What changed in this filing

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Item 1. Financial Statements

2021-08-16 compared with 2021-05-06 · 1194 added, 1144 removed, 457 unchanged (84% of the section changed)

2 unchanged sentences

this Form 10-Q are as follows:

Consolidated Balance Sheets as of March 31, 2021 (unaudited) and September 30, 2020;

Consolidated Statements of Operations for the three and six months ended March 31, 2021 and 2020 (unaudited);

Consolidated Statements of Stockholders’ Equity for the three and six months ended March 31, 2021 and 2020 (unaudited);

Consolidated Statements of Cash Flows for the six months ended March 31, 2021 and 2020 (unaudited);

Consolidated Balance Sheets as of June 30, 2021 (unaudited) and September 30, 2020;

Consolidated Statements of Operations for the three and nine months ended June 30, 2021 and 2020 (unaudited);

Consolidated Statements of Stockholders’ Equity for the three and nine months ended June 30, 2021 and 2020 (unaudited);

Consolidated Statements of Cash Flows for the nine months ended June 30, 2021 and 2020 (unaudited);

Notes to Consolidated Financial Statements (unaudited).

This report on Form 10-Q for the quarter ended

March 31, 2021, 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.

This report on Form 10-Q for the quarter ended June

30, 2021, 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 March 31, 2021 are not necessarily indicative

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

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 June 30, 2021 are not necessarily indicative of the

results that can be expected for the full year.

CLEANSPARK, INC.

CONSOLIDATED BALANCE SHEETS

March 31, 2021

June 30, 2021

September 30, 2020

1 unchanged sentence

Cash and cash equivalents

$ 157,274,542

Accounts receivable, net

6 unchanged sentences

Total current assets

$ 178,459,063

Property and equipment, net

2 unchanged sentences

Intangible assets, net

Deposits on mining equipment and related assets

Deposits on mining equipment

Other long-term asset

4 unchanged sentences

Contract liabilities

Operating lease liability, current portion

Finance lease liability, current portion

Operating lease liability

Finance lease liability

Acquisition liability

Contingent consideration, current portion

Dividends payable

Contingent consideration

Total current liabilities

1 unchanged sentence

Loans payable

Operating lease liability, net of current portion

Finance lease liability, net of current portion

Contingent consideration, net of current portion

Operating lease liability, non-current

Dividends payable

Finance lease liability, non-current

Contingent consideration, non-current

Total liabilities

3 unchanged sentences

50,000,000 shares authorized;

33,874,152 and 17,390,979 shares issued and outstanding as of March 31, 2021 and September 30, 2020, respectively

34,697,943 and 17,390,979 shares issued

and outstanding as of June 30, 2021 and September 30, 2020, respectively

Preferred stock:

shares authorized;

10,000,000 shares

Series A shares;

1,750,000 and 1,750,000 issued and outstanding as of March 31, 2021 and September

30, 2020, respectively

1,750,000 and 1,750,000 issued and outstanding as of June 30, 2021 and September 30, 2020, respectively

Additional paid-in capital

5 unchanged sentences

$ 297,488,821

The accompanying notes are an integral part

of these unaudited consolidated financial statements.

The accompanying notes are an

integral part of these unaudited consolidated financial statements.

CLEANSPARK, INC.

1 unchanged sentence

For the Three Months Ended

For the Six Months Ended

March 31, 2021

March 31, 2020

March 31, 2021

March 31, 2020

For the Nine Months Ended

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Revenues, net

Sale of goods revenues

Service, software and related revenues

Cryptocurrency mining revenue

Digital currency mining revenue

Energy hardware, software and services revenue

Other services revenue

Total revenues, net

4 unchanged sentences

General and administrative expenses

Impairment expense

Depreciation and amortization

7 unchanged sentences

Realized gain on sale of digital currency

Realized gain on sale of equity securities

Unrealized gain (loss) on equity security

Unrealized gain on derivative security

Unrealized gain (loss) on derivative security

( 2,060,774 )

5 unchanged sentences

( 6,407,702 )

Net Income/(loss) attributable to the Company

( 8,875,541 )

$ ( 16,677,127 )

$ ( 8,551,301 )

$ ( 16,444,619 )

$ ( 16,282,653 )

Preferred stock dividends

Net Income (loss) attributable to the Company’s common shareholders

Net loss attributable to common shareholders

$ ( 16,677,127 )

$ ( 8,551,301 )

Earnings/(loss) per common share - basic

$ ( 16,622,124 )

$ ( 16,282,653 )

Loss per common share - basic

Weighted average common shares outstanding - basic

Earnings/(loss) per common share - diluted

Fully diluted weighted average common shares

The accompanying notes are an integral

part of these unaudited consolidated financial statements.

Loss per common share - diluted

Fully Diluted weighted average common shares outstanding

accompanying notes are an integral part of these unaudited consolidated financial statements.

CLEANSPARK, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’

For the Six Months ended March 31, 2021

Nine Months ended June 30, 2021

Preferred Stock

24 unchanged sentences

( 116,347,601 )

For the Six Months Ended March 31, 2020

Shares issued for services

Options and warrants issued for services

Exercise of options and warrants

Shares issued under ATM offering, net of offering costs

Shares returned in relation to business acquisition

( 16,677,127 )

Balance, June 30, 2021

( 133,024,728 )

Nine Months Ended June 30, 2020

Preferred Stock

1 unchanged sentence

Accumulated Deficit

Total Stockholders' Equity

Stockholders'

Balance, September 30, 2019

12 unchanged sentences

Options and warrants issued for services

Shares issued for business acquisition

Shares issued under acquisition

Beneficial conversion feature and shares issued with convertible debt

3 unchanged sentences

( 100,787,815 )

The accompanying notes are an integral

part of these unaudited consolidated financial statements.

Shares issued for services

Options and warrants issued for services

Shares issued upon conversion of debt and accrued interest

( 8,551,301 )

Balance, June 30, 2020

( 109,339,116 )

accompanying notes are an integral part of these unaudited consolidated financial statements.

CLEANSPARK, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended

March 31, 2021

March 31, 2020

For the Nine Months Ended

June 30, 2021

June 30, 2020

Cash Flows from Operating Activities

Net income (loss)

$ ( 16,444,619 )

Adjustments to reconcile net income (loss) to net cash used in operating activities:

$ ( 16,282,653 )

Adjustments to reconcile net loss to net cash used in operating activities:

Stock based compensation

Impairment expense

Unrealized gain on equity security

Realized gain on sale of equity security

Realized gain on sale of digital currency

Digital currency issued for services

Amortization of operating lease right of use asset

3 unchanged sentences

( 5,319,361 )

( 1,544,185 )

PPP loan forgiveness

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

( 2,914,993 )

Decrease in contract assets

Increase in contract liabilities

Decrease (increase) in accounts receivable

(Decrease) increase in accounts payable

Increase in ROU Asset

Increase (decrease) in contract liabilities, net

(Increase) in accounts receivable

( 1,298,308 )

Increase in digital currency from mining

Increase in accounts payable

(Increase) in digital currency

( 16,098,643 )

1 unchanged sentence

Increase in inventory

Increase (decrease) in due to related parties

( 3,978,257 )

(Decrease) in due to related parties

Net cash used in operating activities

2 unchanged sentences

Cash Flows from investing

Increase in deposits on mining equipment and related assets

Increase in deposits on mining equipment

( 125,855,501 )

Sale of digital currencies

Proceeds from sale of equity securities

Proceeds from sale of digital currencies

Investment in infrastructure development

( 6,431,664 )

Purchase of property and equipment

Purchase of fixed assets

( 60,536,521 )

2 unchanged sentences

( 1,141,990 )

Acquisition of Solar Watt Solutions, net of cash received

Acquisition of Solar Watt Solutions

( 1,000,337 )

1 unchanged sentence

Investment in debt and equity securities

Investment in Joint Venture

Net cash used in investing activities

4 unchanged sentences

( 5,865,476 )

Proceeds from promissory notes

Payments on finance leases

Proceeds from exercise of options and warrants

Proceeds from underwritten offerings

Net cash received/(provided) by financing activities

Proceeds from offerings, net

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

2 unchanged sentences

Cash and cash equivalents, end of period

$ 157,274,542

Supplemental disclosure of cash flow information

3 unchanged sentences

Day one recognition of right of use asset and liability

Shares issued for conversion of debt

Right of use asset and liability written off due to lease

Shares issued for conversion of debt and accrued interest

Shares and options issued for business acquisition

2 unchanged sentences

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

accompanying notes are an integral part of these unaudited consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AND LINE OF BUSINESS

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 Corporation.

