What changed in this filing

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Item 1. Financial Statements

2021-02-12 compared with 2020-08-04 · 1303 added, 1371 removed, 271 unchanged (91% of the section changed)

2 unchanged sentences

this Form 10-Q are as follows:

Consolidated Balance Sheets as of June 30, 2020 (unaudited) and September 30, 2019;

Consolidated Statements of Operations for the three and nine months ended June 30, 2020 and 2019 (unaudited);

Consolidated Statements of Stockholders’ Equity for the nine months ended June 30, 2020 and 2019 (unaudited);

Consolidated Statements of Cash Flows for the nine months ended June 30, 2020 and 2019 (unaudited);

Consolidated Balance Sheets as of December 31, 2020 (unaudited) and September 30, 2020;

Consolidated Statements of Operations for the three months ended December 31, 2020 and 2019 (unaudited);

Consolidated Statements of Stockholders’ Equity for the three months ended December 31, 2020 and 2019 (unaudited);

Consolidated Statements of Cash Flows for the three months ended December 31, 2020 and 2019 (unaudited);

Notes to Consolidated Financial Statements (unaudited).

These consolidated financial statements have been prepared in accordance

with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions

to Form 10-Q.

In the opinion of management, all adjustments considered necessary for a fair presentation have been included.

results for the interim period ended June 30, 2020 are not necessarily indicative of the results that can be expected for the full

This report on Form 10-Q for the quarter ended December 31, 2020,

should be read in conjunction with the Company's annual report on Form 10-K for the year ended September 30, 2020, filed with the

Securities and Exchange Commission (“SEC”) on December 17, 2020.

The accompanying consolidated financial statements and footnotes

have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial

information and the SEC instructions to Form 10-Q.

In the opinion of management, all adjustments considered necessary for a fair

presentation have been included.

Operating results for the interim period ended December 31, 2020 are not necessarily indicative

of the results that can be expected for the full year.

CLEANSPARK, INC.

CONSOLIDATED BALANCE SHEETS

June 30, 2020

December 31, 2020

September 30, 2020

3 unchanged sentences

Prepaid expense and other current assets

Digital Currency

Derivative investment asset

6 unchanged sentences

Intangible assets, net

Other long-term asset

LIABILITIES AND STOCKHOLDERS' EQUITY

2 unchanged sentences

Contract liabilities

Lease liability

Due to related parties

Loans payable, net of unamortized discounts

Operating lease liability

Finance lease liability

Contingent consideration

Total current liabilities

Long-term liabilities

Convertible notes, net of unamortized discounts

Loans payable

Operating lease liability, non-current

Finance lease liability, non-current

Total liabilities

Stockholders' equity

Common stock;

$ 0.001 par value;

20,000,000 shares authorized;

16,123,507 and 4,679,018 shares issued and outstanding as of June 30, 2020 and September 30, 2019, respectively

Preferred stock;

1 unchanged sentence

Series A shares;

1,750,000 and 1,000,000 issued and outstanding as of June 30, 2020 and September

30, 2019, respectively

and 1,750,000 issued and outstanding as of December 31, 2020 and September 30, 2020, respectively

Common stock;

shares authorized;

and 17,390,979

shares issued and outstanding as of December 31, 2020 and September 30, 2020, respectively

Additional paid-in capital

9 unchanged sentences

For the Three Months Ended

For the Nine Months Ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

December 31, 2020

December 31, 2019

Revenues, net

1 unchanged sentence

Service, software and related revenues

Digital currency mining revenue

Total revenues, net

Cost of revenues

Cost of goods sold

Cost of services

Product sale revenues

Service, software and related revenues

Cost of mining and data center revenue

Total cost of revenues

9 unchanged sentences

( 2,991,461 )

( 7,407,112 )

( 6,804,290 )

Other income (expense)

Loss on settlement of debt

Realized gain on sale of digital currency

Unrealized gain/(loss) on equity security

Unrealized gain on derivative asset

Interest expense, net

( 7,066,496 )

( 1,495,213 )

Unrealized gain/(loss) on derivative security

( 1,020,494 )

Interest income (expense) (net)

( 1,560,315 )

2 unchanged sentences

$ ( 1,916,254 )

( 8,875,541 )

( 7,215,712 )

$ ( 8,551,301 )

$ ( 3,971,911 )

$ ( 16,282,653 )

$ ( 14,020,002 )

Loss per common share - basic and diluted

4 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’

Accumulated Deficit

For the Nine Months Ended June 30, 2020

the Three months Ended December 31, 2020

Preferred Stock

Additional Paid-in Capital

Additional Paid-in

Accumulated Deficit

Total Stockholders' Equity

Stockholders' Equity

Balance, September 30, 2020

3 unchanged sentences

Options and warrants issued for services

Shares issued upon conversion of debt and accrued interest

Rounding shares issued for stock split

( 1,916,254 )

Balance, December 31, 2019

$ 112,571,454

$ ( 94,972,717 )

Shares returned and cancelled

Options issued for business acquisition

Options and warrants issued for services

Shares issued for business acquisition

Shares issued upon conversion of debt and accrued interest

( 5,815,098 )

Balance, March 31, 2020

Exercise of options and warrants

Shares issued under underwritten offering, net of offering costs

( 7,167,530 )

Shares issued for services

Options and warrants issued for services

Shares issued upon conversion of debt and accrued interest

( 7,167,530 )

Balance, December 31, 2020

$ 195,579,405

Balance, June 30, 2020

$ ( 123,570,136 )

For the Nine Months Ended June 30, 2019

the Three months Ended December 31, 2019

Preferred Stock

Additional Paid-in Capital

Additional Paid-in

Accumulated Deficit

Total Stockholders' Equity

Stockholders' Equity

Balance, September 30, 2019

$ 111,936,125

Shares issued for services

Options and warrants issued for services

Shares issued upon exercise of warrants

Beneficial conversion feature and shares and warrants issued with convertible debt

Shares issued for direct investment

Shares issued for settlement of debt

Commitment shares returned and cancelled

$ ( 93,056,463 )

( 2,283,551 )

Balance, December 31, 2018

$ ( 69,223,082 )

Shares issued for services

Options and warrants issued for services

Shares issued upon exercise of warrants

Shares issued upon conversion of debt

Shares and warrants issued under asset purchase agreement

Commitment shares returned and cancelled

( 7,764,540 )

Balance, March 31, 2019

Shares issued upon conversion of debt and accrued interest

Shares issued for stock split

( 1,916,254 )

Shares issued for services

Options and warrants issued for services

Shares issued upon exercise of warrants

Beneficial conversion feature and shares and warrants issued with convertible debt

( 1,916,254 )

Balance, December 31, 2019

$ 112,571,454

Balance, June 30, 2019

$ ( 94,972,717 )

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended

June 30, 2020

June 30, 2019

For the Three Months Ended

December 31, 2020

December 31, 2019

Cash Flows from Operating Activities

3 unchanged sentences

Stock based compensation

Unrealized gain on equity security

Unrealized (gain) loss on equity security

Realized gain on sale of digital currency

Amortization of operating lease right of use asset

1 unchanged sentence

Amortization of capitalized software

Loss on settlement of debt

Provision for bad debts

Gain on derivative asset

Amortization of debt premium

Unrealized (gain) loss on derivative asset

( 2,266,654 )

1 unchanged sentence

Changes in operating assets and liabilities

(Increase) decrease in prepaid expenses and other current assets

Decrease (increase) in prepaid expenses and other current assets

( 2,329,318 )

Increase in contract assets

Decrease (increase) in contract assets

(Increase) decrease in contract liabilities, net

Increase in accounts receivable

Increase in accounts payable

Increase (decrease) in accounts payable

( 2,366,531 )

Increase in digital currency

Decrease in lease liability

Decrease in due to related parties

Increase in inventory

Increase (decrease) in due to related parties

Net cash used in operating activities

( 6,833,578 )

Cash Flows from investing

Proceeds from sale of digital currencies

Investment in infrastructure development

( 2,830,560 )

Cash Flows from Investing Activities

Purchase of intangible assets

Purchase of fixed assets

Acquisition of p2kLabs

( 1,141,990 )

Investment in capitalized software

Cash acquired from ATL acquisition

Investment in debt and equity securities

Investment in contractual joint venture

Net cash used in investing activities

2 unchanged sentences

Payments on promissory notes

Proceeds from promissory notes

Proceeds from related party debts

Payments on related party debts

Proceeds from convertible debt, net of issuance costs

Payments on convertible debts

( 5,475,000 )

Proceeds from exercise of warrants

Proceeds from issuance of common stock

Net cash provided by financing activities

Proceeds from underwritten offering

Net cash received/(used) in financing activities

Net increase (decrease) in Cash

7 unchanged sentences

Day one recognition of right of use asset and liability

Shares and options issued for business

Shares issued as collateral returned to treasury

Stock issued to promissory notes

Debt discount on convertible debt

Shares and warrants issued for asset acquisition

Shares issued for conversion of debt and accrued interest

Cashless exercise of options

Option expense capitalized as software development costs

The accompanying notes are an integral part of these

unaudited consolidated financial statements.

TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

ORGANIZATION AND LINE OF

(“CleanSpark”, “we”, “our”, the "Company") was incorporated in the State of

Nevada on October

15, 1987 as SmartData Corporation (“SmartData”).

SmartData conducted a 504-public offering in the State of Nevada in December 1987

and began trading publicly in January 1988.

Due to a series of unfortunate events, including the untimely death of the

founding CEO, SmartData discontinued active business operations in 1992.

2014, we began operations in the alternative energy sector.

2014, the Company changed its name to Stratean Inc.

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

Shares and options issued for business acquisition

Cashless exercise of options/warrants

The accompanying notes are an integral

part of these unaudited consolidated financial statements.

CLEANSPARK, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS (UNAUDITED)

ORGANIZATION AND LINE OF BUSINESS

Organ ization

The Company - CleanSpark, Inc.

CleanSpark, Inc.

(“CleanSpark”,

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

under the name, SmartData

In October 2016, the Company changed its name to CleanSpark, Inc.

in order to better reflect the Company’s

brand identity.

The Company, through itself and

its wholly-owned subsidiaries, has operated in the alternative energy sector since March 2014, and in the digital currency

mining sector since December 2020.

Acquisitions Related to Subsidiaries

and/or Assets of the Company

CleanSpark, LLC

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.

22, 2019, CleanSpark entered into an Agreement and Plan of Merger with Pioneer Critical Power, Inc.

whereby the Company acquired certain intellectual property assets and a customer list.

As consideration, the Company issued

to Pioneer’s sole shareholder (i) 175,000

shares of common stock of CleanSpark, (ii) a five-year

warrant to purchase 50,000

shares of common stock of CleanSpark at an exercise price of $ 16.00

per share, and (iii) a five-year

warrant to purchase 50,000

shares of common stock of CleanSpark at an exercise price of $ 20.00

As a result of the transaction, Pioneer became a wholly owned subsidiary of CleanSpark.

February 1, 2019, Pioneer was renamed to CleanSpark Critical Power Systems, Inc.

10, 2019, the Financial Industry Regulatory Authority (“FINRA”) approved a 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 report and included in the financial statements and notes thereto as of and for the period ended June 30, 2020 and September

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

On January 31, 2020, the

Company entered into a Stock Purchase Agreement (the “Agreement”) with p2klabs, Inc., a Nevada corporation (“p2k”),

and its sole stockholder, Amer Tadayon (“Seller”), whereby the Company purchased all of the issued and outstanding

shares of p2k from the Seller (the “Transaction”) in exchange for an aggregate purchase price of cash and equity of

$ 1,688,935 .

The Transaction closed simultaneously upon the execution of the Agreement by the parties on January 31, 2020.

result of the Transaction, p2k, is a wholly-owned subsidiary of the Company.

Pursuant to the Purchase

Agreement, the Company acquired CleanSpark, LLC and all the assets related to the Seller and its line of business.

CleanSpark Critical Power Systems,

On January 22, 2019, CleanSpark

entered into an agreement with Pioneer Critical Power, Inc., whereby it acquired certain intellectual property assets and

client lists.

As a result of the transaction Pioneer Critical Power Inc.

became a wholly owned subsidiary of the Company.

February 1, 2019, Pioneer Critical Power, Inc.

was renamed to CleanSpark Critical Power Systems, Inc.

On January 31, 2020, the Company entered

into a Stock Purchase Agreement with p2klabs, Inc (“p2k”), and its sole stockholder, whereby the Company purchased

all of the issued and outstanding shares of p2k from its sole stockholder.

As a result of the transaction, p2k became a wholly-owned

subsidiary of the Company.

GridFabric, LLC

On August 31, 2020, the Company entered

into a Membership Interest Purchase Agreement with GridFabric, LLC, (“GridFabric”), and its sole member, whereby the

Company purchased all of the issued and outstanding membership units of GridFabric from its sole member.

As a result of the transaction,

GridFabric a wholly-owned subsidiary of the Company.

ATL Data Centers LLC

On December 9, 2020, the Company entered into

an Agreement and Plan of Merger (the “Merger”) with ATL Data Centers LLC (“ATL”), and its members whereby

the Company purchased all of the issued and outstanding membership units of ATL from its members.

As a result of the transaction, ATL became a wholly-owned subsidiary of the Company.

(See Note 3 for details.)

Line of Business

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

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

The work is generally

performed under fixed price bid contracts and negotiated price contracts.

Lines of Business

Energy Business

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.

The work is generally performed under fixed price bid contracts and negotiated price contracts.

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

1 unchanged sentence

The equipment is generally sold under negotiated fixed price contracts.

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

protocol software solutions to commercial and utility customers.

ATL, the Company provides traditional data center services such as providing customers with rack space, power

and equipment, and offers several cloud services including, virtual services, virtual storage, and data backup services.

Agency Segment

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

provided are generally an hourly arrangement or fixed-fee project-based arrangements.

OF SIGNIFICANT POLICIES

Presentation and Liquidity

The accompanying

unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted

in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with

the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial Statements filed

with the SEC on Form 10-K.

In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary

for a fair presentation of financial position and the results of operations for the interim period presented have been reflected

The results of operations for the interim period are not necessarily indicative of the results to be expected for the

Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial

statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted.

has incurred losses for the past several years while developing infrastructure and its software platforms.

As shown in the

accompanying unaudited consolidated financial statements, the Company incurred net losses of $ 16,282,653 during the nine

months ended June 30, 2020.

In response to these conditions and to ensure the Company has sufficient capital for ongoing

operations for a minimum of 12 months, we

have raised additional capital through the sale of debt and equity securities pursuant to a registration statement on Form

(See Note 10 and Note 18 for additional details.) As of June 30, 2020, the Company had working capital of

$ 5,631,164 .

Principles of Consolidation

The accompanying

consolidated financial statements include the accounts of CleanSpark, Inc., and its wholly owned operating subsidiaries, CleanSpark,

LLC, CleanSpark II LLC, CleanSpark Critical Power Systems Inc.

and p2kLabs, Inc.

Currency Mining Segment

ATL Data Centers, LLC, the Company mines digital assets, namely Bitcoin.

SUMMARY OF SIGNIFICANT POLICIES

Basis of Presentation and Liquidity

The accompanying unaudited interim financial

statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of

America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements

and notes thereto contained in the Company’s most recent annual report on Form 10-K for the year ended September 30, 2020,

filed with the SEC on December 17, 2020 (“Form 10-K”).

In the opinion of management, all adjustments, consisting of

normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim

period presented in this quarterly report on Form 10-Q have been reflected herein.

The results of operations for the interim period

are not necessarily indicative of the results to be expected for the full year.

Notes to the financial statements which would substantially

duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form

10-K, have been omitted.

The Company has incurred losses for the past

several years while it develops its infrastructure and its software platforms.

As shown in the accompanying unaudited consolidated

financial statements, the Company incurred net losses of $ 7,167,530

during the three months ended December 31, 2020.

In response to these conditions, and to ensure the Company has sufficient

capital for ongoing operations for a minimum of 12 months we

have raised additional capital through the sale of equity securities pursuant to a registration statement on Form S-3.

(See Note 12 for additional details.) As of December 31, 2020, the Company had working capital of $ 28,711,558 .

of Consolidation

The accompanying consolidated financial statements

include the accounts of CleanSpark, Inc., and its wholly owned operating subsidiaries, CleanSpark, LLC, CleanSpark, II, LLC, CleanSpark

Critical Power Systems Inc., p2kLabs, Inc, GridFabric, LLC, and ATL Data Centers LLC.

All material intercompany transactions have

been eliminated upon consolidation of these entities.

The preparation of consolidated financial statements

in conformity with accounting principles generally accepted in the United States of America requires management to make estimates

and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at

the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period.

Use of estimates

The preparation of consolidated financial

statements in conformity with accounting principles generally accepted in the United States of America requires management to

make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and

liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the

reporting period.

Actual results could differ from those estimates.

Significant estimates include estimates used to review the Company’s goodwill

impairment, impairments and estimations of long-lived assets, revenue recognition on percentage of completion type contracts, allowances

for uncollectible accounts, and the valuations of non-cash capital stock issuances.

The Company bases its estimates on historical

experience and on various other assumptions that are believed to be reasonable in the circumstances, the results of which form

the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions or conditions including, but not limited to, the

ultimate impact that COVID-19 may have on the Company’s operations and financial results during 2020 as such impact

will depend on the ultimate severity and scope of the COVID-19 pandemic.

We are not able to fully quantify the impact that the

COVID-19 pandemic will have on our financial results during 2020 and beyond, but developments related to COVID-19 could affect

the Company’s financial performance in 2020.

Upon adoption of ASC Topic

606, the Company revised its accounting policy on revenue recognition from the policy provided in the Notes to Consolidated

Financial Statements included in our Annual Report on Form 10-K for the year ended September 30, 2019.

accounting policy on revenue recognition is provided below.

The Company accounts for revenue contracts with customers through

the following steps:

Identification of

the contract, or contracts, with a customer

Identification of

the performance obligations in the contract

Determination of the

transaction price

Allocation of the

transaction price to the performance obligations in the contract

Recognition of revenue

when, or as, the Company satisfies a performance obligation

Service & Installation or Construction Contracts

Company recognizes engineering and construction contract revenue over time, as performance obligations are satisfied, due to the

continuous transfer of control to the customer.

Engineering and construction contracts are generally accounted for as a single

unit of account (a single performance obligation) and are not segmented between types of services.

The Company recognizes revenue

based primarily on contract cost incurred to date compared to total estimated contract cost (an input method).

The input method

is the most faithful depiction of the Company’s performance because it directly measures the value of the services transferred

Significant estimates include estimates used to review the

Company’s goodwill impairment, intangible assets acquired, impairments and estimations of long-lived assets, revenue recognition

on percentage of completion type contracts,

allowances for

uncollectible accounts, and the valuations of non-cash capital stock issuances.

Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable in the

circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that

are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions or conditions

including, but not limited to, the ultimate impact that COVID-19 may have on the Company’s operations.

Revenue Recognition

revenue in accordance with generally accepted accounting principles as outlined in the Financial Accounting Standard Board's (“FASB”)

Accounting Standards Codification (“ASC”) 606, Revenue From Contracts with Customers, which requires that five steps

be followed in evaluating revenue recognition:

(i) identify the contract with the customer;

(ii) identity the performance obligations

in the contract;

(iii) determine the transaction price;

(iv) allocate the transaction price;

and (v) recognize revenue when or

as the entity satisfied a performance obligation.

We did not have a cumulative impact

as of October 1, 2019 due to the adoption of Topic 606.

Our accounting policy on revenue recognition by type of revenue

is provided below.

Engineering, Service & Installation

or Construction Contracts

The Company recognizes engineering

and construction contract revenue over time, as performance obligations are satisfied, due to the continuous transfer of control

to the customer.

Customer-furnished materials, labor and equipment and, in certain cases, subcontractor materials, labor and equipment,

are included in revenue and cost of revenue when management believes that the company is acting as a principal rather than as

an agent (i.e., the company integrates the materials, labor and equipment into the deliverables promised to the customer).

Customer-furnished

materials are only included in revenue and cost when the contract includes construction activity and the Company has visibility

into the amount the customer is paying for the materials or there is a reasonable basis for estimating the amount.

recognizes revenue, but not profit, on certain uninstalled materials that are not specifically produced, fabricated, or constructed

for a project.

Revenue on these uninstalled materials is recognized when the cost is incurred (when control is transferred).

to total estimated contract cost or losses, if any, are recognized in the period in which they are determined as assessed at the

contract level.

Pre-contract costs are expensed as incurred unless they are expected to be recovered from the client.

mobilization costs are generally charged to project costs as incurred when they are an integrated part of the performance obligation

being transferred to the client.

Customer payments on engineering and construction contracts are typically due within 30 to 45

days of billing, depending on the contract.

service contracts (including maintenance contracts) in which the Company has the right to consideration from the customer in an

amount that corresponds directly with the value to the customer of the Company’s performance completed to date, revenue

is recognized when services are performed and contractually billable.

Service contracts that include multiple performance obligations

are segmented between types of services.

For contracts with multiple performance obligations, the Company allocates the transaction

price to each performance obligation using an estimate of the stand-alone selling price of each distinct service in the contract.

Revenue recognized on service contracts that have not been billed to clients is classified as a current asset under contract assets

on the Consolidated Balance Sheets.

Amounts billed to clients in excess of revenue recognized on service contracts to date are

classified as a current liability under contract liabilities.

Customer payments on service contracts are typically due within

30 days of billing, depending on the contract.

Revenues from Sale

Obligations Satisfied at a point in time.

revenue on agreements for non-customized equipment we sell on a standardized basis to the market at a point in time.

revenue at the point in time that the customer obtains control of the good, which is generally upon shipment or when the customer

has physical possession of the product depending on contract terms.

We use proof of delivery for certain large equipment with

more complex logistics, whereas the delivery of other equipment is estimated based on historical averages of in-transit periods

(i.e., time between shipment and delivery).

In situations

where arrangements include customer acceptance provisions based on seller or customer-specified objective criteria, we recognize

revenue when we have concluded that the customer has control of the goods and that acceptance is likely to occur.

do not provide for anticipated losses on point in time transactions prior to transferring control of the equipment to the customer.

billing terms for these point in time equipment contracts vary and generally coincide with shipment to the customer;

within certain businesses, we receive progress payments from customers for large equipment purchases, which is generally to reserve

production slots with our manufacturing partners, which are recorded as contract liabilities.

Performance obligations satisfied over time.

into long-term product service agreements with our customers primarily within our microgrid segment.

These agreements require

us to provide preventative maintenance, and standby support services that include certain levels of assurance regarding system

performance throughout the contract periods;

Engineering and construction contracts are generally accounted for as a single unit of account (a single performance

obligation) and are not segmented between types of services.

The Company recognizes revenue based primarily on contract cost incurred

to date compared to total estimated contract cost (an input method).

The input method is the most faithful depiction of the Company’s

performance because it directly measures the value of the services transferred to the customer.

Customer-furnished materials, labor,

and equipment and, in certain cases, subcontractor materials, labor, and equipment are included in revenue and cost of revenue

when management believes that the Company is acting as a principal rather than as an agent (i.e., the Company integrates the materials,

labor and equipment into the deliverables promised to the customer).

Customer-furnished materials are only included in revenue

and cost when the contract includes construction activity and the Company has visibility into the amount the customer is paying

for the materials or there is a reasonable basis for estimating the amount.

The Company recognizes revenue, but not profit, on

certain uninstalled materials that are not specifically produced, fabricated, or constructed for a project.

Revenue on these uninstalled

materials is recognized when the cost is incurred (when control is transferred).

Changes to total estimated contract cost or losses,

if any, are recognized in the period in which they are determined as assessed at the contract level.

Pre-contract costs are expensed

as incurred unless they are expected to be recovered from the client.

Project mobilization costs are generally charged to project

costs as incurred when they are an integrated part of the performance obligation being transferred to the client.

Customer payments

on engineering and construction contracts are typically due within 30 to 45 days of billing, depending on the contract.

For service contracts (including maintenance

contracts) in which the Company has the right to consideration from the customer in an amount that corresponds directly with the

value to the customer of the Company’s performance completed to date, revenue is recognized when services are performed and

contractually billable.

Service contracts that include multiple performance obligations are segmented between types of services.

For contracts with multiple performance obligations, the Company allocates the transaction price to each performance obligation

using an estimate of the stand-alone selling price of each distinct service in the contract.

Revenue recognized on service contracts

that have not been billed to clients is classified as a current asset under contract assets on the Consolidated Balance Sheets.

Amounts billed to clients in excess of revenue recognized on service contracts to date are classified as a current liability under

contract liabilities.

Customer payments on service contracts are typically due within 30 days of billing, depending on the contract.

Revenues from Sale of Equipment

Performance Obligations Satisfied

at a point in time.

We recognize revenue on agreements

for non-customized equipment we sell on a standardized basis to the market at a point in time.

We recognize revenue at the point

in time that the customer obtains control of the good, which is generally upon shipment or when the customer has physical possession

of the product depending on contract terms.

We use proof of delivery for certain large equipment with more complex logistics, whereas

the delivery of other equipment is estimated based on historical averages of in-transit periods (i.e., time between shipment and

Generally, shipping costs are included in the price of equipment unless the customer requests a non-standard shipment.

In situations where an alternative shipment arrangement has been made, the Company recognizes the shipping revenue upon customer

receipt of the shipment.

In situations where arrangements include

customer acceptance provisions based on seller or customer-specified objective criteria, we recognize revenue when we have concluded

that the customer has control of the goods and that acceptance is likely to occur.

We generally do not provide for anticipated

losses on point in time transactions prior to transferring control of the equipment to the customer.

Our billing terms for these point in

time equipment contracts vary and generally coincide with shipment to the customer;

however, within certain businesses, we receive

progress payments from customers for large equipment purchases, which is generally to reserve production slots with our manufacturing

partners, which are recorded as contract liabilities.

Due to the customized nature of the

equipment, the Company does not allow for customer returns.

Service Performance obligations

satisfied over time.

We enter into long-term product service

agreements with our customers primarily within our microgrid segment.

These agreements require us to provide preventative maintenance,

and standby support services that include certain levels of assurance regarding system performance throughout the contract periods;

these contracts will generally range from 1 to 10 years.

We account for items that

are integral to the maintenance of the equipment as part of our service-related performance obligation, unless the customer has

a substantive right to make a separate purchasing decision (e.g., equipment upgrade).

Contract modifications that extend or revise

contract terms are not uncommon and generally result in our recognizing the impact of the revised terms prospectively over the

remaining life of the modified contract (i.e., effectively like a new contract).

Revenues are recognized for these arrangements

on a straight-line basis consistent with the nature, timing and extent of our services, which primarily relate to routine maintenance

and as needed product repairs.

Our billing terms for these contracts vary, but we generally invoice periodically as services are

assets represent revenue recognized in excess of amounts billed and include unbilled receivables (typically for cost

reimbursable contracts) of $ 0 and contract work in progress (typically for fixed-price contracts) of $ 0 and $ 57,077 as of

June 30, 2020 and September 30, 2019, respectively.

Unbilled receivables, which represent an unconditional right to payment

subject only to the passage of time, are reclassified to accounts receivable when they are billed under the terms of the

Advances that are payments on account of contract assets of $ 321,000 and $ 360,000 as of June 30, 2020 and

September 30, 2019, respectively, have been deducted from contract assets.

Contract liabilities represent amounts billed to

clients in excess of revenue recognized to date.

The Company recorded $ 149,493 and $ 499,401 in contract liabilities as of

June 30, 2020 and September 30, 2019, respectively.

We account for items that are integral to the maintenance of the equipment

as part of our service-related performance obligation, unless the customer has a substantive right to make a separate purchasing

decision (e.g., equipment upgrade).

Contract modifications that extend or revise contract terms are not uncommon and generally

result in our recognizing the impact of the revised terms prospectively over the remaining life of the modified contract (i.e.,

effectively like a new contract).

Revenues are recognized for these arrangements on a straight-line basis consistent with the nature,

timing and extent of our services, which primarily relate to routine maintenance and as needed product repairs.

Our billing terms

for these contracts vary, but we generally invoice periodically as services are provided.

Contract assets represent revenue recognized

in excess of amounts billed and include unbilled receivables (typically for cost reimbursable contracts) of $ 0 and contract work

in progress (typically for fixed-price contracts) of $ 906 and $ 4,103 as of December 31, 2020 and September 30, 2020, respectively.

Unbilled receivables, which represent an unconditional right to payment subject only to the passage of time, are reclassified to

accounts receivable when they are billed under the terms of the contract.

Advances that are payments on account of contract assets

of $ 0 and $ 0 as of December 31, 2020 and September 30, 2020, respectively, have been deducted from contract assets.

liabilities represent amounts billed to clients in excess of revenue recognized to date.

The Company recorded $ 63,603 and $ 64,108

in contract liabilities as of December 31, 2020 and September 30, 2020, respectively.

from software

Company derives its revenue from subscription fees from customers for access to its mVSO platform.

The Company’s policy

is to exclude sales and other indirect taxes when measuring the transaction price of its subscription agreements.

Company’s subscription agreements generally have monthly or annual contractual terms.

Revenue is recognized ratably over

the related contractual term beginning on the date that the platform is made available to a customer.

Access to the platform represents

a series of distinct services as the Company continually provides access to, and fulfills its obligation to the end customer over

the subscription term.

The series of distinct services represents a single performance obligation that is satisfied over time.

from design, software development and other technology-based consulting services

service contracts performed under Master Services Agreements (“MSA”) and accompanying Statement(s) of Work (“SOW”),

revenue is recognized based on the performance obligation(s) outlined in the SOW which is typically hours worked or specific deliverable

In the case of a milestone-based SOW, the Company recognizes revenues as each deliverable is signed off by the customer.

Consideration

nature of the Company’s contracts gives rise to several types of variable consideration, including claims and unpriced change

awards and incentive fees;

The Company derives its software revenue

from both subscription fees from customers for access to its (i) energy software offerings and software license sales and (ii)

support services.

Revenues from software licenses are generally recognized upfront when the software is made available to the customer,

and revenues from the related support is generally recognized ratably over the contract term.

The Company’s policy is to

exclude sales and other indirect taxes when measuring the transaction price of its subscription agreements.

The Company’s subscription agreements

generally have monthly or annual contractual terms.

Revenue is recognized ratably over the related contractual term beginning on

the date that the platform is made available to a customer.

Access to the platform represents a series of distinct services as

the Company continually provides access to, and fulfills its obligation to the end customer over the subscription term.

of distinct services represents a single performance obligation that is satisfied over time.

Revenues from design, software

development and other technology-based consulting services

For service contracts performed under

Master Services Agreements (“MSA”) and accompanying Statement(s) of Work (“SOW”), revenue is recognized

based on the performance obligation(s) outlined in the SOW which is typically hours worked or specific deliverable milestones.

In the case of a milestone-based SOW, the Company recognizes revenue as each deliverable is signed off by the customer.

Revenues from data center services

The Company provides data services

such as providing its customers with rack space, power and equipment, and cloud services such as virtual services, virtual storage,

and data backup services, generally based on monthly services provided at a defined price included in the contracts.

The performance

obligations are the services provided to a customer for the month based on the contract.

The transaction price is the price agreed

with the customer for the monthly services provided and the revenues are recognized monthly based on the services rendered for

Revenues from digital currency

The Company has entered into a digital asset

mining pool to provide computing power to the mining pool.

Providing computing power is the only performance obligation in

the Company’s contracts with pool operators.

When the Company successfully places a block (by being the first to solve an

algorithm) and the Company receives confirmation of the consideration it will receive, at which time revenue is recognized.

transaction consideration the Company receives is noncash consideration, which the Company measures at fair value on the date received.

The consideration is dependent on the number of digital assets mined on any given day.

digital Fair value of the digital currency

award received is determined using the spot price of the related digital currency at the time of receipt.

There is currently no specific definitive

guidance under GAAP or alternative accounting framework for the accounting for digital currencies recognized as revenue or held,

and management has exercised significant judgment in determining the appropriate accounting treatment.

In the event authoritative

guidance is enacted by the FASB, the Company may be required to change its policies, which could have an effect on the Company’s

consolidated financial position and results from operations.

Variable Consideration

The nature of the Company’s contracts

gives rise to several types of variable consideration, including claims and unpriced change orders, awards and incentive fees,

and liquidated damages and penalties.

The Company recognizes revenue for variable consideration

when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur.

The Company estimates

the amount of revenue to be recognized on variable consideration using the expected value (i.e., the sum of a probability-weighted

amount) or the most likely amount method, whichever is expected to better predict the amount.

Factors considered in determining

whether revenue associated with claims (including change orders in dispute and unapproved change orders in regard to both scope

and price) should be recognized include the following:

(a) the contract or other evidence provides a legal basis for the claim,

(b) additional costs were caused by circumstances that were unforeseen at the contract date and not the result of deficiencies

in the company’s performance, (c) claim-related costs are identifiable and considered reasonable in view of the work performed,

and (d) evidence supporting the claim is objective and verifiable.

If the requirements for recognizing revenue for claims or unapproved

change orders are met, revenue is recorded only when the costs associated with the claims or unapproved change orders have been

Back charges to suppliers or subcontractors are recognized as a reduction of cost when it is determined that recovery

of such cost is probable, and the amounts can be reliably estimated.

Disputed back charges are recognized when the same requirements

described above for claims accounting have been satisfied.

The Company recognizes revenue for variable consideration when it is probable that a significant

reversal in the amount of cumulative revenue recognized will not occur.

The Company estimates the amount of revenue to be recognized

on variable consideration using the expected value (i.e., the sum of a probability-weighted amount) or the most likely amount method,

whichever is expected to better predict the amount.

Factors considered in determining whether revenue associated with claims (including

change orders in dispute and unapproved change orders in regard to both scope and price) should be recognized include the following:

(a) the contract or other evidence provides a legal basis for the claim, (b) additional costs were caused by circumstances that

were unforeseen at the contract date and not the result of deficiencies in the Company’s performance, (c) claim-related costs

are identifiable and considered reasonable in view of the work performed, and (d) evidence supporting the claim is objective and

If the requirements for recognizing revenue for claims or unapproved change orders are met, revenue is recorded only

when the costs associated with the claims or unapproved change orders have been incurred.

Back charges to suppliers or subcontractors

are recognized as a reduction of cost when it is determined that recovery of such cost is probable, and the amounts can be reliably

Disputed back charges are recognized when the same requirements described above for claims accounting have been satisfied.

generally provides limited warranties for work performed under its engineering and construction contracts.

14 unchanged sentences

Company from its customers (use taxes, value added taxes, some excise taxes).

months ended June 30, 2020 and 2019, the Company reported revenues of $ 8,073,781 and $ 2,209,542 , respectively.

cash equivalents

For purposes of the consolidated statements of cash flows, the Company considers all highly liquid

investments and short-term debt instruments with original maturities of three months or less to be cash equivalents.

$ 1,955,776 and $ 7,838,857 in cash and no cash equivalents as of June 30, 2020 and September 30, 2019, respectively.

Is comprised of uncollateralized customer obligations due under normal trade terms.

The Company performs ongoing

credit evaluation of its customers and management closely monitors outstanding receivables based on factors surrounding the credit

risk of specific customers, historical trends, and other information.

The carrying amount of accounts receivable is reviewed periodically

for collectability.

If management determines that collection is unlikely, an allowance that reflects management’s best estimate

of the amounts that will not be collected is recorded.

Accounts receivable are presented net of an allowance for doubtful accounts

of $ 400,741 and $ 254,570 at June 30, 2020, and September 30, 2019, respectively.

Retention receivable

is the amount withheld by a customer until a contract is completed.

Retention receivables of $ 171,513 and $ 159,989 were included

in the balance of trade accounts receivable as of June 30, 2020 and September 30, 2019, respectively.

Investment securities include debt securities and equity securities.

Debt securities are classified as available

for sale (“AFS”) and are reported as an asset in the Consolidated Balance Sheet at their estimated fair value.

the fair values of AFS debt securities change, the changes are reported net of income tax as an element of OCI, except for other-than-temporarily-impaired

For the three months ended December 31, 2020

and 2019, the Company reported revenues of $ 2,257,570

and $ 976,824 , respectively.

Cash and cash equivalents

purposes of the consolidated statements of cash flows, the Company considers all highly liquid investments and short-term debt

instruments with original maturities of three months or less to be cash equivalents.

There was $ 25,631,913 and $ 3,126,202 in cash

and no cash equivalents as of December 31, 2020 and September 30, 2020, respectively.