(“CleanSpark”,

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

the name, SmartData Corporation.

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

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.

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

Acquisitions Related to Subsidiaries

1 unchanged sentence

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.

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.

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.

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, Inc.

On January 22, 2019, CleanSpark entered into

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

of the transaction, Pioneer Critical Power Inc.

became a wholly owned subsidiary of the Company.

On February 1, 2019,

Pioneer Critical Power, Inc.

On February 1, 2019, Pioneer Critical

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.

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.

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.)

Solutions, Inc.

On February 23, 2021, the Company entered into

an Agreement and Plan of Merger (the “Merger”) with Solar Watt Solutions, Inc.

(“SWS”), and its owners whereby

the Company purchased all of the issued and outstanding shares of SWS from its owners.

As a result of the transaction, SWS became

p2klabs, 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 became

a wholly owned subsidiary of the Company.

ATL Data Centers

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.)

Solar Watt Solutions,

On February 23, 2021, the Company entered into an

Agreement and Plan of Merger (the “Merger”) with Solar Watt Solutions, Inc.

(“SWS”), and its owners whereby the

Company purchased all of the issued and outstanding shares of SWS from its owners.

As a result of the transaction, SWS became a wholly

owned subsidiary of the Company.

(See Note 3 for details.)

Lines of Business

Energy Business

CleanSpark, LLC, we provide microgrid engineering, design and software solutions to military, commercial and residential customers.

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

generally performed under fixed price bid contracts and negotiated price contracts.

CleanSpark Critical Power Systems, Inc., we provide custom hardware solutions for distributed energy systems that serve military

and commercial residential properties.

Energy Business Segment

Through CleanSpark,

LLC, we provide microgrid engineering, design and software solutions to military, commercial and residential customers.

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.

Through CleanSpark

Critical Power Systems, Inc., we provide custom hardware solutions for distributed energy systems that serve government and commercial

The equipment is generally sold under negotiated fixed price contracts.

GridFabric, LLC, we provide Open Automated Demand Response (“OpenADR”) and other middleware communication protocol

software solutions to commercial and utility customers.

Solar Watt Solutions, Inc., which we acquired in February 2021, we provide solar and alternative energy solutions for

homeowners and commercial businesses in Southern California.

ATL Data Centers LLC, we provide traditional data center services, such as providing customers with rack space, power and equipment,

and offer 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.

Through GridFabric,

LLC, we provide Open Automated Demand Response (“OpenADR”) and other middleware communication protocol software solutions

to commercial and utility customers.

Through Solar

Watt Solutions, Inc., which we acquired in February 2021, we provide solar, energy storage, and alternative microgrid energy solutions

for homeowners and commercial businesses in Southern California.

Currency Mining Segment

ATL Data Centers LLC and our recently formed subsidiary, CleanBlok, LLC, we mine Bitcoin.

We entered the Bitcoin mining industry

through our recent acquisition of ATL Data Centers LLC, and we have recently acquired additional equipment and infrastructure capacity

in order to expand our Bitcoin mining operations.

We entered the

Bitcoin mining industry through our acquisition of ATL Data Centers LLC in December 2020, and we have recently acquired additional equipment

and infrastructure capacity in order to expand our Bitcoin mining operations.

We mine Bitcoin through ATL Data Centers LLC, and

our recently formed subsidiary, CleanBlok , Inc.

Other business activities

Through p2kLabs, Inc., the Company provides design,

software development, and other technology-based consulting services.

The services provided are generally an hourly arrangement or fixed-fee

project-based arrangements.

Through ATL Data Centers LLC, we provide traditional

data center services, such as providing customers with rack space, power and equipment, and offer several cloud services including, virtual

services, virtual storage, and data backup services.

Through our recently formed subsidiary CSRE Properties, LLC, we maintain

real property holdings for ATL Data Centers LLC and CleanBlok Inc.

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.

Company has incurred losses in the past while it developed its infrastructure and software platforms.

As shown in the accompanying

unaudited consolidated financial statements, the Company incurred operating losses of $ 8.7

million and produced net income of $ 232,510

during the six months ended March 31,

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.

As shown in the accompanying unaudited consolidated financial statements,

the Company incurred a net loss of $ 16,444,619

during the nine months ended June 30, 2021.

While the company has experienced negative cash flows from operations,

the Company has sufficient capital for ongoing operations from raising additional capital through the registered sale of equity securities

pursuant to a registration statement on Form S-3.

(See Note 11 for additional details.) As of March 31, 2021, the Company had

working capital of $ 171,118,618 .

(See Notes 11 and 17 for additional details.) In addition, the Company is continuing

to grow its business segments through which it expects to grow the working capital base.

As of June 30, 2021, the Company had working

capital of $ 39,940,292 .

of Consolidation

1 unchanged sentence

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, ATL Data Centers LLC, CleanBlok, LLC, and Solar Watt Solutions, Inc.

Critical Power Systems Inc., p2kLabs, Inc, GridFabric, LLC, ATL Data Centers LLC, CleanBlok, Inc., CSRE Properties, LLC and Solar Watt

Solutions, Inc.

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.

Actual results could differ from those estimates.

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.

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.

We recognize 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:

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, 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.

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.

We recognize 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;

identity the performance obligations in the contract;

(iii) determine the transaction price;

(ii) identity the performance obligations in the contract;

(iii) determine the transaction

(iv) allocate the transaction price;

and (v) recognize revenue when or as the entity satisfied a performance obligation.

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

Our accounting policy on revenue recognition by type of revenue is

provided below.

Engineering, Service & Installation or Construction

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.

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.

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).

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.

Company recognizes energy (solar panel and battery) installation contract

revenue for residential customers at a point in time

upon completion of the installation.

The revenues associated with energy installations for commer cial

customers are recognized over a period of time as noted in the engineering and construction contract revenue disclosure above.

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 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.

Company recognizes energy (solar panel and battery) installation contract revenue

for residential customers at a point in time upon completion of the installation.

The revenues associated with energy installations for

commercial customers are recognized over a period of time as noted in the engineering and construction contract revenue disclosure above.

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.

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

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.

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

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 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 $ 0 and $ 4,103 as of March 31, 2021 and September 30, 2020, respectively.

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 March 31, 2021 and September 30, 2020, respectively, have been deducted from contract assets.

Contract liabilities represent

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

The Company recorded $ 551,977 and $ 64,198 in contract liabilities

as of March 31, 2021 and September 30, 2020, respectively.

from software

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, in the form of digital currency, which the Company measures

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 digital currency mining

The Company has entered into a digital asset mining

pool to provide computing power to the mining pool.

The contracts are terminable at any time by either party and the Company’s

enforceable right to compensation only begins when the Company provides computing power to the mining pool operator.

In exchange for providing

computing power, the Company is entitled to a fractional share of the fixed cryptocurrency award the mining pool operator receives (less

net digital asset transaction fees to the mining pool operator which are recorded as a component of cost of revenues), for successfully

adding a block to the blockchain.

The Company’s fractional share is based on the proportion of computing power the Company contributed

to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm.

The transaction consideration the Company receives is noncash consideration, in the form of digital currency, 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.

Fair value of the digital currency award received is determined using the spot price of the related digital currency at the time

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

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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.

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.

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 delivery).

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

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 provided.

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 $ 4,103 as of June 30, 2021 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 June 30, 2021 and September 30, 2020, respectively, have been deducted from contract assets.

Contract liabilities

represent customer deposits and amounts billed to clients in excess of revenue recognized to date.

The Company recorded $ 596,873 and $ 64,198

in contract liabilities as of June 30, 2021 and September 30, 2020, respectively.

from software

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.