Digital Currency

Digital currencies are included in current

assets in the consolidated balance sheets.

Digital currencies are recorded at cost less impairment.

Digital currencies held are

accounted for as intangible assets with indefinite useful lives.

An intangible asset with an indefinite useful life is not amortized

but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more

likely than not that the indefinite-lived asset is impaired.

Impairment exists when the carrying amount exceeds its fair value,

which is measured using the quoted price of the digital currency at the time its fair value is being measured.

In testing for impairment,

the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment

If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not

If the Company concludes otherwise, it is required to perform a quantitative impairment test.

To the extent an impairment

loss is recognized, the loss establishes the new cost basis of the asset.

Subsequent reversal of impairment losses is not permitted.

Digital currencies awarded to the Company

through its mining activities are included within operating activities on the accompanying consolidated statements of cash flows.

The sales of digital currencies are included within investing activities in the accompanying consolidated statements of cash flows

and any realized gains or losses from such sales are included in other income (expense) in the consolidated statements of operations.

The Company accounts for its gains or losses in accordance with the first in first out (FIFO) method of accounting.

The following table presents the activities

of the digital currencies for the three months ended December 31, 2020:

Digital currencies at December 31, 2020:

Balance at September 30, 2020

Additions of digital currencies

Realized gain on sale of digital currencies

Sale of digital currencies

Balance at December 31, 2020

Accounts receivable

Accounts receivable is comprised of

uncollateralized customer obligations due under normal trade terms.

The Company performs ongoing credit evaluation of its customers

and management closely monitors outstanding receivables based on

factors surrounding the credit risk of specific customers, historical

trends, and other information.

The carrying amount of accounts receivable is reviewed periodically for collectability.

If management

determines that collection is unlikely, an allowance that reflects management’s best estimate of the amounts that will not

be collected is recorded.

Accounts receivable are presented net of an allowance for doubtful accounts of $ 42,970 and $ 42,970 at

December 31, 2020, and September 30, 2020, respectively.

Retention receivable is the amount withheld

by a customer until a contract is completed.

Retention receivables of $ 0 and $ 615 were included in the balance of trade accounts

receivable as of December 31, 2020 and September 30, 2020, respectively.

Investment securities

securities include debt securities and equity securities.

Debt securities are classified as available for sale (“AFS”)

and are reported as an asset in the Consolidated Balance Sheet at their estimated fair value.

As the fair values of AFS debt securities

change, the changes are reported net of income tax as an element of OCI, except for other-than-temporarily-impaired securities.

When AFS debt securities are sold, the unrealized gains or losses are reclassified from OCI to non-interest income.

Securities classified as AFS are securities that the Company intends to hold for an indefinite period of time, but not necessarily

Any decision to sell a security classified as AFS would be based on various factors, including significant movements

in interest rates, changes in the maturity mix of the Company’s assets and liabilities, liquidity needs, decline in credit

quality, and regulatory capital considerations.

Interest income

is recognized based on the coupon rate and increased by accretion of discounts earned or decreased by the amortization of premiums

paid over the contractual life of the security.

For individual

debt securities where the Company either intends to sell the security or more likely than not will not recover all of its amortized

cost, the OTTI is recognized in earnings equal to the entire difference between the security's cost basis and its fair value at

the balance sheet date.

For individual debt securities for which a credit loss has been recognized in earnings, interest accruals

and amortization and accretion of premiums and discounts are suspended when the credit loss is recognized.

Interest received after

accruals have been suspended is recognized in income on a cash basis.

Company holds investments in both publicly held and privately held equity securities.

Privately held

equity securities are recorded at cost and adjusted for observable transactions for same or similar investments of the issuer

(referred to as the measurement alternative) or impairment.

All gains and losses on privately held equity securities, realized

or unrealized, are recorded through gains or losses on equity securities on the consolidated statement of operations.

Publicly held

equity securities are based on fair value accounting with unrealized gains or losses resulting from changes in fair value reflected

as unrealized gains or losses on equity securities in our consolidated statement of operations.

Concentration

At times throughout

the year, the Company may maintain cash balances in certain bank accounts in excess of FDIC limits.

As of June 30, 2020, the cash

balance in excess of the FDIC limits was $ 1,705,776 .

The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk in these

The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue.

classified as AFS are securities that the Company intends to hold for an indefinite period of time, but not necessarily to maturity.

Any decision to sell a security classified as AFS would be based on various factors, including significant movements in interest

rates, changes in the maturity mix of the Company’s assets and liabilities, liquidity needs, decline in credit quality, and

regulatory capital considerations.

Interest income is recognized based

on the coupon rate and increased by accretion of discounts earned or decreased by the amortization of premiums paid over the contractual

life of the security.

For individual debt securities where

the Company either intends to sell the security or more likely than not will not recover all of its amortized cost, the OTTI is

recognized in earnings equal to the entire difference between the security's cost basis and its fair value at the balance sheet

For individual debt securities for which a credit loss has been recognized in earnings, interest accruals and amortization

and accretion of premiums and discounts are suspended when the credit loss is recognized.

Interest received after accruals have

been suspended is recognized in income on a cash basis.

The Company holds investments in

both publicly held and privately held equity securities.

However, as described in Note 1, the Company primarily operates in the

alternative energy sector and in the digital currency mining sector, and thus, it is not in the business of investing in securities.

Privately held equity securities are

recorded at cost and adjusted for observable transactions for same or similar investments of the issuer (referred to as the measurement

alternative) or impairment.

All gains and losses on privately held equity securities, realized or unrealized, are recorded through

gains or losses on equity securities on the consolidated statement of operations.

Publicly held equity securities are

based on fair value accounting with unrealized gains or losses resulting from changes in fair value reflected as unrealized gains

or losses on equity securities in our consolidated statements of operations.

Concentration Risk

At times throughout the year, the Company may

maintain cash balances in certain bank accounts in excess of FDIC limits.

As of December 31, 2020, the cash balance in excess of

the FDIC limits was $ 25,379,232 .

The Company has not experienced any losses in such accounts and believes it is not exposed to

any significant credit risk in these accounts.

The Company had certain customers whose revenue individually represented 10% or

more of the Company’s total revenue.

(See Note 16 for details.)

The Company establishes warranty liability reserves to provide for estimated future expenses as a result

of installation and product defects, product recalls and litigation incidental to the Company’s business.

Liability estimates

are determined based on management’s judgment, considering such factors as historical experience, the likely current cost

of corrective action, manufacturers’ and subcontractors’ participation in sharing the cost of corrective action, consultations

with third party experts such as engineers, and discussions with the Company’s general counsel and outside counsel retained

to handle specific product liability cases.

The Company’s manufacturers and service providers currently provide substantial

warranties between ten to twenty-five years with full reimbursement to replace and install replacement parts.

Warranty costs and

associated liabilities were $ 0 and $ 0 at June 30, 2020 and September 30, 2019, respectively.

The Company follows the guidelines in FASB Codification Topic ASC 718-10 “ Compensation-Stock

Compensation, ” which requires companies to measure the cost of employee and non-employee services received in exchange

for an award of an equity instrument based on the grant-date fair value of the award.

Stock-based compensation expense is recognized

on a straight-line basis over the requisite service period.

The Company may issue compensatory shares for services including,

but not limited to, executive, management, accounting, operations, corporate communication, financial and administrative consulting

(loss) per share

The Company reports earnings (loss) per share in accordance with Financial Accounting Standards Board’s

(“FASB”) Accounting Standards Codification (“ASC”) 260-10 “ Earnings Per Share, ” which

provides for calculation of “basic” and “diluted” earnings per share.

Basic earnings per share includes

no dilution and is computed by dividing net income or loss available to common stockholders by the weighted average common shares

outstanding the period.

Diluted earnings per share reflect the potential dilution of securities that could share in the earnings

of an entity.

Warranty Liability

The Company establishes warranty liability reserves to provide

for estimated future expenses as a result of installation and product defects, product recalls, and litigation incidental to the

Company’s business.

Liability estimates are determined based on management’s judgment, considering such factors as

historical experience, the likely current cost of corrective action, manufacturers’ and subcontractors’ participation

in sharing the cost of corrective action, consultations with third party experts such as engineers, and discussions with the Company’s

general counsel and outside counsel retained to handle specific product liability cases.

The Company’s manufacturers and service providers currently provide substantial warranties between ten to twenty-five

years with full reimbursement to replace and install replacement parts.

Warranty costs and associated liabilities were $ 0 and $ 0

at December 31, 2020 and September 30, 2020, respectively.

Stock-based compensation

Company follows the guidelines in FASB Codification Topic ASC 718-10 “Compensation-Stock Compensation,” which requires

companies to measure the cost of employee and non-employee services received in exchange for an award of an equity instrument based

on the grant-date fair value of the award.

Stock-based compensation expense is recognized on a straight-line basis over the requisite

service period.

The Company may issue compensatory shares for services including, but not limited to, executive, management, accounting,

operations, corporate communication, financial and administrative consulting services.

Earnings (loss) per share

The Company reports earnings (loss) per share

in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”)

260-10 “Earnings Per Share,” which provides for calculation of “basic” and “diluted” earnings

Basic earnings per share includes no dilution and is computed by dividing net income or loss available to common stockholders

by the weighted average common shares outstanding the period.

Diluted earnings per share reflect the potential dilution of securities

that could share in the earnings of an entity.

The calculation of diluted net loss per share gives effect to common stock equivalents;

however, potential common

shares are excluded if their effect is anti-dilutive.

As of June 30, 2020, there are 1,503,639 shares issuable upon exercise

of outstanding options and warrants which have been excluded as anti-dilutive.

of financial instruments and derivative asset

The carrying value of cash, accounts payable and accrued expenses, and

debt (See Notes 9 & 10) approximate their fair values because of the short-term nature of these instruments.

Management believes

the Company is not exposed to significant interest or credit risks arising from these financial instruments.

The carrying amount

of the Company’s long-term debt is also stated at fair value of $ 681,169 since the stated rate of interest approximates

market rates.

Fair value is

defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal

or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement

Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable

The Company utilizes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable

and the last unobservable.

1 Quoted prices in active markets for identical assets or liabilities.

These are typically obtained from real-time quotes

for transactions in active exchange markets involving identical assets.

2 Quoted prices for similar assets and liabilities in active markets;

quoted prices included for identical or similar assets

and liabilities that are not active;

and model-derived valuations in which all significant inputs and significant value drivers

are observable in active markets.

however, potential common shares are excluded if their effect is anti-dilutive.

As of December 31, 2020, there are 1,562,092 shares

issuable upon exercise of outstanding options and warrants which have been excluded as anti-dilutive.

Property and equipment

Property and equipment are stated at

Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:

Machinery and equipment

Mining equipment

Leasehold improvements

Shorter of estimated lease term or 5 years

Furniture and fixtures

Long-lived Assets

In accordance with the Financial Accounting

Standards Board ("FASB") Accounts Standard Codification (ASC) ASC 360-10, "Property, Plant and Equipment,"

the carrying value of intangible assets and other long-lived assets is reviewed on a regular basis for the existence of facts or

circumstances that may suggest impairment.

The Company recognizes impairment when the sum of the expected undiscounted future cash

flow is less than the carrying amount of the asset.

Impairment losses, if any, are measured as the excess of the carrying amount

of the asset over its estimated fair value.

For the three months ended December 31, 2020 and 2019, the Company did not record an

impairment expense.

Intangible Assets and Goodwill

The Company accounts for business combinations

under the acquisition method of accounting in accordance with ASC 805, “Business Combinations,” where the total purchase

price is allocated to the tangible and identified intangible assets acquired and liabilities assumed based on their estimated fair

The purchase price is allocated using the information currently available, and may be adjusted, up to one year from acquisition

date, after obtaining more information regarding, among other things, asset valuations, liabilities assumed, and revisions to preliminary

The purchase price in excess of the fair value of the tangible and identified intangible assets acquired less liabilities

assumed is recognized as goodwill.

The Company reviews its indefinite

lived intangibles and goodwill for impairment annually or whenever events or circumstances indicate that the carrying amount of

the asset exceeds its fair value and may not be recoverable.

In accordance with its policies, the Company performed an assessment

of indefinite lived intangibles and goodwill and determined there was no impairment for the three months ended December 31, 2020

Software Development Costs

The Company capitalizes software development

costs under guidance of ASC 985-20 “Costs of Software to be Sold, Leased or Marketed” for our mPulse platform and under

ASC 350-40 “Internal Use Software” for our mVSO, Canvas & Plaid products.

Software development costs include payments

made to independent software developers under development agreements, as well as direct costs incurred for internally developed

Software development costs are capitalized once the technological feasibility of a product is established and such costs

are determined to be recoverable.

Technological feasibility of a product requires both technical design documentation and infrastructure

design documentation, or the completed and tested product design and a working model.

Significant management judgments and estimates

are utilized in the assessment of when technological feasibility is established, and the evaluation is performed on a product-by-product

For products where proven technology exists, this may occur early in the development cycle.

Prior to a product's release,

if and when we believe capitalized costs are not recoverable, we expense

the amounts as part of "Product development." Capitalized costs for products that are cancelled or are expected to be

abandoned are charged to "Product development" in the period of cancellation.

Amounts related to software development,

such as product enhancements to existing features, which are not capitalized are charged immediately to "Product development."

Commencing upon a product's release,

capitalized software development costs are amortized to "Cost of revenues—software amortization" based on the

ratio of current revenues to total projected revenues for the specific product, generally resulting in an amortization period of

seven years for our current product offerings.

In recognition of the uncertainties involved in estimating future revenue, amortization

will never be less than straight-line amortization of the products remaining estimated economic life.

We evaluate the future recoverability

of capitalized software development costs on a quarterly basis.

For products that have been released in prior periods, the primary

evaluation criterion is the actual performance of the software platform to which the costs relate.

For products that are scheduled

to be released in future periods, recoverability is evaluated based on the expected performance of the specific products to which

the costs relate.

Criteria used to evaluate expected product performance include:

historical performance of comparable products

developed with comparable technology, market performance of comparable software, orders for the product prior to its release, pending

contracts, and general market conditions.

Significant management judgments and

estimates are utilized in assessing the recoverability of capitalized costs.

In evaluating the recoverability of capitalized costs,

the assessment of expected product performance utilizes forecasted sales amounts and estimates of additional costs to be incurred.

If revised forecasted or actual product sales are less than the originally forecasted amounts utilized in the initial recoverability

analysis, the net realizable value may be lower than originally estimated in any given quarter, which could result in an impairment

Material differences may result in the amount and timing of expenses for any period if matters resolve in a manner that

is inconsistent with management's expectations.

If an impairment occurs, the reduced amount of the capitalized software costs that

have been written down to the net realizable value at the close of each annual fiscal period will be considered the cost for subsequent

accounting purposes.

Fair value of financial instruments and

derivative asset

The carrying value of cash, accounts

payable and accrued expenses, and debt (See Notes 8 and 9) approximate their fair values because of the short-term nature of

these instruments.

Management believes the Company is not exposed to significant interest or credit risks arising from these

financial instruments.

The carrying amount of the Company’s long-term debt is also stated at fair value of $ 531,169

since the stated rate of interest approximates market rates.

Fair value is defined as the exchange price

that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market

for the asset or liability in an orderly transaction between market participants on the measurement date.

Valuation techniques

used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs.

The Company utilizes

a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable.

Level 1 Quoted prices in active markets for identical assets or liabilities.

These are typically obtained from real-time quotes for transactions in active exchange markets involving identical assets.

Level 2 Quoted prices for similar assets and liabilities in active markets;

quoted prices included for identical or similar assets and liabilities that are not active;

and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

These are typically obtained from readily-available pricing sources for comparable instruments.

3 Unobservable inputs, where there is little or no market activity for the asset or liability.

These inputs reflect the reporting

entity’s own beliefs about the assumptions that market participants would use in pricing the asset or liability, based

on the best information available in the circumstances.

The following

table presents the Company’s financial instruments that are measured and recorded at fair value on the Company’s balance

sheets on a recurring basis, and their level within the fair value hierarchy as of June 30, 2020:

Level 3 Unobservable inputs, where there is little or no market activity for the asset or liability.

These inputs reflect the reporting entity’s own beliefs about the assumptions that market participants would use in pricing the asset or liability, based on the best information available in the circumstances.

The following table presents the Company’s

financial instruments that are measured and recorded at fair value on the Company’s balance sheets on a recurring basis,

and their level within the fair value hierarchy as of December 31, 2020 and September 30, 2020, respectively:

Fair value measured at December 31, 2020

Derivative asset

Investment in equity security

Investment debt security

Fair value measured at September 30, 2020

Derivative asset

Investment in equity security

Investment in debt security

The below table presents

the change in the fair value of the derivative asset and investment in debt security during the nine months ended June 30, 2020:

The below table presents the change in the fair value

of the derivative asset and investment in debt security during the three months ended December 31, 2020:

Balance at September 30, 2020

Fair value at issuance, net of premium

Gain on derivative asset

Balance at June 30, 2020

Gain/(loss) on derivative asset

( 1,020,494 )

Balance at December 31, 2020

Reclassifications

Certain prior year amounts have been reclassified for consistency with the current year presentation.

These reclassifications

had no effect on the reported results of operations or net assets of the Company.

Certain prior year amounts have been reclassified

for consistency with the current period presentation.

These reclassifications had no effect on the reported results of operations

or net assets of the Company.

Segment Reporting

Operating segments are defined as components

of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision

maker, or decision-making group, in deciding the method to allocate resources and assess performance.

The Company currently has

three reportable segments for financial reporting purposes.

issued accounting pronouncements

In June 2018,

the FASB issued ASU 2018-07, "Compensation-Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment

Accounting," which modifies the accounting for share-based payment awards issued to nonemployees to largely align it with

the accounting for share-based payment awards issued to employees.

ASU 2018-07 is effective for us for annual periods beginning

October 1, 2019.

The new standard did not have a material impact on the Company’s results of operations or cash flows.

In August 2018,

the FASB issued ASU 2018-15, "Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Customer’s Accounting

for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract," which allows for the capitalization

of certain implementation costs incurred in a hosting arrangement that is a service contract.

ASU 2018-15 allows for either retrospective

adoption or prospective adoption to all implementation costs incurred after the date of adoption.

ASU 2018-15 is effective for

fiscal years beginning after December 15, 2019.

We are currently evaluating the impact the adoption of this new standard will

have on our financial position and results of operations.