The series 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 the month.

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

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.

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 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 estimated.

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.

The warranty periods

typically extend for a limited duration following substantial completion of the Company’s work on a project.

Historically,

warranty claims have not resulted in material costs incurred.

The warranty periods typically

extend for a limited duration following substantial completion of the Company’s work on a project.

Historically, warranty claims

have not resulted in material costs incurred.

Practical Expedients

If the Company has a right to consideration

from a customer in an amount that corresponds directly with the value of the Company’s performance completed to date (a service

contract in which the Company bills a fixed amount for each hour of service provided), the Company recognizes revenue in the amount

to which it has a right to invoice for services performed.

The Company does not adjust the contract price

for the effects of a significant financing component if the Company expects, at contract inception, that the period between when

the Company transfers a service to a customer and when the customer pays for that service will be one year or less.

If the Company has a right to consideration from a

customer in an amount that corresponds directly with the value of the Company’s performance completed to date (a service contract

in which the Company bills a fixed amount for each hour of service provided), the Company recognizes revenue in the amount to which it

has a right to invoice for services performed.

The Company does not adjust the contract price for

the effects of a significant financing component if the Company expects, at contract inception, that the period between when the Company

transfers a service to a customer and when the customer pays for that service will be one year or less.

The Company has made an accounting policy election

to exclude from the measurement of the transaction price all taxes assessed by governmental authorities that are collected by the

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

For the six months ended March 31, 2021 and

2020, the Company reported revenues of $ 10,377,258 and $ 4,635,107 , respectively.

Cash and cash equivalents

to exclude from the measurement of the transaction price all taxes assessed by governmental authorities that are collected by the Company

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

the nine months ended June 30, 2021 and 2020, the Company reported revenues of $ 22,293,321

and $ 8,073,781 ,

respectively.

and 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.

There was $ 157,274,542 and $ 3,126,202 in cash and cash equivalents as of March

31, 2021 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.

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 $ 22,209,870 and $ 3,126,202 in cash and cash equivalents as of June 30, 2021 and September 30,

2020, respectively.

Digital currencies are included in current assets

in the consolidated balance sheets.

Digital currencies are recorded at cost less impairment, and amounts 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 exists.

If it is determined that it is not

more likely than not that an impairment exists, a quantitative impairment test is not necessary.

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.

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

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.

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 six months ended March 31, 2021:

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 nine months ended June 30, 2021:

Balance at September 30, 2020

Additions of digital currencies

Realized gain on sale of digital currencies

Sale of digital currencies

of digital currencies

gain on sale of digital currencies

Sale of digital

( 2,499,757 )

Balance at March 31, 2021

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

Accounts receivable are presented net of an allowance for doubtful accounts of $ 693,508 and $ 42,970 at March 31, 2021,

and September 30, 2020, respectively.

Digital currencies

issued for services

( 3,720,481 )

at June 30, 2021

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.

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 $ 695,688 and

$ 42,970 at June 30, 2021, 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 March 31, 2021 and September 30, 2020, respectively.

Inventories are stated at the lower of cost

or net realizable value on a first-in, first-out basis.

For solar panel and battery installations, the Company transfers component

parts from inventories to cost of goods sold once installation is complete.

The Company periodically reviews inventories for unusable

and obsolete items based on assumptions about future demand and market conditions.

Retention receivables of $ 0 and $ 615 were included in Accounts receivable, net as of June 30, 2021 and

September 30, 2020, respectively.

Inventories are stated at the lower of cost or net

realizable value with cost being measured on a first-in, first-out basis.

For solar panel and battery installations, the Company transfers

component parts from inventories to cost of goods sold once installation is complete.

The Company periodically reviews inventories for

unusable and obsolete items based on assumptions about future demand and market conditions.

Based on this evaluation, provisions are made

to write inventories down to their net realizable value.

Investment securities

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.

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 to maturity.

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 March 31, 2021, the cash balance in excess of the

FDIC limits was $ 157,024,542 .

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.

The composition of inventory as of June 30, 2021 is as follows:

Batteries and

Supplies and other materials

Balance at June 30, 2021

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 sheets 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 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 other than temporary impairment

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 as well as

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 the 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 the consolidated statements 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, 2021, the cash balance in excess of the FDIC limits was

$ 21,959,870 .

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

Company had one customer whose revenue individually represented 10% or more of the Company’s total revenue.

(See Note 15 for details.)

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 March 31, 2021 and September

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

Warranty costs and associated liabilities were $ 0

and $ 0 as of June 30, 2021 and September

30, 2020, 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

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 services.

Earnings (loss) per share

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.

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

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

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 during 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 March 31, 2021, there are 1,522,604 shares issuable upon exercise of outstanding options and warrants,

the dilutive effect of which is computed using the treasury stock method.

The following table sets forth the computation

of basic and diluted Net income (loss) attributable to the Company’s common shareholders:

three months ended

six months ended

March 31, 2021

March 31, 2020

March 31, 2021

March 31, 2020

Net Income (Loss) attributable to the Company

$ ( 5,815,098 )

$ ( 7,731,352 )

Numerator for basic and diluted EPS - Income (loss) attributable to the Company's common shareholders

$ ( 5,815,098 )

$ ( 7,731,352 )

Denominator for basic EPS - Weighted average shares

Dilutive effect of warrants and options

Dilutive effect of preferred stock conversions

Denominator for diluted EPS - Adjusted weighted average shares

Basic Income (Loss) per common share

Diluted Income (Loss) per common share

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:

30, 2021 and June 30, 2020, there were 1,375,805 shares

and 1,503,639 shares, respectively, issuable upon exercise of outstanding options and warrants, as well as 5,250,000 shares issuable

upon preferred stock conversions, that were excluded from the current and prior period calculations of diluted net loss per share as

their inclusion would have been anti-dilutive to the Company’s net loss.

and equipment

and equipment are stated at cost.

Construction in progress is the construction or development of property and equipment that has not

yet been placed in service for its intended use.

Depreciation for equipment, buildings, and leasehold improvements commences once they

are ready for its intended use.

Land is not depreciated.

Depreciation is calculated on a straight-line basis over the estimated useful

life of the asset as follows:

Machinery and equipment

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Leasehold improvements

Shorter of estimated lease term or 5 years

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 six months ended March 31, 2021 and 2020, the Company did

not record an impairment expense.

Intangible Assets and Goodwill

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

For the nine months ended June 30, 2021 and 2020, the Company did not record an impairment expense.

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 six months ended March 31, 2021 and

Software Development Costs

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 values.

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 estimates.

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

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 nine months ended June 30, 2021 and 2020.

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 Note 8) 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.

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.

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 products.

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 basis.

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

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 charge.

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.

value of financial instruments and derivative asset

The carrying value of cash, accounts payable and accrued

expenses, and debt (See Note 8) 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.

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.

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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 March 31, 2021 and September 30, 2020, respectively:

Fair value measured at March 31, 2021:

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, 2021 and September 30, 2020, respectively:

value measured at June 30, 2021:

Derivative asset

4 unchanged sentences

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 three months ended March 31, 2021:

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, 2021:

Balance at September 30, 2020

Gain/(loss) on derivative asset

Balance at March 31, 2021

Gain on derivative asset

Balance at June 30, 2021

Reclassifications

1 unchanged sentence

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

These reclassifications had no effect on the reported results of operations or net

assets of the Company.

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.

Recently issued accounting pronouncements

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.

To better align with the Company’s

core focus, the Company reduced its reportable segments down to two by eliminating the digital agency segment.

Results associated with

that component are now being reported under other revenue and eliminations.

issued accounting pronouncements

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 flows.

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,

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 2018-13,

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 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.

Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.

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 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.

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 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 flows.

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, 2022.

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 a smaller reporting company 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.

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.

SOLAR WATT SOLUTIONS, INC

On February 23, 2021, the Company entered into

an Agreement and Plan of Merger (the “Merger Agreement”) with SWS (“SWS”) and its owners (the “Sellers”).

the closing on February 24, 2021, SWS became a wholly owned subsidiary of the Company.

On February 23, 2021, the Company entered into an

Agreement and Plan of Merger (the “Merger Agreement”) with Solar Watt Solutions, Inc.

(“SWS”) and its owners (the

At the closing on February 24, 2021, SWS became a

wholly owned subsidiary of the Company.

In exchange, the Company issued (i) 477,703

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 $ 32.74 per share to the sellers, of which (a)

167,685 shares would be fully earned on closing, and (b) an additional 310,018 shares

were issued and held in escrow, subject to holdback pending Sellers’ 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 average daily trading value of the prior

30 days for a period of 36 months following the closing, and (ii) up to $3,850,000 in cash was remitted to the Sellers, of which:

(c) $1,350,000 was remitted to Sellers on a pro rata basis at closing, less payment of $500,000 in Sellers’ debt at closing,

(d) $200,000 in cash was held back by the Company for a period of nine months to satisfy potential damages from indemnification

claims and any amounts owed pursuant to post-closing adjustments, (e) an additional $100,000 in cash was held back by the Company

for a period of 90 days to satisfy any amounts owed pursuant to post-closing adjustments, and (f) up to $2,500,000 in cash was

held back by the Company pending the Sellers’ satisfaction of certain future milestones.

The Company determined the fair value of the

consideration given to the sellers of SWS in connection with the transaction in accordance with ASC 820 was as follows:

for the five trading days including and immediately preceding the closing date of $ 32.74

per share to the sellers, of which (a) 167,685

shares would be fully earned on closing, and (b) an additional 310,018

shares were issued and held in escrow, subject to holdback pending Sellers’ 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 average daily trading value of the

prior 30 days for a period of 36 months following the closing, and (ii) up to $3,850,000 in cash was remitted to the Sellers, of which:

(c) $1,350,000 was remitted to Sellers on a pro rata basis at closing, less payment of $500,000 in Sellers’ debt at closing, (d)

$200,000 in cash was held back by the Company for a period of nine months to satisfy potential damages from indemnification claims and

any amounts owed pursuant to post-closing adjustments, which is included in the acquisition liability balance on the consolidated balance

sheet, (e) an additional $100,000 in cash was held back by the Company for a period of 90 days to satisfy any amounts owed pursuant to

post-closing adjustments, which is included in the acquisition liability balance on the consolidated balance sheet, and (f) up to $2,500,000

in cash was held back by the Company pending the Sellers’ satisfaction of certain future milestones, which is included in the contingent

consideration balance on the consolidated balance sheet.

Company determined the fair value of the consideration given to the sellers of SWS in connection with the transaction in accordance with

ASC 820 was as follows:

Consideration:

2 unchanged sentences

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.

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.

The total purchase price was allocated to identifiable

assets deemed acquired, and liabilities assumed, based on their estimated fair values as indicated below.

We recorded certain adjustments

to the preliminary purchase price allocation during the three and nine months ended June 30, 2021, that resulted in a net increase of

$ 448,042 to goodwill.

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:

1 unchanged sentence

Other assets and liabilities assumed, net

$ ( 525,277 )

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.

the closing, A TL

became a wholly owned subsidiary of the Company.

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 were issued and held in escrow, 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

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

were issued and held in escrow, subject to holdback pending satisfaction of certain indemnification claims and 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 closing.

2 unchanged sentences

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

Of the 975,976 shares held in escrow, 515,724 shares

were released to the selling members of ATL and 68,194 shares were returned to the Company and canceled due to non-satisfaction of certain

indemnification claims during the three and nine months ended June 30, 2021.

The remaining 392,058 shares held in escrow consist of 72,989

shares subject to holdback pending satisfaction of further indemnification claims and 319,069 shares subject to satisfaction of future

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

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 unchanged sentence

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.

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.

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.

In connection with the return of the 68,194

shares held in escrow that were cancelled due to the non-satisfaction of certain indemnification claims, total consideration,

including contingent consideration, decreased by $ 892,659

during the three and nine months ended June 30, 2021.

Including the 68,194

returned shares, adjustments to the preliminary purchase price allocation resulted in a net decrease to goodwill of $ 685,037

and $ 810,570

during the three and nine months ended June 30, 2021, respectively.

Purchase Price Allocation:

2 unchanged sentences

$ ( 561,953 )

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 six months ended March 31, 2021.

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 nine months

ended June 30, 2021.

In connection with the acquisition, the Company had acquired an operating lease related to a rental building, which

had a purchase option associated with the lease agreement.

The Company exercised the purchase option to buy the property in May

2021 and as a result terminated the lease (see Note 7 for further details).

P2K LABS, INC

On January 31, 2020, the Company, entered into

an Agreement with p2k, and its sole stockholder, Amer Tadayon (the “Seller”), whereby the Company purchased all of

the issued and outstanding shares of p2k in exchange for an aggregate adjusted 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 became

a wholly owned subsidiary of the Company.

Pursuant to the terms of the Agreement, the

purchase price was as follows:

On January 31, 2020, the Company, entered

into an Agreement with p2k, and its sole stockholder, Amer Tadayon (the “Seller”), whereby the Company purchased all of the

issued and outstanding shares of p2k in exchange for an aggregate adjusted 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 became a wholly

owned subsidiary of the Company.

Pursuant to the terms of the Agreement, the purchase

price was as follows:

in cash was paid to the Seller;

2 unchanged sentences

$ 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;

64,516 restricted shares of the Company’s common stock, valued

at $ 300,000 , were issued to an independent third-party escrow agent (the “Holdback Shares”) and will be released to

the Seller upon achievement of certain revenue milestones.

As of March 31, 2021, based on actual revenue milestones achieved, 56,444

restricted shares of the Company’s common stock were released to the Seller and the balance of 8,072 shares of the Company’s

common stock were returned and cancelled.

64,516 restricted shares of the Company’s

common stock, valued at $ 300,000 , were issued to an independent third-party escrow agent (the “Holdback Shares”) and will

be released to the Seller upon achievement of certain revenue milestones.

During the nine months ended June 30, 2021, 56,444 restricted

shares of the Company’s common stock were released to the Seller and the balance of 8,072 shares of the Company’s common stock

were returned and cancelled.

The Holdback Shares are subject to the Leak-Out Terms.

1 unchanged sentence

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:

26,950 common stock options that 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:

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Total Consideration

The total purchase price of the Company’s acquisition

of p2k was allocated to identifiable assets deemed acquired, and liabilities assumed, based on their estimated

fair values as indicated below.

total purchase price of the Company’s acquisition of p2k was allocated to identifiable assets deemed acquired, and liabilities

assumed, based on their estimated fair values as indicated below.

Purchase Price Allocation:

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GRIDFABRIC, LLC

On August 31, 2020, the Company entered into

a Membership Interest Purchase Agreement (the “Agreement”) with GridFabric, and its sole member, Dupont Hale Holdings,

LLC (the “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

On August 31, 2020, the Company entered

into a Membership Interest Purchase Agreement (the “Agreement”) with GridFabric, and its sole member, Dupont Hale Holdings,

LLC (the “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”).

2 unchanged sentences

GridFabric, became a wholly owned subsidiary of the Company.

Pursuant to the terms of the Agreement, the

Purchase Price was as follows:

Pursuant to the terms of the Agreement, the Purchase

Price was as follows:

$ 360,000 in cash was paid to the Seller at closing;

$ 400,000 in cash was delivered to an

independent third-party escrow agent where such cash is subject to offset for adjustments to the Purchase Price and

indemnification purposes for a period of 12 months;

$ 400,000 in cash was delivered to an independent third-party escrow agent where such cash is subject to offset for adjustments to the Purchase Price and indemnification purposes for a period of 12 months;

26,427 restricted shares of the Company’s common stock, valued at $ 250,000 , were issued to the Seller (the “Shares”).

2 unchanged sentences

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

The Shares were issued at a fair

market value of $ 9.46 per share.

The Shares were issued at

a fair market value of $ 9.46 per share.

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:

shares to be issued will be determined based on the closing price of the Company’s common stock on the date such milestone event

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:

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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.