2016, the FASB issued guidance within ASU 2016-02, Leases .

The amendments in ASU 2016-02 to Topic 842, Leases ,

require lessees to recognize the lease assets and lease liabilities arising from operating leases in the statement of financial

The accounting applied by a lessor is largely unchanged from that applied under previous GAAP.

The Company adopted the

amendments to Topic 842 on October 1, 2019 using the modified retrospective approach.

The Company elected the transition option

issued under ASU 2018-11, Leases (Topic 842) Targeted Improvements , which allows entities to continue to apply the

legacy guidance in ASC 840, Leases , to prior periods, including disclosure requirements.

Accordingly, prior period

financial results and disclosures have not been adjusted.

The Company also elected to apply the package of practical expedients permitting

entities to forgo reassessment of:

1) expired or existing contracts that may contain leases;

2) lease classification of expired

or existing leases;

and 3) initial direct costs for any existing leases.

The Company has also elected to apply the short term

lease measurement and recognition exemption to leases with an initial term of 12 months or less.

The most significant impact of

the new standard on the Company’s Consolidated Financial Statements was the recognition of a right of use asset and lease

liability for operating leases for which the Company is the lessee.

Upon adoption of this guidance, on October 1, 2019, the Company

recorded a Right of use asset and corresponding lease liability of $85,280 and $85,280, respectively, on the Consolidated Balance

No cumulative effect adjustment to retained earnings resulted from adoption of this guidance.

The new standard did not

have a material impact on the Company’s results of operations or cash flows.

2017, the FASB issued guidance within ASU 2017-04, Intangibles-Goodwill and Other.

The amendments in ASU 2017-04 simplify the subsequent

measurement of goodwill by comparing the fair value of a reporting unit with its carrying amount.

ASU 2017-04 is effective for

fiscal years beginning after December 15, 2019.

We are currently evaluating the impact the adoption of this new standard will

have on our financial position and results of operations.

In June, 2016, the FASB issued guidance within

ASU 2016-13, Financial Instruments – Credit Losses.

The amendments in ASU 2016-13 require assets measured at amortized cost

and establishes an allowance of credit losses for available for sale debt securities.

ASU 2016-13 is effective for fiscal years

beginning after December 15, 2020.

We are currently evaluating the impact the adoption of this new standard will have on our financial

position and results of operations.

has evaluated all other recent accounting pronouncements, and believes that none of them will have a material effect on the Company's

financial position, results of operations or cash flows.

OF P2KLABS, INC.

On January 31,

2020, the Company, entered into an Agreement with p2k, and its sole stockholder, Amer Tadayon, whereby the Company purchased all

of the issued and outstanding shares of p2k in exchange for an aggregate purchase price of cash and equity of $ 1,688,935 .

Transaction closed simultaneously upon the execution of the Agreement by the parties on January 31, 2020.

of the Transaction, p2k is a wholly-owned subsidiary of the Company.

the terms of the Agreement, the purchase price was as follows:

$ 1,039,500 in cash was paid

to the Seller;

restricted shares of the Company’s

common stock, valued at $ 145,000 ,

were issued to the Seller (the “Shares”).

The Shares are subject to certain lock-up and leak-out provisions whereby

may sell an amount of Shares equal to ten percent (10%) of the daily dollar trading volume of the Company’s common stock

on its principal market for the prior 30 days (the

“Leak-Out Terms”);

$ 115,500 in cash was paid to an independent third-party escrow

agent where such cash is subject to offset for adjustments to the purchase price and indemnification purposes;

restricted shares of the Company’s common stock, valued at $ 300,000 , were issued to an independent third-party escrow

agent (the “Holdback Shares”).

The Holdback Shares will be released to Seller once p2k achieves certain revenue

milestones for the future performance of p2k.

In August 2018, the FASB issued ASU 2018-15,

"Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs

Incurred in a Cloud Computing Arrangement That Is a Service Contract," which allows for the capitalization of certain implementation

costs incurred in a hosting arrangement that is a service contract.

ASU 2018-15 allows for either retrospective adoption or prospective

adoption to all implementation costs incurred after the date of adoption.

ASU 2018-15 is effective for fiscal years beginning

after December 15, 2019.

The new standard did not have a material impact on the Company’s results of operations or cash

In August 2018, the FASB issued ASU

2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework – Changes to the Disclosure Requirements for Fair Value

The purpose of the standard is to improve the overall usefulness of fair value disclosures to financial statement

users and reduce unnecessary costs to companies when preparing the disclosures.

ASU 2018-13 is effective for for fiscal years beginning

after December 15, 2019 and requires the application of the prospective method of transition (for only the most recent interim

or annual period presented in the initial fiscal year of adoption) to the new disclosure requirements for (1) changes in unrealized

gains and losses included in other comprehensive income and (2) the range and weighted average used to develop significant unobservable

inputs for Level 3 fair value measurements.

ASU 2018-13 also requires prospective application to any modifications to disclosures

made because of the change to the requirements for the narrative description of measurement uncertainty.

The effects of all other

amendments made by ASU 2018-13 must be applied retrospectively to all periods presented.

The new standard did not have a material

impact on the Company’s results of operations or cash flows.

In January 2017, the FASB issued guidance

within ASU 2017-04, Intangibles-Goodwill and Other.

The amendments in ASU 2017-04 simplify the subsequent measurement of goodwill

by comparing the fair value of a reporting unit with its carrying amount.

ASU 2017-04 is effective for fiscal years beginning

after December 15, 2019.

The new standard did not have a material impact on the Company’s results of operations or cash

In June 2016, the FASB issued guidance within ASU 2016-13, Financial Instruments – Credit Losses.

The amendments in

ASU 2016-13 require assets measured at amortized cost and establishes an allowance of credit losses for available for sale debt

ASU 2016-13 is effective for fiscal years beginning after December 15, 2022.

We are currently evaluating the impact

the adoption of this new standard will have on our financial position and results of operations.

The Company has evaluated all other

recent accounting pronouncements and believes that none of them will have a material effect on the Company's financial position,

results of operations or cash flows.

ATL DATA CENTERS, LLC

On December 9, 2020, the Company entered into an Agreement and Plan

of Merger (the “Merger”) with ATL Data Centers LLC (“ATL”) and its members.

At the closing, ATL became a wholly-owned subsidiary of the Company.

In exchange, the Company issued 1,618,285 shares

of restricted common stock based on the

average closing price of the Company’s common stock (as reflected on Nasdaq.com) for the five trading days including and

immediately preceding the closing date of $ 11.988 per share, to the selling members of ATL, of which:

(i) 642,309 shares were fully

earned on closing, and (ii) an additional 975,976 shares issued to escrow and subject to holdback pending satisfaction of certain

future milestones, with all such shares subject to a lock up of no less than 180 days and a leak out of no more than 10% of the

average daily trading value of the prior 30 days.

The consideration remitted in connection with the Merger is subject

to adjustment based on post-closing adjustments to closing cash, indebtedness, and transaction expenses of ATL within 90 days of

The Company also assumed approximately $6.9 million in debts of ATL at closing.

As part of the transaction costs, the

Company issued 41,708 shares of common stock for an aggregate value of $ 545,916 to the broker.

The Company accounted for the acquisition of ATL as an

acquisition of a business under ASC 805.

The Company determined the fair value of the consideration

given to the selling members of ATL in connection with the transaction in accordance with ASC 820 was as follows:

Consideration:

1,618,285 shares of common stock

Total Consideration

The total purchase price was allocated

to identifiable assets deemed acquired, and liabilities assumed, based on their estimated

fair values as indicated below.

The business combination accounting is not yet final and the amounts assigned to the assets acquired

and the liabilities assumed are provisional.

Therefore, this may result in future adjustments to the provisional amounts as new

information is obtained about the facts and circumstances that existed at the acquisition date.

Purchase Price Allocation:

Strategic contract

Other assets and liabilities assumed, net

$ ( 479,864 )

The strategic contract relates

to supply of a critical input to our digital currency mining business.

The other assets and liabilities assumed includes $5.475

million in digital currency mining equipment and notes payable related to this equipment, which was settled by the Company during

the current quarter ended December 31, 2020.

The following is the unaudited pro forma

information assuming the acquisition of GridFabric, p2k Labs, and ATL occurred on October 1, 2019:

For the Three Months Ended

December 31, 2020

December 30, 2019

$ ( 6,458,903 )

$ ( 1,890,994 )

Loss per common share - basic and diluted

Weighted average common shares outstanding - basic and diluted

The unaudited pro forma consolidated

financial results have been prepared for illustrative purposes only and do not purport to be indicative of the results of operations

that actually would have resulted had the acquisition occurred on the first day of the earliest period presented, or of future

results of the consolidated entities.

The unaudited pro forma consolidated financial information does not reflect any operating

efficiencies and cost savings that may be realized from the integration of the acquisition.

All transitions that would be considered

inter-company transactions for proforma purposes have been eliminated.

P2K LABS, INC

On January 31, 2020, the Company, entered into

an Agreement with p2k, and its sole stockholder, Amer Tadayon, whereby the Company purchased all of the issued and outstanding

shares of p2k in exchange for an aggregate purchase price of cash and equity of $ 1,688,935 .

The transaction closed simultaneously

upon the execution of the Agreement by the parties on January 31, 2020.

As a result of the transaction, p2k is now

a wholly-owned subsidiary of the Company.

Pursuant to the terms of the Agreement, the

purchase price was as follows:

$ 1,039,500 in cash was paid to the Seller;

31,183 restricted shares of the Company’s common stock, valued at $ 145,000 , were issued to the Seller (the “Shares”).

The Shares are subject to certain lock-up and leak-out provisions whereby the Seller may sell an amount of Shares equal to ten percent (10%) of the daily dollar trading volume of the Company’s common stock on its principal market for the prior 30 days (the “Leak-Out Terms”);

$ 115,500 in cash was paid to an independent third-party escrow where such cash is subject to offset for adjustments to the purchase price and indemnification purposes;

restricted shares of the Company’s common stock, valued at $ 300,000 , were issued to an independent third-party escrow (the

“Holdback Shares”).

The Holdback Shares will be released to Seller once p2k achieves certain revenue milestones for

the future performance of p2k.

Holdback Shares will also be subject to the Leak-Out Terms once they are released from escrow 12 months from closing.

The Shares and Holdback Shares

were deemed to have a fair market value of $ 4.65 per share which was the closing price of the Company’s common stock

on January 31, 2020.

26,950 Common Stock options which were deemed

to have a fair market value of $ 88,935 on the date of the closing of the Transaction.

The Company accounted

for the acquisition of p2k as an acquisition of a business under ASC 805.

The Company determined

the fair value of the consideration given to the Seller in connection with the Transaction in accordance with ASC 820 was as follows:

The Shares and Holdback Shares were deemed to have a fair market

value of $ 4.65 per share which was the closing price of the Company’s common stock on January 31, 2020.

26,950 common stock options which were deemed to have a fair market value of $ 88,935 on the date of the closing of the Transaction.

The Company accounted for the acquisition of p2k as an

acquisition of a business under ASC 805.

The Company determined the fair value of the consideration

given to the Seller in connection with the Transaction in accordance with ASC 820 was as follows:

Consideration:

2 unchanged sentences

Total Consideration

total purchase price was allocated to identifiable assets deemed acquired, and liabilities assumed, of the Company’s acquisition

of p2k, based on their estimated fair values as indicated below.

The business combination accounting is not yet complete, and the

amounts assigned to the assets acquired and the liabilities assumed are provisional.

Therefore, this may result in future adjustments

to the provisional amounts as new information is obtained about the facts and circumstances that existed at the acquisition date.

The total purchase price was allocated

to identifiable assets deemed acquired, and liabilities assumed, of the Company’s acquisition of p2k, based on their estimated

fair values as indicated below.

Purchase Price Allocation:

3 unchanged sentences

$ ( 121,453 )

following is the unaudited pro forma information assuming the acquisition of p2k occurred on October 1, 2018:

the Three Months Ended

the Nine months ended

$ ( 8,551,301 )

$ ( 3,948,319 )

$ ( 16,402,974 )

$ ( 13,993,029 )

per common share - basic and diluted

average common shares outstanding - basic and diluted

The unaudited pro forma consolidated financial results have been prepared for illustrative

purposes only and do not purport to be indicative of the results of operations that actually would have resulted had the acquisition

occurred on the first day of the earliest period presented, or of future results of the consolidated entities.

The unaudited pro

forma consolidated financial information does not reflect any operating efficiencies and cost savings that may be realized from

the integration of the acquisition.

All transitions that would be considered inter-company transactions for proforma purposes

have been eliminated.

IN INTERNATIONAL LAND ALLIANCE

International

Land Alliance, Inc.

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.

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

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

the terms of the ILAL SPA, ILAL sold, and the Company purchased 1,000 shares

GRIDFABRIC, LLC

On August 31, 2020, the Company entered into a Membership Interest

Purchase Agreement (the “Agreement”) with GridFabric, LLC, (“GridFabric”), and its sole member, Dupont

Hale Holdings, LLC (“Seller”), whereby the Company purchased all of the issued and outstanding membership units of

GridFabric from the Seller (the “Transaction”) in exchange for an aggregate purchase price of cash and stock of up

to $ 1,400,000 (the “Purchase Price”).

The Transaction closed simultaneously with execution on August 31, 2020.

result of the Transaction, GridFabric, an OpenADR software solutions provider, is now a wholly-owned subsidiary of the Company.

Pursuant to the terms of the Agreement, the

Purchase Price was as follows:

cash was paid to the Seller at closing;

was delivered to an independent third-party escrow where such cash is subject to offset

for adjustments to the Purchase Price and indemnification purposes for a period of 12

shares of the Company’s common stock, valued at $ 250,000 ,

were issued to the Seller (the “Shares”).

The Shares are subject to certain

leak-out provisions whereby the Seller

may sell an amount of Shares equal to no more than ten percent (10%) of the daily dollar

trading volume of the Company’s common stock on its principal market for the prior

“Leak-Out Terms”);

d) additional

shares of the Company’s common stock, valued at up to $ 750,000 ,

will be issuable to Seller if GridFabric achieves certain revenue and product release

milestones related to the future performance of GridFabric (the “Earn-out Shares”).

The Earn-Out Shares are also subject to the Leak-Out Terms.

The Shares were issued at a fair market value of $ 9.46

The Earn-Out Shares are accounted for as contingent consideration and the number of shares to be issued will be

determined based on the closing price of the Company’s common stock on the date such milestone event occurs.

The Agreement contains standard representations, warranties, covenants,

indemnification and other terms customary in similar transactions.

In connection with the transaction, the Company also entered into

employment relationships and non-compete agreements with GridFabric’s key employees for a period of 36 months and plans to

issue future equity compensation to said employees, subject to approval of the Company’s board of directors.

The Company accounted for the acquisition of GridFabric

as an acquisition of a business under ASC 805.

The Company determined the fair value of the consideration

given to the Seller in connection with the Transaction in accordance with ASC 820 was as follows:

Consideration:

26,427 shares of common stock

Contingent consideration - common stock issuable upon achievement of

Total Consideration

The total purchase price of the Company’s acquisition

of GridFabric was allocated to identifiable assets deemed acquired, and liabilities assumed, based on their estimated fair values

as indicated below.

Purchase Price Allocation:

Customer list

INVESTMENT IN INTERNATIONAL LAND ALLIANCE

International Land Alliance, Inc.

On November 5, 2019, the Company 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.

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 “ILAL SPA”).

Pursuant to the terms of the ILAL 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 (the

“Stock Transaction”), less certain expenses and fees.

Series B Preferred Stock will accrue cumulative in kind accruals at a rate of 12%

per annum and shall increase by 10% per annum upon the occurrence of any trigger event.

ILAL may redeem by paying in cash

within 9 months from the issuance date.

The Preferred Stock becomes convertible into common stock after 9 months or when

certain triggering events occur.

In the event of a conversion of any shares of the Preferred Stock, the number of conversion

shares is equal to the face value of the Preferred Stock divided by the applicable Conversion Price (defined at 65% of the 5

lowest individual daily volume weighted average prices of the Common Stock from issuance to conversion less $0.05 per share,

but no less than the Floor Price ($0.01).

While the Preferred Stock is outstanding if triggering events occur, the Conversion

Rate may be decreased by 10% and the accrual rate increased by 10% for each triggering event.

believes that, pursuant to the terms and conditions of the ILAL SPA, at least two triggering events have occurred.

good faith belief, the Company believes that as a result of the occurrence of these triggering events, the Series B Preferred

stock should be convertible at the Company’s option, and the interest and conversion rate should be adjusted by 10% for

each such occurrence.

The Preferred

Stock is recorded as an AFS debt security and is reported at its estimated fair value as of June 30, 2020.

As of June 30, 2020,

the Company has identified a derivative instrument in accordance with ASC Topic No.

The Company also received 350,000 shares

(“commitment shares”) of ILAL’s common stock.

Preferred Stock will accrue cumulative in-kind accruals at a rate of 12% per annum and may increase upon the

occurrence of certain events.

The Preferred Stock is now convertible into common stock at a variable rate as calculated

under the agreement terms.

The commitment shares are recorded at

fair value as of December 31, 2020 of $ 136,500 .

The Preferred Stock is recorded as an AFS

debt security and is reported at its estimated fair value as of December 31, 2020.

The Company identified

a derivative instrument in accordance with ASC Topic No.

815 due to the variable conversion feature.

upon certain triggering events that occurred during the period.

815 requires the Company to account for the conversion

feature on its balance sheet at fair value and account for changes in fair value as a derivative gain or loss.

The Black-Scholes

model utilized the following inputs to value the derivative asset at the date in which the derivative asset was determined through

June 30, 2020.

815 requires the

Company to account for the conversion feature on its balance sheet at fair value and account for changes in fair value as a derivative

gain or loss.

The Black-Scholes model utilized the following

inputs to value the derivative asset at the date in which the derivative asset was determined through December 31, 2020.

Fair value assumptions:

June 30, 2020

December 31, 2020

Risk free interest rate

2 unchanged sentences

Expected dividends

connection with the Stock Transaction, ILAL issued 350,000 shares of its common stock to the Company as commitment shares.

commitment shares are recorded at $ 171,500 , or $ 0.49 per share, which was the quoted price of the shares on June 30, 2020.

CONTRACTUAL JOINT VENTURE

April 6, 2020, the Company entered into a joint venture agreement with third party partners to procure, distribute, and supply

Personal Protective Equipment (PPE) for hospitals and frontline medical personnel.