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

The following is the unaudited pro forma information assuming the

acquisition of GridFabric, p2k Labs, ATL, and SWS occurred on October 1, 2019:

the Three Months Ended

the Six Months Ended

Net income/ (loss)

The following is the unaudited pro forma information assuming the acquisition

of GridFabric, p2k Labs, ATL, and SWS occurred on October 1, 2019:

For the Three Months Ended

For the Nine Months Ended

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

$ ( 16,677,127 )

$ ( 8,464,370 )

Earnings/(loss) per common share - basic

average common shares outstanding - basic

Earnings/(loss) per common share - diluted

average common shares outstanding - 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.

$ ( 17,050,808 )

$ ( 16,467,306 )

Net 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 would have actually

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 transactions that would be considered inter-company transactions for proforma purposes have

been eliminated.

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.

The Company also received 350,000 shares (“commitment shares”) of ILAL’s common stock.

The Preferred

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

Preferred 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 March 31, 2021 of $ 729,500 .

The Preferred Stock is recorded as an AFS debt

security and is reported at its estimated fair value as of March 31, 2021.

The Company identified a derivative instrument in accordance

with ASC Topic No.

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.

also received 350,000 shares (“commitment shares”) of ILAL’s common stock.

The 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 is now

convertible into common stock at a variable rate as calculated under the agreement terms.

commitment shares are recorded at fair value as of June 30, 2021 of $ 223,823 .

The Preferred Stock is recorded as an AFS debt security

and is reported at its estimated fair value as of June 30, 2021.

The Company identified a derivative instrument in accordance with ASC

815 due to the variable conversion feature.

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 March 31, 2021.

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 as of June 30, 2021

Fair value assumptions:

March 31, 2021

June 30, 2021

Risk free interest rate

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Expected volatility

Expected dividends

CAPITALIZED SOFTWARE

Capitalized software consists of the following

as of March 31, 2021 and September 30, 2020:

March 31, 2021

Capitalized software consists of the following as

of June 30, 2021 and September 30, 2020:

June 30, 2021

September 30, 2020

3 unchanged sentences

Capitalized Software, net

software amortization recorded as cost of revenues and product development expense for the six months ended March 31, 2021 and

2020 was $ 83,983 and $ 79,705 , respectively.

software amortization recorded as part of amortization expense for the nine months ended June 30, 2021 and 2020 was $ 126,090

and $ 121,582 ,

respectively.

INTANGIBLE ASSETS

The Company amortizes intangible assets

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

The Company amortizes intangible assets with

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

13 - 20 years

5 unchanged sentences

Intangible assets consist of the following

as of March 31, 2021 and September 30, 2020:

March 31, 2021

September 30, 2020

Customer list and non-compete agreement

Design assets

Trade secrets

as of June 30, 2021 and September 30, 2020:

Customer list

and non-compete agreement

Strategic contract

Intangible assets:

Trade secrets

Design assets

accumulated amortization

1 unchanged sentence

( 5,353,792 )

Intangible assets, net

Amortization expense for the six months ended

March 31, 2021 and 2020 was $ 2,225,991 and $ 1,269,293 , respectively.

expense for the nine months ended June 30, 2021 and 2020 was $ 4,239,280

and $ 1,952,779 ,

respectively.

The Company expects to record amortization

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

2021 (six months remaining)

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

(three months remaining)

PROPERTY AND EQUIPMENT, NET

Property and equipment, net consist of

the following as of March 31, 2021 and September 30, 2020:

March 31, 2021

Property and equipment, net consist of the following

as of June 30, 2021 and September 30, 2020:

June 30, 2021

September 30, 2020

Machinery and equipment

Mining equipment

Land and building

Machinery and equipment

Leasehold improvements

Furniture and fixtures

Construction in progress

accumulated depreciation

1 unchanged sentence

Fixed assets, net

Depreciation expense for the six months ended

March 31, 2021 and 2020 was $ 930,324 and $ 32,071 , respectively.

Company has purchase commitments for approximately $146.5 million related to purchase of miners as of March 31, 2021, and the

Company has paid $42.8 million towards these commitments as of the end of this period.

expense for the nine months ended June 30, 2021 and 2020 was $ 2,517,650 and

$ 51,952 , respectively.

On May 19, 2021, the Company exercised its purchase

option on the ATL lease agreement to purchase property for $ 4.4 million at 2380 Godby Road, College Park, Georgia.

The property contains

approximately six acres and includes approximately 41,000 square feet of office and warehouse space.

ATL utilizes, and intends to utilize,

this space for cryptocurrency mining activities.

Company has purchase commitments for approximately $ 203.6

million related to purchase of miners as of

June 30, 2021, and the Company has paid $125.9 million towards these commitments as of the end of this period.

Long-term loans payable consists of the following:

March 31, 2021

June 30, 2021

September 30, 2020

1 unchanged sentence

Promissory Notes

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

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 "SBA").

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

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

on May 7, 2022 and bear interest at a rate of 1.0 % per annum.

The Company applied for and received loan forgiveness

from the SBA on March 23, 2021.

The entire principal balance and interest charges were forgiven.

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.

31, 2021, the Company's operating lease right of use asset and operating lease liability totaled $ 713,158 and $ 713,023 ,

respectively.

A weighted average discount rate of 10 % was used in the measurement of the right of use asset and lease

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

The Company's operating leases have

remaining lease terms between one year to two years , with a weighted average lease term of 1.15 years

at March 31, 2021.

2020, the loan was approved, and the Company received the proceeds from the loan in the amount of $ 531,169 (the “PPP Loan”).

The Company applied for and received loan forgiveness from the SBA on March 23, 2021.

The entire principal balance and interest

charges were forgiven.

The gain on loan forgiveness of $ 531,169 is included in other income in the consolidated statements of operations

during the nine months ended June 30, 2021.

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

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.

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 June 30,

2021, the Company's operating lease right of use asset and operating lease liability totaled $ 559,182 and $ 554,669 , respectively.

A weighted average discount rate of 10 % was used in the measurement of the right of use asset and lease liability.

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 sheets, but rather, lease expense is recognized over the lease term on a straight-line basis.

As of June 30, 2021, the Company’s

operating leases had a weighted-average remaining lease term of 5 years.

Some leases include multiple year renewal options.

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 March 31, 2021.

These operating leases also have a weighted average discount

rate of 10 % at March 31, 2021.

The following is a schedule of the

Company's operating lease liabilities by contractual maturity as of March 31, 2021:

Fiscal year ending September 30, 2021 (six months remaining)

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

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 June 30, 2021.

These operating leases also have

a weighted average discount rate of 10 % at June 30, 2021.

The following is a schedule of the Company's

operating lease liabilities by contractual maturity as of June 30, 2021:

Fiscal year ending September 30, 2021 (three months remaining)

Fiscal year ending September 30, 2022

Fiscal year ending September 30, 2023

Fiscal year ending September 30, 2024

Fiscal year ending September 30, 2025

Total Lease Payments

1 unchanged sentence

Total present value of lease liabilities

Total operating lease costs of $

208,536 and $48,459 for the six months ended March 31, 2021 and 2020, 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 March 31, 2021:

Fiscal year ending September 30, 2021 (six months remaining)

Total operating lease costs of $ 327,991 and $ 38,328 for

the nine months ended June 30, 2021 and 2020, respectively, were included as part of General and administrative expenses.

terminated its ATL lease agreement upon exercise of its purchase option (see Note 7 for additional details).

The lease agreement was entered

into on June 6, 2020 for a two year term at $ 52,958 of base rent per month.

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 June 30, 2021:

Fiscal year ending September 30, 2021 (three months remaining)

Fiscal year ending September 30, 2022

4 unchanged sentences

imputed interest

Total present value of lease liabilities

These financing leases have a weighted average

lease term of 3.13 years and a weighted average discount rate of 10.0 % at March 31, 2021.

present value of lease liabilities

These financing leases have a weighted

average lease term of 3.15 years and a weighted average discount rate of 10.0 % at June 30, 2021.

RELATED PARTY TRANSACTIONS

Zachary Bradford – Chief

Executive Officer and Director

During the six months ended March 31,

2021, the Company paid Blue Chip Accounting, LLC (“Blue Chip”) $ 90,365 for accounting, tax, administrative

services and reimbursement for office supplies.

Zachary Bradford – Chief Executive

Officer and Director

During the nine months ended June

30, 2021, the Company paid Blue Chip Accounting, LLC (“Blue Chip”) $ 131,890 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

The Company also sub-leases office space from Blue Chip (see Note 15 for additional details).

During the six months

ended March 31, 2021, $ 9,150 was paid to Blue Chip for rent.

Matthew Schultz - Chairman of

None of the services were associated

with work performed by Mr.

The services consisted of bookkeeping, accounting, and administrative support assistance.

also sub-leases office space from Blue Chip (see Note 14 for additional details).

During the nine months ended June 30, 2021, $ 13,725 was

paid to Blue Chip for rent.

Matthew Schultz - Chairman of the Board

The Company entered into an agreement

1 unchanged sentence

Schultz is affiliated

The Company paid the organization $ 49,500 in fees plus $ 176,000 in expense reimbursements for the six months ended March

The Company paid the organization $ 49,500 in fees plus $ 176,000 in expense reimbursements for the nine months ended June 30, 2020.

The agreement was terminated in March 2020.

STOCKHOLDERS EQUITY

The Company’s authorized capital

stock consists of 50,000,000 shares of common stock and 10,000,000 shares of preferred stock, par value $ 0.001 per share.

March 31, 2021, there were 33,874,152 shares of common stock issued and outstanding, and 1,750,000 shares of preferred stock issued

and outstanding.

The Company’s authorized

capital stock consists of 50,000,000 shares of common stock and 10,000,000 shares of preferred stock, par value $ 0.001 per share.

June 30, 2021, there were 34,697,943 shares of common stock issued and outstanding, and 1,750,000 shares of preferred stock issued and

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

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.

Under the Certificate of Designation,

holders of Series A Preferred Stock are 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

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

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.

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”).

On March 16, 2021, 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 50,000,000 .

Common Stock issuances during the six months

ended March 31, 2021

On March 16, 2021, 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 50,000,000 .

Common Stock issuances during the nine months ended

June 30, 2021

The Company issued 4,444,445 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.

value of these shares is $ 1.9

million and was fully expensed for in the prior year.

The Company issued 222,725

shares of common stock for the current year related to bonus compensation.

The fair value of these shares is $ 1.07

million and $ 582

thousand has been expensed during the six months ended March 31, 2021.

The Company issued 1,618,285 shares

of common stock in relation to the acquisition of ATL (See Note 3 for additional details.)

The Company issued 43,749 shares of

common stock for services rendered for a total fair value of $576 thousand and has been fully expensed during the six months ended

March 31, 2021.

The Company issued 339,035 shares of

common stock in relation to the exercise of stock options and warrants.

of approximately $ 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 was approximately $ 1.9 million and was fully expensed for in the prior year.

The Company issued 327,725 shares of common stock for the current year related to bonus compensation.

The fair value of these shares is approximately $ 3.07 million, out of which approximately $ 2.55 million has been expensed during the nine months ended June 30, 2021.

The Company issued 1,618,285 shares of common stock in relation to the acquisition of ATL (See Note 3 for additional details.)

Company issued 55,093

shares of common stock for services rendered for a total fair value of approximately $ 786,000 which

has been fully expensed during the nine months ended June 30, 2021.

The Company issued 387,345 shares of common stock in relation to the exercise of stock options and warrants.

(See Notes 12 and 13 for additional details.)

The Company issued 477,703 shares of

common stock in relation to the acquisition of SWS (See Note 3 for additional details.)

The Company issued 18,392 restricted

stock units for a total fair value of $ 510,000 of common shares to certain SWS employees as part of the transaction to incentivize

the employees for retention purposes.

These restricted stock units vest over a period of one year and we have expensed $ 42,500

during the six months ended March 31, 2021.

The Company issued 477,703 shares of common stock in relation to the acquisition of SWS (See Note 3 for additional details.)

Company issued 18,392

restricted stock units for a total fair value of $ 510,000

of shares of common stock to certain SWS employees as part of the transaction to incentivize the employees for retention purposes.

These restricted stock units vest over a period of

one year , and we have expensed $ 80,821 during the nine months ended June 30, 2021.

The Company issued 9,090,910 shares of the Company’s common stock in connection with its underwritten public equity offering at a price of $ 22.00 per share for net proceeds of approximately $ 187.2 million.

June 3, 2021, the Company entered into an At The Market Offering Agreement (“ATM”) with H.C.

Wainwright & Co., LLC, to

create an at-the-market equity program under which the Company may, from time to time, offer and sell shares of its common stock having

an aggregate gross offering price of up to $ 500,000,000

to or through H.C.

Wainwright & Co., LLC.

During the nine months ended June 30, 2021, the Company issued 731,190

shares of the Company’s common stock under The ATM for net proceeds of $ 11,860,566 .

The shares were sold pursuant to a prospectus dated March 15, 2021 and a prospectus supplement dated June 3, 2021 filed with the SEC.

Common stock returned during the nine months ended

June 30, 2021

As a result of an adjustment of

holdback shares to actual milestones earned in relation to the p2k acquisition, 8,072 shares were returned and cancelled.

for additional details.)

As a result of an adjustment of holdback shares

pursuant to Article II and Schedule A of that certain Agreement and Plan of Merger in connection with the acquisition of ATL, 68,194 shares

were returned and cancelled.

(See Note 3 for additional details.)

Common Stock issuances during the nine months ended

June 30, 2020

The Company issued 1,964,313 shares

of common stock in accordance with the terms of the convertible debt agreement due to the decrease in stock price.

Company issued 22,000 shares

of the Company’s common stock in connection with its underwritten public equity offering at a price of $ 22.00 per

share for net proceeds of $ 187.2 million.

Common stock returned during the six months

ended March 31, 2021

As a result of an adjustment of holdback

shares to actual milestones earned in relation to the p2k acquisition, 8,072 shares were returned and cancelled.

(See Note 3 for

additional details.)

Common Stock issuances during the six months

ended March 31, 2020

The Company issued 997,605 shares of

common stock in accordance with the terms of the convertible debt agreement due to the decrease in stock price.

The Company issued 2,000 shares of

common stock for services rendered to an independent consultant.

of common stock for services rendered to independent consultants and

board members 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.

The Company issued 95,699 shares

of common stock in relation to the acquisition of p2k.

In relation to a 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 .

In relation to a 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 .

The Company issued 25,019 shares of common

stock as a result of rounding related to the reverse stock split.

The Company issued 95,699 shares of

common stock in relation to the acquisition of p2k

Common stock returned during the six months

ended March 31, 2020

As a result of a note payoff on December

5, 2019, 5,000 shares common stock were returned to treasury and cancelled on January 13, 2020.

As a result of the cancellation of

an investor relations services contract, 25,000 shares were returned to treasury and cancelled on February 10, 2020.

Series A Preferred Stock issuances during

the six months ended March 31, 2020

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 three members of its board of directors for services rendered.

fair value of $ 0.02 per share was determined by the Company.

stock as board and executive compensation at a fair value of $ 57,500 .

Common stock returned during the nine months ended

June 30, 2020

As a result of a note payoff on

December 5, 2019, 5,000 shares common stock were returned to treasury and cancelled on January 13, 2020.

As a result of the cancellation

of an investor relations services contract, 25,000 shares were returned to treasury and cancelled on February 10, 2020.

Series A Preferred Stock issuances during the nine

months ended June 30, 2020

On October 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

three members of its board of directors for services rendered.

A 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.

We accrued $ 177,505 in preferred stock

dividends payable for the three months ended March 31, 2021.

We accrued $177,505 in preferred stock dividends

payable for the nine months ended June 30, 2021.

STOCK WARRANTS

The following is a summary of stock warrant

activity during the six months ended March 31, 2021.

The following is a summary of stock warrant activity

during the nine months ended June 30, 2021.