The agreement is effective until December

31, 2020, unless otherwise extended by mutual consent.

Company contributed capital in the amount of $ 660,000 on April 6, 2020 to assist with the procurement of these products, with

the potential for additional monies to be lent by the Company to the contractual joint venture, upon mutual consent if necessary.

resulting income is reported net of all other costs, and CleanSpark recognized $ 20,000

in other income from the agreement for the period ended June 30, 2020.

As of June 30, 2020, the balance of CleanSpark funds

held in the joint venture (“JV”)

account for future orders was $ 660,000 and

is accounted for as a receivable from the third party partner since the Company considers itself as a passive investor in the

The receivable is reported in prepaid expenses and other current assets in the consolidated balance sheet.

July 7, 2020, the Company received its $ 660,000 in initial capital from the JV.

The Company plans to continue to evaluate opportunities

under the JV and will continue to provide capital for the procurement of PPE under this agreement as future opportunities continue

CAPITALIZED SOFTWARE

software consists of the following as of June 30, 2020 and September 30, 2019:

June 30, 2020

Capitalized software consists of the following

as of December 31, 2020 and September 30, 2020:

December 31, 2020

September 30, 2020

1 unchanged sentence

mPulse software

Capitalized Software:

accumulated amortization

Capitalized Software, net

software amortization recorded as cost of revenues and product development expense for the nine months ended June 30, 2020 and

2019 was $ 121,582 and $ 1,034,612 , respectively.

software amortization recorded as cost of revenues and product development expense for the three months ended December 31, 2020

and 2019 was $ 39,286 and $ 39,286 , respectively.

INTANGIBLE ASSETS

consist of the following as of June 30, 2020 and September 30, 2019:

June 30, 2020

The Company amortizes intangible assets

with finite lives over their estimated useful lives, which range between two and twenty years as follows:

15 - 20 years

Customer list and non-compete agreement

Design assets

Engineering trade secrets

Strategic contract

Intangible assets consist of the following

as of December 31, 2020 and September 30, 2020:

December 31, 2020

September 30, 2020

2 unchanged sentences

Trade secrets

Strategic Contract

Intangible assets:

3 unchanged sentences

Intangible assets, net

expense for the nine months ended June 30, 2020 and 2019 was $ 1,952,779 and $ 1,243,610 , respectively.

consist of the following as of June 30, 2020 and September 30, 2019:

June 30, 2020

Amortization expense for the three months

ended December 31, 2020 and 2019 was $ 867,205 ,

including $ 12,683 recorded to cost of revenues, and $ 613,115 ,

respectively.

The Company expects to record amortization

expense of intangible assets over the next 5 years and thereafter as follows:

Fixed assets consist of the following as of

December 31, 2020 and September 30, 2020:

December 31, 2020

September 30, 2020

Machinery and equipment

Mining equipment

Leasehold improvements

2 unchanged sentences

Fixed assets, net

expense for the nine months ended June 30, 2020 and 2019 was $ 51,952 and $ 31,639 , respectively.

Long-term loans payable consist of the following:

June 30, 2020

Depreciation expense for the three months ended

December 31, 2020 and 2019 was $ 223,907 and $ 13,662 , respectively.

Long-term loans payable consists of the following:

December 31, 2020

September 30, 2020

Promissory notes

Current loans payable consist of the following:

June 30, 2020

September 30, 2019

Promissory Notes

Insurance financing loans

Current loans payable:

Unamortized debt discount

Total, net of unamortized discount

5, 2017, the Company executed a 9 % secured promissory note with a face value of $ 150,000 with an investor.

Under the terms of

the promissory note, the Company received $ 150,000 and agreed to make monthly interest payments and repay the note principal 24

months from the date of issuance.

On September 5, 2019, the investor extended the maturity date to September 5, 2021 and the modification

was not deemed substantial.

The note is secured by 15,000 shares which are held in escrow and would be issued to the note holder

only in the case of an uncured default.

As of June 30, 2020, the Company owed $ 150,000 in principal and $ 0 in accrued interest

under the terms of the agreement and recorded interest expense of $ 10,133 and $ 10,096 during the nine months ended June 30, 2020

and 2019, respectively.

11, 2017, the Company executed a 10 %

secured promissory note with a face value of $ 100,000

with an investor.

Under the terms of the promissory note the Company received $ 100,000

and agreed to make monthly interest payments and repay the note principal 24

months from the date of issuance.

The note was secured by 10,000

shares which would be issued to the note holder only in the case of an uncured default.

The Company repaid all principal and outstanding interest on August 13, 2019 and the 10,000 shares of common stock held as collateral

were returned to treasury and cancelled on August 26, 2019.

The Company recorded interest expense of $ 0

for the nine months ended June 30, 2020 and 2019, respectively.

On December 5, 2017, the Company

executed a 9 %

secured promissory note with a face value of $ 50,000

with an investor.

Under the terms of the promissory note the Company received $ 50,000

and agreed to make monthly interest payments and repay the note principal 24

months from the date of issuance.

The note was secured by 5,000

shares which would be issued to the note holder only in the case of an uncured default.

The Company repaid all principal

and outstanding interest on December 5, 2019 and the 5,000 shares of common stock held as collateral were returned to treasury

and cancelled on January 13, 2020.

The Company recorded interest expense of $ 802

for the nine months ended June 30, 2020 and 2019, respectively.

7, 2020, the Company applied for a loan from Celtic Bank Corporation, as lender, pursuant to the Paycheck Protection Program

of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) as administered by the U.S.

Business Administration (the "SBA").

On May 15, 2020, the loan was approved and the Company received

the proceeds from the loan in the amount of $ 531,169

On May 7, 2020, the Company applied for a

loan from Celtic Bank Corporation, as lender, pursuant to the Paycheck Protection Program of the Coronavirus Aid, Relief, and

Economic Security Act (the “CARES Act”) as administered by the U.S.

Small Business Administration (the

On May 15, 2020, the loan was approved and the Company received the proceeds from the loan in the amount of $ 531,169

(the “PPP Loan”).

The PPP Loan took the form of a promissory note issued by the Company that matures on May

The PPP Loan, which took the form of a promissory note issued by the Company (the “PPP

Note”) matures on May

7, 2022 and bears interest at a rate of 1.0 %

Monthly principal and interest payments, less the amount of any potential forgiveness (discussed below), will

commence on December 7, 2020.

The PPP Loan provides for customary events of default, including, among others, those relating

to failure to make payments thereunder.

Borrower may prepay the principal of the PPP Loan at any time without incurring any

prepayment penalties.

The PPP Loan is non-recourse against any individual shareholder, except to the extent that such party

uses the loan proceeds for an unauthorized purpose.

or a portion of the PPP Loan may

be forgiven by the SBA and lender upon application by the Company and upon

documentation of expenditures in accordance with the SBA requirements.

Under the CARES Act, loan forgiveness is available for

the sum of documented payroll costs, covered rent payments, and covered utilities during the applicable period beginning on

the date of loan approval.

For purposes of the CARES Act, payroll costs exclude compensation of an individual employee in

excess of $100,000, prorated annually.

Not more than 25% of the forgiven amount may be for non-payroll costs.

Forgiveness is

reduced if full-time headcount declines, or if salaries and wages for employees with salaries of $100,000 or less annually

are reduced by more than 25%.

In the event the PPP Loan, or any portion thereof, is forgiven pursuant to the PPP, the amount

forgiven is applied to outstanding principal.

The Company recorded interest expense of $ 3,987 and $ 0 for the nine months

ended June 30, 2020 and 2019, respectively.

financing loans

11, 2019, the Company executed an unsecured 5.6% installment loan with a total face value of $ 78,603 with a financial institutional

to finance its insurance policies.

Under the terms of the installment notes the Company received $ 76,800 and agreed to make equal

payments and repay the note 10 months from the date of issuance.

As of September 30, 2019, $ 17,467 in principal

remained outstanding.

The Company repaid all principal and outstanding interest on November 4th, 2019.

Monthly principal and interest payments, less the amount of any potential forgiveness (discussed below), will commence on June 7, 2021.

The PPP Note provides for customary events

of default, including, among others, those relating to failure to make payments thereunder.

The Company may prepay the principal

of the PPP Loan at any time without incurring any prepayment penalties.

The PPP Loan is non-recourse against any individual shareholder,

except to the extent that such party uses the loan proceeds for an unauthorized purpose.

All or a portion of the PPP Loan may

be forgiven by the SBA and lender upon application by the Company beginning 8 weeks after loan approval and upon documentation

of expenditures in accordance with the SBA requirements.

the CARES Act, loan forgiveness is available for the sum of documented payroll costs, covered rent payments, and covered utilities

during the eight-week period beginning on the date of loan approval.

For purposes of the CARES Act, payroll costs exclude compensation

of an individual employee in excess of $100,000, prorated annually.

Not more than 25% of the forgiven amount may be for non-payroll

Forgiveness is reduced if full-time headcount declines, or if salaries and wages for employees with salaries of $100,000

or less annually are reduced by more than 25%.

In the event the PPP Loan, or any portion thereof, is forgiven pursuant

to the CARES Act, the amount forgiven is applied to outstanding principal.

Paycheck Protection Program Flexibility Act

of 2020 (the “PPP Flexibility Act”), enacted on June 5, 2020, amended the Paycheck Protection Program, among others,

(i) extended the covered period from 8 weeks to 24 weeks from the date the PPP Loan is originated, during which PPP

funds needed to be expended in order to be forgiven.

A borrower may submit a loan forgiveness application any time on or before

the maturity date of the loan – including before the end of the covered period – if the borrower has used all of the

loan proceeds for which the borrower is requesting forgiveness, (ii) at least 60% of PPP funds must be spent on payroll costs,

with the remaining 40% available to spend on other eligible expenses, (iii) payments are deferred until the date on which the

amount of forgiveness determined is remitted to the lender.

If a borrower fails to seek forgiveness within 10 months after the

last day of its covered period, then payments will begin on the date that is 10 months after the last day of the covered period.

In addition, the PPP Flexibility Act modified the CARES Act by increasing the maturity date for loans made after the effective

date from two years, to a minimum maturity of five years from the date on which the borrower applies for loan forgiveness.

PPP loans made before the new legislation retain their original two-year term, but may be renegotiated between a lender and a

borrower to match the 5-year term permitted under the PPP Flexibility Act.

Company intends to apply for loan forgiveness

within the required timeframe.

No assurance is provided that the Company will obtain forgiveness of the PPP Loan in whole or in

The Company recorded

interest expense of $ 3,987 and $ 0 for the three months ended December 31, 2020 and 2019, respectively.

CONVERTIBLE NOTES PAYABLE

convertible notes

Securities Purchase Agreement –

December 31, 2018

December 31, 2018, the Company entered into a Securities Purchase Agreement (the “SPA”) with an otherwise unaffiliated

third-party institutional investor (the “Investor”), pursuant to which the Company issued to the Investor a Senior

Secured Redeemable Convertible Debenture (the “Debenture”) in the aggregate face value of $ 5,250,000 .

secured by all assets of the Company.

The Debenture has a maturity date of two years

from the issuance date and the Company agreed to pay compounded interest on the unpaid principal balance of the Debenture at the

rate equal 7.5 % per annum.

Interest is payable on the date

the applicable principal is converted or on maturity.

The interest must be paid in cash and, in certain circumstances, may be paid

in shares of common stock.

transactions described above closed on December 31, 2018.

In connection with the issuance of the Debenture and pursuant to the

terms of the SPA, the Company issued to the Investor 10,000 shares of common stock and a Common Stock Purchase Warrant to acquire

up to 308,333 shares of common stock for a term of three years (the “Warrant”) on a cash-only basis at an exercise

price of $ 20.00 per share with respect to 125,000 Warrant Shares, $ 25.00 with respect to 100,000 Warrant Shares, $ 50.00 with respect

to 50,000 Warrant Shares and $ 75.00 with respect to 33,333 Warrant Shares.

The warrants and shares issued were fair valued and

a debt discount of $ 4,995,000 was recorded as a result of the issuance of the warrants and shares and the recognition of a beneficial

conversion feature on the Debenture.

The Company also paid a $ 5,000 due diligence fee prior to receiving the funding which was

also recorded as a debt discount.

Pursuant to the terms of

the SPA, the Investor agreed to tender to the Company the sum of $ 5,000,000 , of which the Company received the full amount as

of the closing.

to the maturity date, provided that no trigger event has occurred, the Company will have the right at any time upon 30 trading

days’ prior written notice, in its sole and absolute discretion, to redeem all or any portion of the Debenture then outstanding

by paying to the Investor an amount equal to 140% of the of the portion of the Debenture being redeemed.

Short-Term convertible notes

Purchase Agreement – December 31, 2018

On December 31, 2018, the Company

entered into a Securities Purchase Agreement (the “SPA”) with an otherwise unaffiliated third-party institutional

investor (the “Investor”), pursuant to which the Company issued to the Investor a Senior Secured Redeemable

Convertible Debenture (the “Debenture”) in the aggregate face value of $ 5,250,000 .

The note was secured by all assets of the Company.

The Debenture has a maturity date of two

years from the issuance date and the Company agreed to pay compounded interest on the unpaid principal

balance of the Debenture at the rate equal to 7.5 % per

Interest is payable on the date the applicable principal is converted or on maturity.

The interest must be paid in

cash and, in certain circumstances, may be paid in shares of common stock.

The transactions described above closed

on December 31, 2018.

In connection with the issuance of the Debenture and pursuant to the terms of the SPA, the Company issued

to the Investor 10,000 shares of common stock and a Common Stock Purchase Warrant to acquire up to 308,333 shares of common stock

for a term of three years (the “Warrant”) on a cash-only basis at an exercise price of $ 20.00 per share with respect

to 125,000 Warrant Shares, $ 25.00 with respect to 100,000 Warrant Shares, $ 50.00 with respect to 50,000 Warrant Shares and $ 75.00

with respect to 33,333 Warrant Shares.

The warrants and shares issued were fair valued and a debt discount of $ 4,995,000 was recorded

as a result of the issuance of the warrants and shares and the recognition of a beneficial conversion feature on the Debenture.

The Company also paid a $ 5,000 due diligence fee prior to receiving the funding which was also recorded as a debt discount.

Pursuant to the terms of the SPA, the

Investor agreed to tender to the Company the sum of $ 5,000,000 , of which the Company received the full amount as of the closing.

Prior to the maturity date, provided

that no trigger event has occurred, the Company will have the right at any time upon 30 trading days’ prior written notice,

in its sole and absolute discretion, to redeem all or any portion of the Debenture then outstanding by paying to the Investor an

amount equal to 140% of the of the portion of the Debenture being redeemed .

The Investor may convert the Debenture

into shares of the Company’s common stock at a conversion price equal to 95% of the mathematical average of the 5 lowest

individual daily volume weighted average prices of the common stock, less $0.50 per share, during the period beginning on the

issuance date and ending on the maturity date subject to certain floor price restrictions.

In the event certain equity conditions

exist, the Company may require that the Investor convert the Debenture.

In no event shall the Debenture be allowed to affect a

conversion if such conversion, along with all other shares of Company common stock beneficially owned by the Investor and its

affiliates would exceed 4.99% of the outstanding shares of the common stock of the Company.

the note is outstanding if Triggering Events occur the conversion rate may be decreased by 10% and the interest rate increased

by 10% for each Triggering Event which may result in the issuance of additional shares.

On March 4, March 13, and

May 1, 2020 the Company entered into amendments (the “Amendments”) with the Investor.

The Amendments amended the SPA and

Debenture, as follows:

Floor Price of $ 1.50 per share of Common Stock was placed on conversions by the Investor under the Debenture, with the Floor

Price on the First Debenture not applying in the occurrence of an event of default;

Lowered the closing price of the Common Stock

which may trigger an event of default from $ 5.00 per share to $ 1.75 per share for 5 consecutive trading days provided that

any event of default will not be triggered, if at all, until after September 29, 2020;

Deleted the requirement that the Investor convert

the Debenture at maturity and

Allowed the Company, to not reserve or issue to the Investor more shares of Common Stock than were reserved for the Investor

prior to the amendment date until September 29, 2020.

On January 7, 2019, the Investor converted

$ 2,500,000 in principal and $ 875,000 in interest as a conversion premium, for 178,473 shares of the Company common stock at an

effective conversion price of $ 18.90 , due to a trigger event for the Company not filing its annual report on Form 10-K for the

fiscal year ended September 30, 2018 on or before December 31, 2018.

On March 6, 2019, the Investor

converted $ 1,000,000

in principal and $ 350,000

in interest as a conversion premium, for 71,389

shares of the Company common stock at an effective conversion price of $ 18.90 , due to a trigger event for the Company not

filing its annual report on Form 10-K for the fiscal year ended September 30, 2018 on or before December 31, 2018.

On July 9, 2019, in accordance with

the terms of the agreement the Investor was issued an additional 45,614 shares of common stock due to the decrease in stock price

resulting in an effective conversion price of $ 15.06 .

On July 16, 2019, in accordance with

the terms of the agreement the Investor was issued an additional 18,246 shares of common stock due to the decrease in stock price

resulting in an effective conversion price of $ 15.06 .

On July 19, 2019, the Investor converted

$ 500,000 in principal and $ 175,000 in interest as a conversion premium, for 45,109 shares of the Company common stock at an effective

conversion price of $ 15.00 due to a trigger event for the Company not filing its annual report on Form 10-K for the fiscal year

ended September 30, 2018 on or before December 31, 2018.

On August 23, 2019, in accordance with

the terms of the agreement the Investor was issued an additional 43,721 shares of common stock due to the decrease in stock price

resulting in an effective conversion price of $ 7.60 .

On September 16, 2019, in accordance

with the terms of the agreement the Investor was issued an additional 61,500 shares of common stock due to the decrease in stock

price resulting in an effective conversion price of $ 7.30 .

On October 17, 2019, in accordance

with the terms of the agreement the Investor was issued an additional 90,000 shares of common stock due to the decrease in stock

price resulting in an effective conversion price of $ 3.74 .

On December 5, 2019, in accordance

with the terms of the agreement the Investor was issued an additional 97,100 shares of common stock due to the decrease in stock

price resulting in an effective conversion price of $ 3.15 .

On February 10, 2020, in accordance

with the terms of the agreement the Investor was issued an additional 100,000 shares of common stock due to the decrease in stock

price resulting in an effective conversion price of $ 3.15 .