Number of Warrant Shares

3 unchanged sentences

Warrants expired

Warrants canceled

Warrants canceled / forfeited

Warrants exercised

Balance, March 31, 2021

During the six months ended March 31, 2021,

a total of 166,396 shares of the Company’s common stock were issued in connection with the exercise of 166,396 common stock

warrants at exercise prices ranging from $ 3.36 and $ 20.00 , for a total consideration of $ 2,774,812 .

On March 31, 2021, a total of 74,437 shares

of the Company’s common stock were issued in connection with the cashless exercise of 76,800 common stock warrants

at exercise prices ranging from $ 0.83 to $ 3.67 .

As of March 31, 2021, the outstanding warrants

have a weighted average remaining term of was 0.77 years and an intrinsic value of $ 6,073,392 .

As of March 31,

Balance, June 30, 2021

the nine months ended June 30, 2021, a total of 173,990

shares of the Company’s common stock were issued in connection with the exercise of common stock warrants at exercise prices

ranging from $ 3.36

and $ 20.00 ,

for total consideration of $ 2,883,622 .

June 30, 2021, a total of 74,437 shares of the Company’s common stock were issued in connection with the cashless exercise

of 76,800 common stock warrants at exercise prices ranging from $ 0.83 to $ 3.67 .

As of June 30, 2021, the outstanding warrants

have a weighted average remaining term was 0.93 years and an intrinsic value of $ 924,250 .

30, 2021, there are warrants exercisable to purchase 605,704 shares of common stock in the Company

1 unchanged sentence

warrants outstanding that cannot be exercised until vesting conditions are met.

858,699 of the warrants require a cash investment

to exercise as follows, 2,500 require a cash investment of $ 8.00 per share, 439,865 require a cash investment of $ 15.00 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.

197,170 of the outstanding warrants contain provisions allowing a cashless

exercise at their respective exercise prices.

418,834 of the warrants require a cash investment to exercise

as follows, 2,500 require a cash investment of $ 8.00 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,

38,334 require a cash investment of $ 75.00 per share and 5,000 require a cash investment of $ 100.00 per share.

196,870 of the outstanding

warrants contain provisions allowing a cashless exercise at their respective exercise prices.

STOCK OPTIONS

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 the Plan to increase its share pool

from 300,000 to 1,500,000 shares of common stock.

As of March 31, 2021, there were 461,767 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 six months ended March 31, 2021.

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 the Plan to increase its share pool from 300,000 to 1,500,000 shares

of common stock.

As of June 30, 2021, there were 26,261 shares available for issuance under the Plan.

On July 16, 2021, the Board unanimously approved to

(i) increase the number of shares of common stock authorized for issuance under the Plan by an additional 2,000,000 shares, resulting

(if such increase is authorized by the

Company’s stockholders at the annual meeting

of stockholders on September 15, 2021) in the aggregate of 3,500,000

shares of common stock authorized for issuance under

the Plan, and (ii) revise Section 19 of the Plan to more closely

align with the provisions of Section 422 of the Internal

Revenue Code of 1986, as amended, and Section 17.2 of the

Plan (the “Plan Amendment”).

As of July 16, 2021, options to purchase an aggregate

of 801,500 shares of common stock have been issued to three

officers of the Company, conditioned upon stockholder

approval of the Plan Amendment and ratification of such

issuances by the Company’s stockholders, which

approval must occur on or prior to April 16, 2022, or such options

shall be rendered null and void.

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

nine months ended June 30, 2021:

of Option Shares

Average Exercise Price

Balance, September 30, 2020

Options granted

Options expired

Options cancelled

Options exercised

Balance, March 31, 2021

As of March 31, 2021, there are options exercisable to purchase

September 30, 2020

canceled / forfeited

June 30, 2021

As of June 30, 2021, there are options exercisable to purchase

357,774 shares of common stock in the Company.

As of March 31, 2021, the outstanding options have a weighted average remaining

term of was 2.43 years and an intrinsic value of $ 7,345,720 .

Option activity for the six months ended

March 31, 2021

During the six months ended March 31, 2021,

As of June 30, 2021, the outstanding options have a weighted average remaining term of

was 3.31 years and an intrinsic value of $ 3,721,218 .

Option activity for the nine months ended June

During the nine months ended June 30,

2021, a total of 138,918 shares of the Company’s common stock were issued in connection with the exercise of 138,918 common stock

options at exercise prices ranging from $ 4.65 and $ 24.40 , for a total consideration of $ 847,940 .

During the six months ended

March 31, 2021, the Company issued 298,500 options with a total fair value of $ 2,696,715 to purchase shares of common stock to

The Company offset $ 953,125 of stock compensation expense against bonuses accrued during the prior year.

were granted at quoted market prices ranging from $ 7.55 to $ 34.67 and were valued at issuance using the Black Scholes model.

The Black-Scholes model utilized the following

inputs to value the options granted during the six months ended March 31, 2021:

the nine months ended June 30, 2021, the Company granted 636,750 options with a total fair value of $ 9,536,795 to

purchase shares of common stock to employees.

The Company offset $ 953,125 of stock compensation expense against bonuses accrued during

the prior year.

The shares were granted at quoted market prices ranging from $ 7.55 to $ 34.67 and were valued at issuance using the Black

Scholes model.

The Black-Scholes model utilized the following inputs

to value the options granted during the nine months ended June 30, 2021:

Fair value assumptions – Options:

March 31, 2021

June 30, 2021

Risk free interest rate

4 unchanged sentences

Expected dividends

the six months ended March 31, 2021 and 2020, the Company recognized of $ 1,163,401 and $ 716,740

of stock compensation expense respectively.

As of March 31, 2021, the Company expects to recognize $ 742,865 of

stock-based compensation for the non-vested outstanding options over a weighted-average period of 1.01

Option activity for the six months ended

March 31, 2020

During the six months ended March 31, 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

$ 716,740 was recorded as a result of the issuances.

The Black-Scholes model utilized the following

inputs to value the options granted during the six months ended March 31, 2020:

During the nine months ended June 30, 2021, the Company recognized $ 8,599,029 of stock compensation expense.

As of June 30, 2021, the Company expects to recognize approximately $ 5.5 million of stock-based compensation for the non-vested outstanding options over a weighted-average period of 2.42 years.

On April 16, 2021, the Company’s board of directors

approved one-time options to key executives Zachary Bradford, Lori Love and S.

Matthew Schultz subject to the availability of shares

under the Company’s 2017 Equity Incentive Plan with any remaining equity options to be granted when the Company obtains

shareholder approval to increase the shares under the Plan.

As of June 30, 2021, 801,500 of

these options were waiting to be issued pending the shareholder approval.

Option activity for the nine months ended June 30, 2020

During the nine months ended June 30, 2020, the Company recognized $ 1,171,632 of stock compensation expense and granted 233,233 options to purchase shares of common stock to employees, where such options 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:

Fair value assumptions – Options:

March 31, 2020

June 30, 2020

Risk free interest rate

2 unchanged sentences

Expected volatility

124 % - 209 %

Expected dividends

2 unchanged sentences

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 renewed and is on

an annual basis through February 28, 2022.

November 22, 2019, the Company entered into a lease to relocate the corporate office to 1185 South 1800 West, Suite 3, Woods Cross, UT

The agreement calls for the Company to make payments of $ 2,300 in base rent per month through February 28, 2021, unless

otherwise cancelled the lease automatically renews annually.

The lease was renewed through February 28 ,

San Diego Office

On May 15, 2018, the Company executed

month lease agreement, which commenced on July 1, 2018 at 4360 Viewridge Avenue, Suite C, San Diego, California.

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.

Las Vegas Offices

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.

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 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.

called for the Company to make payments of $ 4,057 in base rent per month through July 31, 2021 subject to an annual 3 % rent

The lease was terminated on July 31, 2021.

Carlsbad Office

On June 17, 2021, the Company entered into a lease agreement at 2042 Corte Del Nogal, Suite C, Carlsbad, CA 92011.

The agreement calls for the company to make monthly payments of $ 11,307 in base rent through June 30, 2026, subject to an annual 3 % rent escalation.

Las Vegas Offices

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.

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 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 per month in base

rent through June 4, 2022.

The agreement called for $ 1,801 in base rent through October 31, 2020.

The Company did not renew this lease and it was terminated on October 31, 2020.

Contingent consideration

On August 31, 2020, the Company acquired

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.

On February 24, 2021, the Company acquired

Pursuant to the terms of the purchase agreement, additional cash consideration of $ 2,500,000 will be payable if Solar Watt

Solutions achieves certain revenue milestones.

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.

February 24, 2021, the Company acquired SWS.

Pursuant to the terms of the purchase agreement, additional cash consideration of $ 2,500,000

will be payable if Solar Watt Solutions achieves

certain revenue 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.

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 contingent liabilities.

Despite the measures taken, such policies

may not cover future litigation, or the damages claimed may exceed our coverage which could result in contingent liabilities.

For a description of our material pending

1 unchanged sentence

MAJOR CUSTOMERS AND VENDORS

For the six months ended March 31, 2021 and

For the nine months ended June 30, 2021 and 2020,

the Company had the following customers that represented more than 10% of our sales.

March 31, 2021

March 31, 2020

For the three months ended March 31, 2021 and

2020, 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.

March 31, 2021

March 31, 2020

We report revenue from both customers under our Energy

June 30, 2021

June 30, 2020

For the nine months ended June 30, 2021 and 2020,

the Company had one supplier that represented more than 10% of our direct costs.

Internally developed product costs and labor for services

rendered are excluded from the calculation.

We report costs from vendor A under our Energy Segment and vendor B under our Digital Currency

Mining Segment.

June 30, 2021

June 30, 2020

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:

We disclose segment information that is consistent with the way in

which management operates and views the business.

To better align with the Company’s core focus, the Company reduced its reportable

segments down to two by eliminating the digital agency segment.

Results associated with that component are now being reported under other

revenue and eliminations.

Our operating structure now contains the following reportable segments:

Energy Segment – Consisting of our CleanSpark,

LLC, CleanSpark Critical Power Systems, Inc., GridFabric, and SWS.

lines of business, this segment provides services, equipment,

and software to the energy industry.

Digital Agency Segment – p2k provides

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

Digital Currency Mining Segment – Consisting of ATL

and CleanBlok, LLC, this segment mines digital currency assets, namely Bitcoin.

Three Months Ended March 31, 2021

Digital Agency

Digital Currency Mining

Inter-segment

$ ( 125,353 )

Total cost and expenses

Income/(loss) from operations

( 9,223,830 )

LLC, CleanSpark Critical Power Systems, Inc., GridFabric, and Solar Watt Solutions lines of business, this segment provides services,

equipment, and software to the energy industry.

Currency Mining Segment – Consisting of ATL and CleanBlok, Inc., this segment mines digital

currency assets, namely Bitcoin.

SEGMENT REPORTING - Segment Reporting Assets

the Three Months Ended

the Nine Months Ended

Currency Mining

Segment Revenues

revenue and eliminations

(excluding depreciation and amortization)

$ ( 1,635,401 )

Capital expenditures

Depreciation and amortization

Three Months Ended March 31, 2020

Digital Agency

Digital Currency Mining

Inter-segment

Total cost and expenses

Income/(loss) from operations

$ ( 530,074 )

$ ( 4,711,928 )

Capital expenditures

Depreciation and amortization

Six Months Ended March 31, 2021

Digital Agency

Digital Currency Mining

Inter-segment

$ ( 2,294,571 )

Total cost and expenses

Income/(loss) from operations

Currency Mining

segment profit/(loss)

$ ( 530,074 )

$ ( 2,294,571 )

Capital expenditures

Depreciation and amortization

Months Ended March 31, 2020

Digital Agency

Digital Currency Mining

Inter-segment

Total cost and expenses

Income/(loss) from operations

items and eliminations (including depreciation and amortization)

$ ( 16,677,127 )

$ ( 8,551,301 )

Capital expenditures

Depreciation and amortization

Digital Agency

Digital Currency Mining

Accounts Receivable

$ ( 16,444,619 )

$ ( 16,282,653 )

June 30, 2021

September 30, 2020

Digital Agency

Digital Currency Mining

Accounts Receivable

SUBSEQUENT EVENTS

On April 1, 2021, the Company issued 7,144

shares of common stock in connection with a Common Stock warrant exercise at an exercise price of $ 15.00 per share.

received $ 107,160 as a result of the issuance.

During April 2021, the Company received approximately 900 S19 pro

mining servers against the orders it placed during the months of March and April 2021.

April 2, April 6, April 9, April 14, and April 29, 2021 the Company

entered into agreements with cryptocurrency mining equipment suppliers to purchase an aggregate of approximately 23,900 mining

servers for an aggregate purchase price of $ 192,307,550 .

paid $ 90,164,750 towards these miner purchases in April 2021.

On April 16, 2021, as more specifically

described in that certain Current Report on Form 8-K filed by the Company with the SEC on April 16, 2021, at the recommendation

of the Company’s Compensation Committee, the Company’s board of directors approved certain executive compensation matters

with key executives Zachary Bradford, Lori Love and S.

Matthew Schultz (the “Executives”).

Specifically, amendments

to the employment agreements of the Executives were approved which provided (i) an additional cash bonus incentive for Ms.

based on the Company achieving certain annual gross revenues plus realized gains/losses for the current fiscal year, (ii) the addition

of non-cash components to the base salaries of Mr.

Bradford and Mr.

Schultz in the form of certain monthly payments of Bitcoin,

and (iii) additional cash and equity bonus incentives for Mr.

Bradford and Mr.

Schultz based on the Company achieving certain annual

gross revenues plus realized gains/losses in the current fiscal year as well as certain market capitalization milestone targets

for the current fiscal year.

Additionally, the Executives received (i) one-time cash incentive bonuses, (ii) one-time grants of

fully vested RSUs and (iii) option grants to acquire shares of common stock that vest over 36 months.

Certain of the additional equity

incentive grants set forth above will be granted to the extent there are available shares under the Company’s 2017 Equity

Incentive Plan (the “Plan”) with any remaining equity grants to be granted when the Company obtains shareholder approval

to increase the shares available under the Plan.

Other and Corporate assets

$ 297,488,821

On July 8, 2021, the Company, through its wholly owned

subsidiary, CleanBlok, entered into a services agreement with Coinmint, LLC (“Coinmint”).

Pursuant to the agreement, Coinmint

has agreed to house and power certain of CleanBlok’s cryptocurrency mining equipment in its facilities, and to use commercially

reasonably efforts to mine Bitcoin on behalf of CleanBlok.

All Bitcoin mining services performed by Coinmint for CleanBlok shall be conducted

using mining equipment owned by CleanBlok, which equipment will be delivered by CleanBlok to a designated hosting locations over the term

of the agreement.

Pursuant to the agreement, as consideration for the

Hosting Services, CleanBlok shall pay Coinmint services fees, which shall be based on the operating costs incurred by Coinmint in performing

the Services, and a variable fee calculated based on the profitability of the Bitcoin mined during the relevant payment periods, subject

to uptime performance commitments.

The Agreement has an initial term of one year, after which it will renew automatically for three-month

periods until terminated in accordance with the terms of the Agreement.

On July 22, 2021, the Company created CSRE Properties

Norcross, LLC, a single member limited liability company and wholly owned subsidiary of the Company, under the laws of the State of Georgia.

The entity was created to hold certain real-estate assets of the Company.

On July 28, 2021, the Company created CSRE Property

Management Company, LLC, a single member limited liability company and wholly owned subsidiary of the Company, under the laws of the State

The entity was created to hold certain real-estate assets of the Company.

On August 6, 2021, CSRE Properties Norcross, LLC purchased

certain real property located at 5295 Brook Hollow Parkway, Norcross, Georgia for $6,550,000.

The property consists of approximately seven

acres and includes an approximately 87,000 square foot office building.

The Company, through its subsidiary CleanBlok, Inc., intends to

utilize this office space to conduct certain of its cryptocurrency mining activities.

Between July 1, 2021 and August 13, 2021, the Company issued 893,324

shares of the Company’s common stock in connection with its ATM for net proceeds of $12,198,106.

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