On February 21, 2020, in accordance

with the terms of the agreement the Investor was issued an additional 108,770 shares of common stock due to the decrease in stock

price resulting in an effective conversion price of 2.69 .

On March 2, 2020, in accordance with

the terms of the agreement the Investor was issued an additional 167,100 shares of common stock due to the decrease in stock price

resulting in an effective conversion price of $ 1.87 .

On March 5, 2020, in accordance with

the terms of the agreement the Investor was issued an additional 154,835 shares of common stock due to the decrease in stock price

resulting in an effective conversion price of $ 1.83 .

On March 13, 2020, in accordance with

the terms of the agreement the Investor was issued an additional 116,000 shares of common stock due to the decrease in stock price

resulting in an effective conversion price of $ 1.50 .

On March 20, 2020, in accordance with

the terms of the agreement the Investor was issued an additional 163,800 shares of common stock due to the decrease in stock price

resulting in an effective conversion price of $ 1.50 .

On April 15, 2020, the Investor converted

$ 1,250,000 in principal and $ 437,500 in interest, for 1,125,000 shares of the Company common stock at an effective conversion price

of $ 1.50 due to a trigger event for the Company not filing its annual report on Form 10-K for the fiscal year ended September 30,

2018 on or before December 31, 2018.

As of June 30, 2020, the Debenture was fully converted into shares of the Company’s

common stock.

aggregate debt discount has been accreted and charged to interest expenses as a financing expense in the amount of $ 783,474 during

the nine months ended June 30, 2020.

Purchase Agreement – April 17, 2019

April 17, 2019, the Company entered into a Securities Purchase Agreement (the “Agreement”) with an otherwise unaffiliated

third-party institutional investor (the “Investor”), pursuant to which the Company agreed to issue to the Investor

a $ 10,750,000 face value Senior Secured Redeemable Convertible Promissory Note (the “Debenture”) with a 7.5 % original

issue discount, 215 shares of our Series B Preferred Stock with a 7.5 % original issue discount, a Common Stock Purchase Warrant

(the “Warrant”) on a cash-only basis to acquire up to 230,000 shares (the “Warrant Shares”) of our common

stock and 125,000 shares of our Common Stock.

The aggregate purchase price for the Debenture, the Series B Preferred Stock the

Warrant and the Common Stock is $ 20,000,000 .

(See Notes 13 and 14 for additional details.)

The Debenture was secured by all assets of the Company.

Pursuant to the first closing of the

Agreement, which occurred on April 18, 2019, the Investor agreed to tender to the Company the sum of $ 10,000,000 , for the Debenture,

the Common Stock and the Warrant.

No additional closings to sell the preferred stock have occurred and the Series B preferred stock

was removed under the amendments to the Agreement discussed below.

Debenture has a maturity date of two years from the issuance date and the Company

has agreed to pay compounded interest on the unpaid principal balance of the Debenture at the rate equal 7.5 % per annum.

is payable on the date the applicable principal is converted or on maturity.

The interest must be paid in cash and, in certain

circumstances, may be paid in shares of common stock.

to the maturity date, provided that no trigger event has occurred, the Company will have the right at any time upon 30 trading

days’ prior written notice, in its sole and absolute discretion, to redeem all or any portion of the Debenture then outstanding

by paying to the Investor an amount equal to 145% of the of the portion of the Debenture being redeemed.

Investor may convert the Debenture into shares of the Company’s common stock at a conversion price equal to 90% of the mathematical

average of the 5 lowest individual daily volume weighted average prices of the common stock, less $0.75 per share, during the

period beginning on the issuance date and ending on the maturity date subject to certain floor price restrictions.

certain equity conditions exist, the Company may require that the Investor convert the Debenture.

In no event shall the Debenture

be allowed to effect a conversion if such conversion, along with all other shares of Company common stock beneficially owned by

the Investor and its affiliates would exceed 4.99% of the outstanding shares of the common stock of the Company.

the note is outstanding if Triggering Events occur the conversion rate may be decreased by 10% and the interest rate increased

by 10% for each Triggering Event which may result in the issuance of additional shares.

On March 4, March 13, and

May 1, 2020 the Company entered into amendments (the “Amendments”) with the Investor.

individual daily volume weighted average prices of the common stock, less $0.50 per share, during the period beginning on the issuance

date and ending on the maturity date subject to certain floor price restrictions.

In the event certain equity conditions exist,

the Company may require that the Investor convert the Debenture.

In no event shall the Debenture be allowed to affect a conversion

if such conversion, along with all other shares of Company common stock beneficially owned by the Investor and its affiliates would

exceed 4.99% of the outstanding shares of the common stock of the Company.

While the Debenture is outstanding,

if triggering events occur, the conversion rate may be decreased by 10% and the interest rate increased by 10% for each triggering

event which may result in the issuance of additional shares.

On March 4, March 13, and May 1, 2020

the Company entered into amendments (the “Amendments”) with the Investor.

The Amendments amended the SPA and

Debenture, as follows:

A Floor Price of $ 1.50 per share of Common Stock

was placed on conversions by the Investor under the Debenture, not applying in the occurrence of an event of default;

Lowered the closing price of the Common Stock

which may trigger an event of default from $ 5.00 per share to $ 1.75 per share for 5 consecutive trading days provided that

any event of default will not be triggered, if at all, until after September 29, 2020;

Deleted the requirement that the Investor convert

the Debenture at maturity and

Allowed the Company, to not reserve or issue to the Investor more shares

of Common Stock than were reserved for the Investor prior to the amendment date until September 29, 2020.

The Company and the Investor also agreed to

remove the Second Closing and Company Option to sell an aggregate of an additional $10,000,000 in securities under the Debenture.

As a result of these changes, the Company was authorized to terminate any and all documentation related to the 100,000 shares

of Series B Preferred Stock that the Company's Board of Directors had previously voted to designate back on April 16,

May 5, 2020, the Investor converted $ 750,000 in principal and $ 112,500 in interest, for 575,000

shares of the Company common stock at an effective conversion

price of $ 1.50 .

On May 6, 2020, the Investor converted

$ 600,000 in principal and $ 90,000 in interest, for 460,000 shares of the Company common stock at an effective conversion price

On May 7, 2020, the Investor converted

$ 595,000 in principal and $ 89,250 in interest, for 456,167 shares of the Company common stock at an effective conversion price

On May 8, 2020, the Investor converted

$ 350,000 in principal and $ 52,500 in interest, for 268,333 shares of the Company common stock at an effective conversion price

On May 11, 2020, the Investor converted

$ 350,000 in principal and $ 52,500 in interest, for 268,333 shares of the Company common stock at an effective conversion price

On May 12, 2020, the Investor converted

$ 730,000 in principal and $ 109,500 in interest, for 559,667 shares of the Company common stock at an effective conversion price

On May 13, 2020, the Investor converted

$ 375,000 in principal and $ 56,250 in interest, for 287,500 shares of the Company common stock at an effective conversion price

On May 18, 2020, the Investor converted

$ 360,000 in principal and $ 54,000 in interest, for 276,000 shares of the Company common stock at an effective conversion price

On May 19, 2020, the Investor converted

$ 1,020,000 in principal and $ 153,000 in interest, for 782,000 shares of the Company common stock at an effective conversion price

On May 20, 2020, the Investor converted

$ 380,000 in principal and $ 57,000 in interest, for 291,333 shares of the Company common stock at an effective conversion price

On May 21, 2020, the Investor converted

$ 2,140,000 in principal and $ 321,000 in interest, for 1,640,667 shares of the Company common stock at an effective conversion price

On May 22, 2020, the Investor converted

$ 3,100,000 in principal and $ 465,000 in interest, for 2,376,667 shares of the Company common stock at an effective conversion price

As of June 30, 2020, the Debenture

1) A Floor Price of $ 1.50 per share of Common Stock was placed on conversions

by the Investor under the Debenture, with the Floor Price on the First Debenture not applying in the occurrence of an event of

2) Lowered the closing price of the Common Stock which may trigger an

event of default from $ 5.00 per share to $ 1.75 per share for 5 consecutive trading days provided that any event of default will

not be triggered, if at all, until after September 29, 2020;

3) Deleted the requirement that the Investor convert the Debenture at

maturity and;

4) Allowed the Company, to not reserve or issue to the Investor more

shares of Common Stock than were reserved for the Investor prior to the amendment date until September 29, 2020.

As of September 30, 2020, the Debenture

was fully converted into shares of the Company’s common stock.

aggregate debt discount has been accreted and charged to interest expenses as a financing expense in the amount of $ 8,320,205

during the nine months ended June 30, 2020.

1, 2019, the Company adopted the amendments to ASC 842, Leases , which requires lessees to recognize lease assets and

liabilities arising from operating leases on the balance sheet.

The Company adopted the new lease guidance using the modified

retrospective approach and elected the transition option issued under ASU 2018-11, Leases (Topic 842) Targeted Improvements ,

allowing entities to continue to apply the legacy guidance in ASC 840, Leases , to prior periods, including disclosure

requirements.

Accordingly, prior period financial results and disclosures have not been adjusted.

has operating leases under which it leases its branch offices and corporate headquarters, one of which is with a related party.

Upon adoption of the new lease guidance, on October 1, 2019, the Company recorded a right of use asset and corresponding lease

liability of $ 85,280 and $ 85,280 , respectively, on the consolidated balance sheet.

As of June 30, 2020, the Company's operating

lease right of use asset and operating lease liability totaled $ 52,280 and $ 52,999 , respectively.

A weighted average

discount rate of 10 % was used in the measurement of the right of use asset and lease liability as of October 1,

As the rate implicit in the lease is not readily determinable, the Company's incremental collateralized borrowing rate is

used to determine the present value of lease payments.

This rate gives consideration to the applicable Company collateralized

borrowing rates and is based on the information available at the commencement date.

The Company has elected to apply the short-term

lease measurement and recognition exemption to leases with an initial term of 12 months or less;

therefore, these leases are not

recorded on the Company’s Consolidated Balance Sheet, but rather, lease expense is recognized over the lease term on a straight-line

Company's leases have remaining lease terms between one year to two years , with a weighted average lease term of 0.7 years

at June 30, 2020.

The aggregate debt discount has been accreted and charged

to interest expenses as a financing expense in the amount of $ 0 and $ 157,379 during the three months ended December 31, 2020 and

2019, respectively.

Securities Purchase Agreement –

April 17, 2019

On April 17, 2019, the Company entered

into a Securities Purchase Agreement (the “Agreement”) with an otherwise unaffiliated third-party institutional investor

(the “Investor”), pursuant to which the Company agreed to issue to the Investor a $ 10,750,000 face value Senior Secured

Redeemable Convertible Promissory Note (the “Note”) with a 7.5 % original issue discount, 215 shares of our Series

B Preferred Stock with a 7.5 % original issue discount, a Common Stock Purchase Warrant (the “Warrant”) on a cash-only

basis to acquire up to 230,000 shares (the “Warrant Shares”) of our common stock and 125,000 shares of our Common Stock.

The aggregate purchase price for the Note, the Series B Preferred Stock the Warrant and the Common Stock is $ 20,000,000 .

The Note was secured by all assets of the Company.

Pursuant to the first closing of

the Agreement, which occurred on April 18, 2019, the Investor agreed to tender to the Company the sum of $ 10,000,000 ,

for the Note, the Common Stock and the Warrant.

No additional closings to sell the preferred stock have occurred and the

Series B preferred stock was removed under the amendments to the Agreement discussed below.

The Note has a maturity date of two

years from the issuance date and the Company has agreed to pay compounded interest on the unpaid principal balance of

the Note at the rate equal 7.5 %

Interest is payable on the date the applicable principal is converted or on maturity.

The interest must be paid in

cash and, in certain circumstances, may be paid in shares of common stock.

Prior to the maturity date, provided

that no trigger event has occurred, the Company will have the right at any time upon 30 trading days’ prior written notice,

in its sole and absolute discretion, to redeem all or any portion of the Note then outstanding by paying to the Investor an

amount equal to 145% of the of the portion of the Note being redeemed.

The Investor may convert the Note

into shares of the Company’s common stock at a conversion price equal to 90% of the mathematical average of the 5 lowest

individual daily volume weighted average prices of the common stock, less $0.75 per share, during the period beginning on the issuance

date and ending on the maturity date subject to certain floor price restrictions.

In the event certain equity conditions exist,

the Company may require that the Investor convert the Note.

In no event shall the Note be allowed to effect a conversion

if such conversion, along with all other shares of Company common stock beneficially owned by the Investor and its affiliates would

exceed 4.99% of the outstanding shares of the common stock of the Company.

While the Note is outstanding if triggering

events occur the conversion rate may be decreased by 10% and the interest rate increased by 10% for each triggering event which

may result in the issuance of additional shares.

On March 4, March 13, and May 1, 2020

the Company entered into amendments (the “Amendments”) with the Investor.

The Amendments amended the Agreement and Note, as

1) A Floor Price of $ 1.50 per share of Common Stock was placed on conversions

by the Investor under the Note, not applying in the occurrence of an event of default;

2) Lowered the closing price of the Common Stock which may trigger an

event of default from $ 5.00 per share to $ 1.75 per share for 5 consecutive trading days provided that any event of default will

not be triggered, if at all, until after September 29, 2020;

3) Deleted the requirement that the Investor convert the Note at maturity;

4) Allowed the Company, to not reserve or issue to the Investor more shares of Common Stock than

were reserved for the Investor prior to the amendment date until September 29, 2020;

5) The Company and the Investor also agreed to remove

the Second Closing and Company Option to sell an aggregate of an additional $10,000,000 in securities under the Note.

result of these changes, the Company was authorized to terminate any and all documentation related to the 100,000 shares of Series

B Preferred Stock that the Company's Board of Directors had previously voted to designate back on April 16, 2019.

As of September 30, 2020, the Note

was fully converted into shares of the Company’s common stock.

The aggregate debt discount has been

accreted and charged to interest expenses as a financing expense in the amount of $ 0 and $ 1,354,795 during

the three months ended December 31, 2020 and 2019, respectively.

Effective October 1, 2019, the Company

accounts for its leases under ASC 842, which requires lessees to recognize lease assets and liabilities arising from operating

leases on the balance sheet.

The Company adopted the new lease guidance using the modified retrospective approach and elected the

transition option issued under ASU 2018-11, Leases (Topic 842) Targeted Improvements , allowing entities to continue

to apply the legacy guidance in ASC 840, Leases , to prior periods, including disclosure requirements.

prior period financial results and disclosures have not been adjusted.

The Company has operating leases under

which it leases its branch offices, corporate headquarters and data center, one of which is with a related party.

As of December

31, 2020, the Company's operating lease right of use asset and operating lease liability totaled $ 865,441 and $ 865,441 ,

respectively.

A weighted average discount rate of 10 % was

used in the measurement of the right of use asset and lease liability.

As the rate implicit in the lease is not readily determinable,

the Company's incremental collateralized borrowing rate is used to determine the present value of lease payments.

This rate gives

consideration to the applicable Company collateralized borrowing rates and is based on the information available at the commencement

The Company has elected to apply the short-term lease measurement and recognition exemption to leases with an initial term

of 12 months or less;

therefore, these leases are not recorded on the Company’s Consolidated Balance Sheet, but rather,

lease expense is recognized over the lease term on a straight-line basis.

The Company's operating leases have

remaining lease terms between one year to two years , with a weighted average lease term of 1.39 years

at December 31, 2020.

Some leases include multiple year renewal options.

Company’s decision to exercise these renewal options is based on an assessment of its current business needs and market

factors at the time of the renewal.

Currently, the Company has no leases for which the option to renew is reasonably certain and

therefore, options to renew were not factored into the calculation of its right of use asset and lease liability as of October

The following

is a schedule of the Company's operating lease liabilities by contractual maturity as of June 30, 2020:

The Company’s decision to exercise these renewal

options is based on an assessment of its current business needs and market factors at the time of the renewal.

Currently, the Company

has no leases for which the option to renew is reasonably certain and therefore, options to renew were not factored into the calculation

of its right of use asset and lease liability as of December 31, 2020.

These operating leases also have a weighted average discount

rate of 10 % at December 31, 2020.

The following is a schedule of the

Company's operating lease liabilities by contractual maturity as of December 31, 2020:

Fiscal year ending September 30, 2021

3 unchanged sentences

Total present value of lease liabilities

Total operating

lease costs of $ 38,328 and $ 38,523 the nine months ended June 30, 2020 and 2019, respectively, were included

as part of administrative expense.

PARTY TRANSACTIONS

Bradford – Chief Executive Officer, Director and Former Chief Financial Officer

the nine months ended June 30, 2019, the Company had a consulting agreement with ZRB Holdings, Inc., an entity wholly owned by

Zachary Bradford, our Chief Executive Officer and director, for management services.

In accordance with this agreement, as amended,

Bradford earned $ 353,140 during the nine months ended June 30, 2019.

The agreement was terminated in October 2019 when Mr.

Bradford stepped down as the CFO and took the position of CEO and accepted the associated employment agreement.

the nine months ended June 30, 2020, the Company paid Blue Chip Accounting, LLC (“Blue Chip”) $ 86,658

for accounting, tax, administrative services and reimbursement for office supplies.

Blue Chip is 50 %

beneficially owned by Mr.

Blue Chip performed all services at discounted

rates and none of the charges were associated with work performed by Mr.

The services consisted of preparing and filing

tax returns, bookkeeping, accounting and administrative support assistance.

The Company also sub-leases office space from Blue

Chip (see note 11 for additional details).

During the nine months ended June 30, 2020, $ 10,150

was paid to Blue Chip for rent.

Huber – Former Officer and Director

28, 2018, the Company executed an agreement with Zero Positive, LLC an entity controlled by Mr.

In accordance with the

agreement with Zero Positive, LLC, Mr.

Huber earned $ 125,154 and $ 127,772 , during the nine months ended June 30, 2020 and 2019.

March 12, 2019, the Agreement was terminated upon the execution of a separation agreement.

All amounts owed from all agreements

totaling $ 90,000 were paid in full.

28, 2018, in connection with the consulting agreement executed with Zero Positive, LLC, the Company issued warrants to purchase

90,000 shares of common stock at an exercise price of $ 8.00 per share to Zero Positive.

The warrants were valued at $ 2,607,096

using the Black Scholes option pricing model based upon the following assumptions:

term of 10 years , risk free interest rate of

3.05 % , a dividend yield of 0 % and volatility rate of 191 % .

The warrants vest as follows:

30,000 vested immediately, the balance

vest evenly on the last day of each month over forty-two months beginning August 31, 2018 .

As of June 30, 2020, 62,857 warrants

had vested, and the Company recorded an expense of $ 372,442 and 372,442 during the nine months ended June 30, 2020 and 2019.

Schultz- Chairman of the Board and Former Chief Executive Officer

Company has a consulting agreement with Matthew Schultz, our former Chief Executive Officer, for management services.

In accordance

with this agreement, as amended, Mr.

Schultz earned $ 0 and $ 353,140 , respectively during the nine months ended June 30, 2020 and

The agreement was terminated on October 7, 2019 when Mr.

Schultz stepped down as the CEO and took the position of Chairman

of the Board.

Schultz received $ 189,000 as compensation for his services as chairman of the board during the nine months ended

June 30, 2020.

Company additionally entered into an agreement on November 15, 2019 with an organization to provide general investor relations

and consulting services that Mr.

Schultz is affiliated with.

The Company paid the organization $ 49,500 in fees plus $ 176,000 in

expense reimbursements for the nine months ended June 30, 2020.

Total operating lease costs of $ 117,223 and $ 21,318 for

the three months ended December 31, 2020 and 2019, respectively, were included as part of administrative expense.

The Company has financing leases in relation

to the equipment used at its data center.

The following is a schedule of the Company’s financing lease liabilities by contractual

maturity as of December 31, 2020:

Fiscal year ending September 30, 2021

Fiscal year ending September 30, 2022

Fiscal year ending September 30, 2023

Fiscal year ending September 30, 2024

Total Lease Payments

imputed interest

Total present value of lease liabilities

These financing leases have a weighted average

lease term of 3.02 years and a weighted average discount rate of 8.6 % at December 31, 2020.

RELATED PARTY TRANSACTIONS

Zachary Bradford – Chief

Executive Officer and Director

During the three months ended

December 31, 2020, the Company paid Blue Chip Accounting, LLC (“Blue Chip”) $ 30,000 for accounting,

tax, administrative services and reimbursement for office supplies.

Blue Chip is 50 % beneficially owned by Mr.

None of the services were associated with work performed by Mr.

The services consisted of bookkeeping,

accounting, and administrative support assistance.

The Company also sub-leases office space from Blue Chip (see Note 15 for

additional details).

During the three months ended December 31, 2020, $ 4,575 was paid to Blue Chip for rent.

Schultz - Chairman of the Board

The Company entered into an agreement

on November 15, 2019 with an organization to provide general investor relations and consulting services that Mr.

Schultz is affiliated

The Company paid the organization $ 27,000 in fees plus $ 85,150 in expense reimbursements for the three months ended December

The agreement was terminated in March 2020.

McNeill, Roger Beynon, Dr.

Tom Wood –Directors

Effective January

1, 2019, the Company agreed to pay non-executive independent board members $ 2,500 per month.

McNeill earned $ 22,500 and $ 15,000

in Board compensation during the nine months ended June 30, 2020 and 2019.

Beynon and Dr.

Wood each earned $ 22,500 and $ 0

in Board compensation during the nine months ended June 30, 2020 and 2019.

Company’s authorized capital stock consists of 20,000,000 shares of common stock and 10,000,000 shares of preferred stock,

par value $ 0.001 per share.

As of June 30, 2020, there were 16,123,507 shares of common stock issued and outstanding and 1,750,000

shares of preferred stock issued and outstanding.

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 the consolidated financial statements and notes thereto as of and for the periods ended June

30, 2020 and September 30, 2019, have been adjusted for the stock split as if such stock split occurred on the first day of the

first period presented.

to Articles of Incorporation

9, 2019, the Company filed a Certificate of Amendment to its Articles of Incorporation to increase its authorized shares of common

stock from 100,000,000 to 200,000,000 .

The amendment was previously approved by written consent of the Company’s Board and

more than a majority of the voting power of its stockholders and delivered to stockholders of record as of the close of business

July 2, 2019 pursuant to a Definitive Information Statement on Schedule 14C.

As a result of the reverse split mentioned above,

the effect of the filed amendment reduced the authorized shares to 20,000,000 .

4, 2019, pursuant to Article IV of our Articles of Incorporation, our Board of Directors voted to increase the number of shares

of preferred stock designated as Series A Preferred Stock from one million ( 1,000,000 ) shares to two million ( 2,000,000 ) shares,

par value $ 0.001 .

Under the Certificate

of Designation, holders of Series A Preferred Stock will be entitled to quarterly dividends on 2% of our earnings before interest,

taxes and amortization.

STOCKHOLDERS EQUITY

The Company’s authorized capital

stock consists of 35,000,000 shares of common stock and 10,000,000 shares of preferred stock, par value $ 0.001 per share.

December 31, 2020, there were 24,070,531 shares of common stock issued and outstanding and 1,750,000 shares of preferred stock

issued and outstanding.

December 5, 2019, the Company’s Board of Directors approved a reverse stock split of the Company’s common stock, par

value $ 0.001 per share.

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 the consolidated financial statements

and notes thereto as of and for the interim period ended December 31, 2019 and fiscal year ended September 30, 2020, have been

adjusted for the stock split as if such stock split occurred on the first day of the first period presented.

Amendment to Articles of Incorporation

On October 4, 2019, pursuant to Article

IV of our Articles of Incorporation, our Board of Directors voted to increase the number of shares of preferred stock designated

as Series A Preferred Stock from one million ( 1,000,000 ) shares to two million ( 2,000,000 ) shares, par value $ 0.001 .

Under the Certificate of Designation, holders

of Series A Preferred Stock will be entitled to quarterly dividends on 2% of our earnings before interest, taxes and amortization.

The dividends are payable in cash or common stock.

The holders will also have a liquidation preference

on the state value of $0.02 per share plus any accumulated but unpaid dividends.

The holders are further entitled to have us redeem

their Series A Preferred Stock for three shares of common stock in the event of a change of control and they are entitled to vote

together with the holders of our common stock on all matters submitted to shareholders at a rate of forty-five (45) votes for

each share held.

The rights of

the holders of Series A Preferred Stock are defined in the relevant Amendment to the Certificate of Designation filed with the

Nevada Secretary of State on October 9, 2019.

of Preferred Stock Designation

16, 2019, pursuant to Article IV of our Articles of Incorporation, the Company’s Board of Directors voted to designate a

class of preferred stock entitled Series B Preferred Stock, consisting of up to one hundred thousand ( 100,000 ) shares, par value

Under the Certificate of Designation, the holders of Series B Preferred Stock are entitled to the following powers, designations,

preferences and relative participating, optional and other special rights, and the following qualifications, limitations and restrictions,

among others as set forth in the Certificate of Designation:

The holders of shares of Series B Preferred

Stock will have no right to vote on any matters, questions or proceedings of the Company including, without limitation, the

election of directors;

on the date of issuance, the Series B Preferred Stock will accrue cumulative in kind accruals (“the Accruals”)

at the rate of 7.5 % per annum;

Upon any liquidation, dissolution or winding

up of the Company, the holders of the Series B Preferred Stock will be entitled to be paid out of the assets of the Company

available for distribution to its stockholders an amount with respect to each share of Series B Preferred Stock equal to $ 5,000.00

(the “Face Value”), plus an amount equal to any accrued but unpaid Accruals thereon (the “Liquidation Value”);

On maturity, the Company may redeem the Series

B Preferred Stock by paying the holder the Liquidation Value;

Before maturity, the Company may redeem the

Series B Preferred stock on 30 days’ notice by paying 145 % of the outstanding Face Value per share;

If the Company determines to liquidate, dissolve

or wind-up its business and affairs, the Company will, within three trading days of such determination and prior to effectuating

any such action, redeem all outstanding shares of Series B Preferred Stock;

In the event of a conversion of any shares of

Series B Preferred Stock, the Company will (a) satisfy the payment of the Conversion Premium, which is defined as the Face

Value of the shares converted multiplied by the product of 7.5% and the number of whole years between issuance and maturity,

and (b) issue to the holder of the shares of Series B Preferred Stock a number of conversion shares equal to the Face Value

divided by the applicable Conversion Price (defined as 90% of the of the 5 lowest individual daily volume weighted average

prices of the Common Stock from issuance to conversion less $0.75 per share, but no less than the Floor Price ($3.50) with

respect to the number of shares converted;

While the note is outstanding if Triggering Events occur the conversion rate may

be decreased by 10% and the interest rate increased by 10% for each Triggering Event.

In the event of certain defaults, conversion

price may not be subject to a floor.

if at any time the Company grants, issues or

sells any options, convertible securities or rights to purchase stock, warrants, securities or other property pro rata to

the record holders of any class of shares of Common Stock (the “Purchase Rights”), then holder will be entitled

to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which holder could have acquired

if holder had held the number of shares of Common Stock acquirable upon conversion of Series B Preferred Stock;

At maturity ( 2 years from issuance), all outstanding

shares of Series B Preferred Stock shall automatically convert into common stock at the Conversion Price;

At no time may the holders of Series B Preferred

Stock own more than 4.99 % of the outstanding common stock in the Company.

On March 6, 2020, the Company

withdrew the Certificate of Designation for the Series B Preferred Stock.

At the time of withdrawal, no shares of Series B Preferred

Stock were issued and outstanding.

issuances during the nine months ended June 30, 2020

The holders will also have a liquidation preference on the state value of $0.02

per share plus any accumulated but unpaid dividends.

The holders are further entitled to have us redeem their Series A Preferred

Stock for three shares of common stock in the event of a change of control and they are entitled to vote together with the holders

of our common stock on all matters submitted to shareholders at a rate of forty-five (45) votes for each share held.

The rights of the holders of Series A Preferred

Stock are defined in the relevant Amendment to the Certificate of Designation filed with the Nevada Secretary of State on October

On October 2, 2020, the Company

filed a Certificate of Amendment to its Articles of Incorporation with the Nevada Secretary of State to increase its authorized

shares of common stock to 35,000,000 .

On October 7, 2020, the Company

executed that certain first amendment to 2017 Equity Incentive Plan to increase its option pool from 300,000 to 1,500,000 shares

of common stock (the “Plan Amendment”).

Certificate of Preferred Stock Designation

On April 16, 2019, pursuant to Article

IV of our Articles of Incorporation, the Company’s Board of Directors voted to designate a class of preferred stock entitled

Series B Preferred Stock, consisting of up to one hundred thousand ( 100,000 ) shares, par value $ 0.001 .

Shares of the Series B Preferred

Stock were never issued and on March 6, 2020, the Company withdrew the Certificate of Designation for the Series B Preferred Stock.

At the time of withdrawal, no shares of Series B Preferred Stock were issued and outstanding.

Common Stock issuances during the three

months ended December 31, 2020

The Company issued 4,444,445

shares of common stock in accordance with the terms of the convertible debt agreement due to the decrease in stock price.

(See Note 10 for additional details.)

The Company issued 22,000 shares of

common stock for services rendered to independent consultants at a fair value of $ 54,000 .

The Company issued 793 shares of common

stock as a result of rounding related to the reverse stock split.

shares of the Company’s common stock in connection with its underwritten equity offering at a price of $ 9.00 per share

for net proceeds of $ 37.05 million.

The Company issued 236,000 shares

of common stock as settlement of accrued bonus compensation related to the year ended September 30, 2020.

The fair value of these

shares is $ 1.9 million and was fully expensed for in the prior year.

The Company also issued 222,249 shares of common stock for

the current year and the fair value of these shares is $ 546 thousand and has been fully expensed during the three months ended

December 31, 2020.

The Company issued 1,618,285 shares

of common stock in relation to the acquisition of ATL Data Centers LLC (See Note 3 for additional details.)

The Company issued 43,188 shares

of common stock for services rendered for a total fair value of $ 561 thousand and has been fully expenses during the three months

ended December 31, 2020.

The Company issued 115,385 shares of

common stock in relation to the acquisition of p2k (See note 3 for additional details.)

In relation to the Securities Purchase

Agreement dated December 31, 2018, the Company issued 1,125,000 shares of common stock for the conversion of $ 1,250,000 in principal

and $ 437,500 in interest at an effective conversion price of $ 1.50 .

(See Note 10 for additional details)

relation to the Securities Purchase Agreement dated April 17, 2019, the Company issued 8,241,665 shares of common stock for

the conversion of $ 10,750,000 in principal and $ 1,612,500 in interest as a conversion premium at an effective conversion

price of $ 1.50 .

(See Note 10 for additional details)

The Company issued 25,019 shares of common stock as board and

executive compensation at a fair value of $ 57,500 .

returned during the nine months ended June 30, 2020

result of a note payoff on December 5, 2019, 5,000 shares common stock were returned to treasury and cancelled on January 13,

result of the cancellation of an investor relations services contract, 25,000 shares were returned to treasury and cancelled on

February 10, 2020.

Preferred Stock issuances during the nine months ended June 30, 2020

common stock in relation to the exercise of stock options and warrants.

(See Notes 13 and 14 for additional details.)

Common Stock issuances during the three

months ended December 31, 2019

The Company issued 187,100 shares in

accordance with the terms of the convertible debt agreement due to the decrease in stock price.

The Company issued 2,000 shares for

services rendered to an independent consultant.

The Company issued 793 shares for stock

split true up due to rounding.

Series A Preferred Stock issuances during

the three months ended December 31, 2019

4, 2019, the Company authorized the issuance of a total of seven hundred and fifty thousand ( 750,000 ) shares of its designated

Series A Preferred Stock to members of its board of directors for services rendered.

A fair value of $ 0.02 per share was

determined by the Company.

Series A Preferred Stock to three members of its board of directors for services rendered.

fair value of $ 0.02 per share was determined by the Company.

Director fees of $ 15,000 was recorded as a result of the stock issued.

issuances during the nine months ended June 30, 2019

the period commencing October 1, 2018 through June 30, 2019, the Company received $ 361,800 from 14 investors pursuant to private

placement agreements with the investors to purchase 45,225 shares of the Company’s common stock at a purchase price equal

to $ 8.00 for each share of common stock.

September 11, 2018, the Company entered into an agreement with Regal Consulting, LLC for investor relations services.

agreement the Company agreed to issue 3,000 shares of the Company’s common stock per month as compensation for services

plus additional cash compensation.

During the nine months ended June 30, 2019, the Company issued a total of 18,000 shares of its common stock in accordance with the agreement.

Stock compensation

of $ 531,600 was recorded as a result of the stock issued under the agreement.

October 15, 2018, the Company entered into an agreement with a consultant for services.

Under this agreement the Company

agreed to issue 3,000

shares of the Company’s common stock which vest evenly over a six month period from the agreement date.

During the nine

months ended June 30, 2019, the Company recorded stock compensation of $ 68,819

was recorded as a result of the stock issued under the agreement.

2, 2018, an investor exercised warrants to purchase 300 shares of the Company’s $0.001 par value common stock at a purchase

price equal to $ 3.63 for each share of Common stock.

The Company receive $ 1,088 as a result of this exercise.

Company issued 10,000 shares in relation to a Securities purchase agreement executed on December 31, 2018.

(See Note 10 for additional

December 31, 2018, the Company settled $ 25,000 of a promissory note through the issuance of 2,500 shares of the

Company’s common stock.

The shares were valued at $ 51,225 and a $ 26,225 loss on settlement of debt was recorded as a

result of the issuance.

7, 2019, a total of 144,417 shares of the Company’s common stock were issued in connection with the cashless exercise of

150,000 common stock warrants at an exercise price of $ 0.83 .

January 7, 2019, an investor converted $ 2,500,000 in principal and $ 875,000 in interest, for

178,472 shares of the Company’s common stock at an effective conversion price of $ 18.90 .

22, 2019, in accordance with a merger agreement, the Company issued 175,000 shares of the Company’s common stock.

26, 2019, a total of 24,628 shares of the Company’s common stock were issued in connection with the cashless exercise of

25,000 common stock warrants at an exercise price of $ 0.83 .

6, 2019, the investor converted $ 1,000,000 in principal and $ 350,000 in interest as a conversion premium, for 71,389 shares of

the Company’s common stock at an effective conversion price of $ 18.90 .

26, 2019, a total of 48,857 shares of the Company’s common stock were issued in connection with the cashless exercise of

50,000 common stock warrants at an exercise price of $ 0.83 .

9, 2019, an investor exercised warrants to purchase 900 shares of the Company’s common stock at a purchase price equal to

The Company received $ 3,267 as a result of this exercise.

Company issued 125,000 shares in relation to the Securities purchase agreement executed on April 17, 2019.

12, 2019, the Company entered into an agreement with SylvaCap Media for investor relations services.

Under this agreement, the

Company agreed to issue 25,000 shares of the Company’s common stock as compensation for services for a six month period

plus additional cash considerations.

The 25,000 shares vest upon issuance but if the agreement is terminated within 90 days of

execution, the shares are to be returned and cancelled.

The Company terminated the agreement and the shares were returned on February

returned during the nine months ended June 30, 2019

a result of a conversion of a note on September 21, 2018, 13,750 shares common stock which were previously issued as a

commitment fee were returned to treasury and cancelled on December 21, 2018.

a result of a note payoff on January 3, 2019, 13,750 shares of common stock which were previously issued as a commitment

fee returned to treasury and cancelled on January 8, 2019.

STOCK WARRANTS

The following

is a summary of stock warrant activity during the nine months ended June 30, 2020.

The following is a summary of stock warrant

activity during the three months ended December 31, 2020.

Number of Warrant Shares

3 unchanged sentences

Warrants expired

Warrants cancelled

Warrants canceled

Warrants exercised

Balance, June 30, 2020

As of June 30,

2020, the outstanding warrants have a weighted average remaining term of 2.17 years and an intrinsic value of $ 194,250 .

As of June 30,

2020, there are warrants exercisable to purchase 1,286,922

shares of common stock in the Company and 27,143 unvested

Balance, December 31, 2020

During the three months ended December 31,

2020, a total of 31,096 shares of the Company’s common stock were issued in connection with the exercise of warrants at exercise

prices ranging from $ 3.63 and $ 8.00 .

On December 31, 2020, a total of 73,906 shares

of the Company’s common stock were issued in connection with the cashless exercise of 76,200 common stock warrants

at an exercise price of $ 0.83 .

As of December 31, 2020, the outstanding warrants

have a weighted average remaining term of was 1.50 years and an intrinsic value of $ 11,130,019 .

As of December

31, 2020, there are warrants exercisable to purchase 1,191,769 shares of common stock in the

Company and 18,571 unvested

warrants outstanding that cannot be exercised until vesting conditions are met.

the warrants require a cash investment to exercise as follows, 5,000

required a cash investment of $ 8.00 per share, 449,865

require a cash investment of $ 15.00 per share, 125,000

require a cash investment of $ 20.00 per share, 103,000

require a cash investment of $ 25.00 per share, 200,000

require an investment of $ 35.00 per share, 10,000

require an investment of $ 40.00 per share, 60,000

require an investment of $ 50.00 per share, 38,333

require a cash investment of $ 75.00 per share and 5,000

require a cash investment of $ 100.00 per share.

of the outstanding warrants contain provisions allowing a

cashless exercise at their respective exercise prices.

Warrant activity

for the nine months ended June 30, 2019

October 15, 2018, the Company entered into an agreement with a consultant for services.

Under this agreement the Company agreed

to issue 3,000 warrants to purchase shares of the Company’s common stock at an exercise price of $ 25.00 for a period of

five years which vest evenly over a six-month period from the agreement date.

During the nine months ended June 30, 2020 and 2019

the Company recorded stock compensation of $ 0 and $ 68,643 as

a result of the stock issued under the agreement.

The warrants were valued using the black-Scholes valuation model.

31, 2018, in connection with a Securities purchase agreement (see Note 10 for additional details) the Company issued Common Stock

Purchase Warrants to acquire up to 308,333

shares of common stock for a term of three years on a cash-only basis at an exercise

price of $ 20.00 per share with respect to 125,000

Warrant Shares, $ 25.00 with respect to 100,000

Warrant Shares, $ 50.00 with respect to 50,000

Warrant Shares and $ 75.00 with respect to 33,333

Warrant Shares.

28, 2018, in connection with the Consulting agreement executed with Zero Positive, LLC the Company issued warrants to

purchase 90,000 shares of common stock at an exercise price of $ 8.00 per share to Zero Positive.

The warrants were valued at

$ 2,607,096 using the Black Scholes option pricing model.

The warrants vest as follows:

30,000 warrants vested immediately,

the balance vest evenly on the last day of each month over the forty-two months beginning August 31, 2018 .

As of June 30,

2020, 58,571 warrants had vested, and the Company recorded an expense of $ 372,442 and 372,442 during the nine months ended

June 30, 2020 and 2019.

(See Note 10 for additional details.)

January 22, 2019, in accordance with a merger agreement, CleanSpark issued;

year warrant to purchase 50,000

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

shares of CleanSpark common stock at an exercise price of $ 20.00 per share.

warrants were valued at $ 1,102,417

and $ 1,102,107 ,

respectively.

2019, in connection with a Securities purchase agreement, the Company issued Common Stock Purchase Warrants to acquire up to 230,000

shares of common stock for a term of three years on a cash-only basis at an exercise price of $ 35.00 per share with respect to

200,000 Warrant Shares, $ 40.00 with respect to 10,000 Warrant Shares, $ 50.00 with respect to 10,000 Warrant Shares, $ 75.00 with

respect to 5,000 Warrant Shares and $ 100.00 with respect to 5,000 Warrant Shares.

The Black-Scholes model

utilized the following inputs to value the warrants granted during the nine months ended June 30, 2019:

value assumptions – Warrants:

free interest rate

254 % - 268 %

On January 7,

2019, a total of 144,417 shares of the Company’s common stock were issued in connection with the cashless exercise of 150,000

common stock warrants at an exercise price of $ 0.83 .

26, 2019, a total of 24,628 shares of the Company’s common stock were issued in connection with the cashless exercise of

25,000 common stock warrants at an exercise price of $ 0.83 .

2019, a total of 48,857 shares of the Company’s common stock were issued in connection with the cashless exercise of 50,000

common stock warrants at an exercise price of $ 0.83 .

As of June 30,

2020, the Company expects to recognize $ 786,415 of stock-based compensation for the non-vested outstanding warrants over a weighted-average

period of 1.5 years .

993,699 of the warrants require a cash investment

to exercise as follows, 2,500 require a cash investment of $ 8.00 per share, 449,865 require a cash investment of $ 15.00 per share,

125,000 require a cash investment of $ 20.00 per share, 103,000 require a cash investment of $ 25.00 per share, 200,000 require an

investment of $ 35.00 per share, 10,000 require an investment of $ 40.00 per share, 60,000 require an investment of $ 50.00 per share,

38,333 require a cash investment of $ 75.00 per share and 5,000 require a cash investment of $ 100.00 per share.

198,070 of the outstanding

warrants contain provisions allowing a cashless exercise at their respective exercise prices.

STOCK OPTIONS

sponsors a stock-based incentive compensation plan known as the 2017 Incentive Plan (the “Plan”), which was established

by the Board of Directors of the Company on June 19, 2017.

A total of 300,000 shares were initially reserved for issuance under

As of June 30, 2020, there were 21,360 shares available for issuance under the plan.

The Plan allows

the Company to grant incentive stock options, non-qualified stock options, stock appreciation right, or restricted stock.

incentive stock options are exercisable for up to ten years, at an option price per share not less than the fair market value

on the date the option is granted.

The incentive stock options are limited to persons who

are regular full-time employees of the Company at the date of the grant of the option.

Non-qualified options may be granted

to any person, including, but not limited to, employees, independent agents, consultants and attorneys, who

the Company’s Board believes have contributed, or will contribute, to the success of the Company.

Non-qualified options

may be issued at option prices of less than fair market value on the date of grant and may be exercisable for up to ten years

from date of grant.

The option vesting schedule for options granted is determined by the Board of Directors at the time of the

The Plan provides for accelerated vesting of unvested options if there is a change in control, as defined in the Plan.

The following

is a summary of stock option activity during the nine months ended June 30, 2020.

The Company sponsors a stock-based incentive

compensation plan known as the 2017 Incentive Plan (the “Plan”), which was established by the Board of Directors of

the Company on June 19, 2017.

On October 7, 2020, the Company executed a first amendment to thePlan to increase its share pool

from 300,000 to 1,500,000 shares of common stock.

As of December 31, 2020, there were 553,190 shares available

for issuance under the Plan.

The Plan allows the Company to grant incentive

stock options, non-qualified stock options, stock appreciation right, or restricted stock.

The incentive stock options are exercisable

for up to ten years, at an option price per share not less than the fair market value on the date the option is granted.

The incentive

stock options are limited to persons who are regular full-time employees of the Company

at the date of the grant of the option.

Non-qualified options may be granted to any person, including, but not limited to, employees,

independent agents, consultants and attorneys, who the Company’s Board believes

have contributed, or will contribute, to the success of the Company.

Non-qualified options may be issued at option prices of less

than fair market value on the date of grant and may be exercisable for up to ten years from date of grant.

The option vesting schedule

for options granted is determined by the Board of Directors at the time of the grant.

The Plan provides for accelerated vesting

of unvested options if there is a change in control, as defined in the Plan.

The following is a summary of stock option

activity during the three months ended December 31, 2020.

Number of Option Shares

5 unchanged sentences

Options exercised

Balance, June 30, 2020

As of June 30, 2020, there are options

Balance, December 31, 2020

As of December 31, 2020, there are options

exercisable to purchase 388,895 shares of common stock in the Company.

As of June 30, 2020, the outstanding options have a weighted

average remaining term of was 2.59 years and an intrinsic value of $ 0 .

Option activity

for the nine months ended June 30, 2020

During the nine

months ended June 30, 2020, the Company issued 233,233 options to purchase shares of common stock to employees;

the shares were

granted at quoted market prices ranging from $ 4.50 to $ 8.50 .

The options were valued at issuance using the Black Scholes model

and stock compensation expense of $ 673,590 was recorded as a result of the issuances.

The Black-Scholes

model utilized the following inputs to value the options granted during the nine months ended June 30, 2020:

value assumptions – Options:

As of December 31, 2020, the outstanding options have a

weighted average remaining term of was 2.60 years and an intrinsic value of $ 11,800,257 .

Option activity for the three months ended

December 31, 2020

During the three months ended December 31,

2020, the Company issued 291,500 options to purchase shares of common stock to employees.

The shares were granted at quoted market

prices ranging from $ 8.07 to $ 12.48 .

The options were valued at issuance using the Black Scholes model and stock compensation expense

of $ 385,883 was recorded as a result of the issuances, with the balance of $ 953,126 offset against bonuses accrued in the prior

The Black-Scholes model utilized the following

inputs to value the options granted during the three months ended December 31, 2020:

Fair value assumptions – Options:

December 31, 2020

Risk free interest rate

4 unchanged sentences

Expected dividends

of June 30, 2020, the Company expects to recognize $ 245,300 of

stock-based compensation for the non- vested outstanding

options over a weighted-average period of 2.17 years .

Option activity

for the nine months ended June 30, 2019

During the nine

months ended June 30, 2019, the Company issued 12,788 options to purchase shares of common stock to employees, the shares were

granted at quoted market prices ranging from $ 15.10 to $ 59.00 .

The options were valued at issuance using the Black Scholes model

and stock compensation expense of $ 245,000 was recorded as a result of the issuances.

2018 the Company issued a total of 25,000 options to four consultants for advisory services.

The options vest evenly 12 months

from issuance.

The options expire 24 months after issuance and require a cash investment to exercise.

The options were valued

at issuance using the Black Scholes model at $ 342,500 and amortized of the term of the agreement.

During the nine months ended

June 30, 2019, $ 191,425 was expensed as stock-based compensation.

The Black-Scholes

model utilized the following inputs to value the options granted during the nine months ended June 30, 2019:

value assumptions – Options:

of December 31, 2020, the Company expects to recognize $ 1,040,030 of

stock-based compensation for the non-vested outstanding options over a weighted-average period of 1.01 years.

Option activity for the three months ended

December 31, 2019

During the three months ended December 31,

2019, the Company issued 136,697 options to purchase shares of common stock to employees, the shares were granted at quoted market

prices ranging from $ 4.50 to $ 8.50 .

The options were valued at issuance using the Black Scholes model and stock compensation expense

of $ 478,022 was recorded as a result of the issuances.

The Black-Scholes model utilized the following

inputs to value the options granted during the three months ended December 31, 2019:

Fair value assumptions – Options:

December 31, 2019

Risk free interest rate

5 unchanged sentences

COMMITMENTS AND CONTINGENCIES

Utah Corporate

November 22, 2019, the company entered into a lease to relocate the corporate office to 1185 South 1800 West, Suite 3, Woods Cross,

The agreement calls for the Company to make payments of $ 2,300

in base rent per month through February

The lease term is on an annual basis beginning on March 1, 2020.

Office leases

Utah Corporate Office

On November 22, 2019, the Company

entered into a lease to relocate the corporate office to 1185 South 1800 West, Suite 3, Woods Cross, UT 84047.

The agreement calls

for the Company to make payments of $ 2,300 in base rent per month through February 28, 2021.

The lease term is on an

annual basis beginning on March 1, 2020.

San Diego Office

2018, the Company executed a 37 month lease agreement, which commenced on July 1, 2018 at 4360 Viewridge Avenue, Suite C, San

Diego, California.

The agreement calls for the Company to make payments of $ 4,057 in base rent per month through July 31,

2021 subject to an annual 3 % rent escalation.

Future minimum lease payments

under the operating leases for the facilities as of June 30, 2020, are as follows:

year ending (three months remaining) September 30, 2020

year ending September 30, 2021

On May 15, 2018, the Company executed a 37

month lease agreement, which commenced on July 1, 2018 at 4360 Viewridge Avenue, Suite C, San Diego, California.

The agreement

calls for the Company to make payments of $ 4,057 in base rent per month through July 31, 2021 subject to an annual 3 % rent

Las Vegas Offices

On January 2,

2020, the Company entered into a sublease agreement for office space at 8475 S.

On January 2, 2020, the Company

entered into a sublease agreement with Blue Chip for office space at 8475 S.

Eastern Ave., Suite 200, Las Vegas, NV 89123.

The agreement calls for the Company to make monthly payments of $ 1,575 in base rent through January 1, 2021.

The lease term is

on an annual basis beginning January 2, 2020.

assumed p2k’s lease agreement entered into on October 17, 2017 at 7955 W.

agreement calls for the Company to make monthly payments of $ 1,575 in base rent through January 1, 2021.

The lease term

is on an annual basis beginning January 2, 2020.

The Company assumed p2k’s lease

agreement entered into on October 17, 2017 at 7955 W.

Badura Ave., Suite 1040, Las Vegas, NV 89113.

The agreement calls for $ 1,801 in base rent through October 31, 2020.

The lease expires on October 31, 2020.

does not expect to renew.

contingencies

time to time we may be subject to litigation.

Risks associated with legal liability are difficult to assess and quantify, and

their existence and magnitude can remain unknown for significant periods of time.

We have acquired liability insurance to reduce

such risk exposure to the Company.

Despite the measures taken, such policies may not cover future litigation, or the damages claimed

may exceed our coverage which could result in continent liabilities.

MAJOR CUSTOMERS

months ended June 30, 2020 and 2019, the Company had the following customers that represented more than 10% of sales.

June 30, 2020

June 30, 2019

months ended June 30, 2020 and 2019, the Company had the following suppliers that represented more than 10% of direct material

The agreement calls for $ 1,801 in

base rent through October 31, 2020.

The lease expired on October 31, 2020.

The Company did not renew this lease.

Atlanta Offices

The Company assumed ATL’s

lease agreement entered into on June 6, 2020 at 2380 Godby Road, Atlanta GA 30349.

The agreement calls for $ 52,958 in base rent

through June 4, 2022.

Contractual contingencies

On April 6, 2020, the Company entered

into a joint venture agreement with a third party to procure, distribute, and supply Personal Protective Equipment (PPE) for hospitals

and frontline medical personnel.

The agreement expired on December 31, 2020.

Contingent consideration

On August 31, 2020, the Company

acquired GridFabric.

Pursuant to the terms of the purchase agreement, additional shares of the Company’s common stock

valued at up to $ 750,000 will be issuable if GridFabric achieves certain revenue and product release milestones.

Legal contingencies

From time to time we may be subject

to litigation.

Risks associated with legal liability are difficult to assess and quantify, and their existence and magnitude can

remain unknown for significant periods of time.

We have acquired liability insurance to reduce such risk exposure to the Company.

Despite the measures taken, such policies may not cover future litigation, or the damages claimed may exceed our coverage which

could result in continent liabilities.

For a description of our material pending

legal proceedings, please see Part II, Item I of this Quarterly Report on Form 10Q.

MAJOR CUSTOMERS AND VENDORS

For the three months ended December 31, 2020

and 2019, the Company had the following customers that represented more than 10% of our sales.

December 31, 2020

December 31, 2019

For the three months ended December 31,

2020 and 2019, the Company had the following suppliers that represented more than 10% of our direct material costs.

Internally developed product costs and labor for services rendered are excluded from the calculation.

June 30, 2020

June 30, 2019

December 31, 2020

December 31, 2019

SEGMENT REPORTING

We disclose segment information that is consistent with

the way in which management operates and views the business.

Our operating structure contains the following reportable segments:

Energy Segment – Consisting of our CleanSpark,

LLC, CleanSpark Critical Power Systems, Inc., and GridFabric, LLC lines of business, this segment provides services, equipment,

and software to the energy industry.

Digital Agency Segment – p2kLabs, Inc.

design, software development, and other technology-based consulting services.

Digital Currency Mining Segment – Consisting of ATL

Data Centers, LLC, this segment mines digital assets, namely Bitcoin.

SEGMENT REPORTING - Segmnent Reporting Assets

Currency Mining

Inter-segment

Cost of revenues

Operating expenses

Income/(loss) from

( 6,170,098 )

Capital expenditures

Depreciation and amortization

Digital Agency

Currency Mining

Accounts Receivable

SUBSEQUENT EVENTS

On July 7, 2020, the Company received

its $ 660,000 in initial capital from the Contractual joint venture.

The Company plans to continue to evaluate opportunities under

the joint venture and will continue to provide capital for the procurement of PPE under this agreement as future opportunities

continue to arise.

(See note 5 for details).

On July 16, 2020, the Company filed a preliminary

information statement wherein the Company’s shareholders approved to grant the Board authority to effectuate an increase

in the number of authorized shares of Common Stock from 20,000,000 to no more than 50,000,000 and amend the Company’s 2017

Incentive Plan to increase the number of shares issuable from 300,000 to 1,500,000.

The effective date of these actions is determined

by the Board in its sole discretion.

On July 20, 2020, the Company sold

1,230,770 shares to an existing accredited investor at a price of $ 3.25 per share for gross proceeds of $ 4,000,000 .

An investor has advised us that

it considers the July 21, 2020 filing of the Form 8-K without that investor’s prior review to be a contractual breach.

believe the investor’s position is without merit given that the governing contract does not provide that investor any right

to prior review of the Form 8-K.

We intend to vigorously defend against any claims brought by the investor related to the filing

of the Form 8-K.

We are not in a position to estimate potential impact at this time.

On January 7, 2021, the Company issued 26,000 shares of Common

Stock in connection with employee Common Stock Option exercises at exercise prices ranging from $ 4.65 - $ 10.00 per share.

received $ 150,262 in consideration as a result of these exercises.

On January 8, 2021, the Company issued 10,000 shares of Common Stock

in connection with a Common Stock warrant exercise at an exercise price of $ 15.00 per share.

The Company received $ 150,000 in consideration

as a result of the exercise.

On January 11, 2021, the Company issued 125,000 shares of Common

Stock in connection with a Common Stock warrant exercise at an exercise price of $ 20.00 per share.

The Company received $ 2,500,000

in consideration as a result of the exercise.

On January 15, 2021, the Company issued 300 shares of Common

Stock in connection with a Common Stock warrant exercise at an exercise price of $ 3.36 per share.

The Company received $ 1,008 in

consideration as a result of the exercise.

On January 31, 2021, the Company issued 423 shares of Common Stock

in connection with an employee Common Stock Option exercise at an exercise price of $ 24.40 per share.

The Company received $ 10,321

in consideration as a result of the exercise.

On February 9, 2021, the Company issued 268 shares of Common Stock

in connection with the cashless exercise of 300 Common Stock warrants at an exercise price of $ 3.36 per share.

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-Q

Item 1. Financial Statements