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Item 1A. Risk Factors

2021-12-14 compared with 2020-12-17 · 1131 added, 598 removed, 48 unchanged (97% of the section changed)

1 unchanged sentence

harm our business, prospects, financial condition and results of operations.

An investment in our common stock is speculative and involves a high degree of risk.

In evaluating an investment in shares of our common stock, you should carefully consider

the risks described below, together with

the other information included in this report.

An investment

in our common stock is speculative and involves a high degree of risk.

In evaluating an investment

in shares of our common stock, you should carefully consider the risks

described below, together with the other information included in this Annual Report.

described below are not the only risks we face.

If any of the events described

in the following risk factors actually occurs, or if additional risks

If any of the events described in

the following risk factors actually occurs, or if additional risks

and uncertainties later materialize, that are not presently

known to us or that we currently deem immaterial,

then our business, prospects, results of operations and financial condition

could be materially adversely affected.

In that event, the trading price of our common

stock could decline, and you may lose all or part of your investment in our shares.

discussed below include forward-looking statements, and our actual results

then our business, prospects, results of operations and financial condition could

be materially adversely affected.

In that event, the trading price of our common stock could

decline, and you may lose all or part of your investment in our shares.

The risks discussed

below include forward-looking statements, and our actual results

may differ substantially from those discussed in these forward-looking statements.

Factors Summary

Below is a summary of the principal factors

that make an investment in our common stock speculative or risky.

This summary does not address all of the risks that we face.

discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below and should be carefully

considered, together with other information included in this Annual Report.

· risks arising from pandemics, epidemics or an outbreak of diseases, such

as the recent outbreak of the COVID-19 pandemic;

· supply chain and shipping disruptions have resulted in shipping delays,

a significant increase in lead times and shipping costs, and could increase product costs and result in lost sales and bitcoin production;

· our limited operating history and history of operating losses and negative

· volatile and unpredictable cycles in the emerging and evolving industries

in which we operate;

· competition in the markets in which we operate;

· our reliance on intellectual property rights to protect our technology;

· our ability to manage our suppliers and contract manufacturers;

· our relationships with certain key customers;

· our limited experience selling our distributed energy focus products and

solutions for use in residential markets;

· the concentration of our solar energy business in Southern California;

· potential product defect or liability suits, or any recall of our products;

· our reliance on our management team, and any failure by management to properly

manage growth;

· future strategic acquisitions and other arrangements that we engage in,

which could disrupt our business, cause dilution to our stockholders, reduce our financial resources and harm our operating results;

· our substantial dependency on utility rate structures and government incentive

programs that encourage the use of alternative energy sources;

· our need for financing in the future to sustain and expand our operations

and any inability to obtain such financing on acceptable terms, or at all;

· potential changes in laws and regulations applicable to digital currencies,

or interpretations thereof, including, without limitation, banking regulations and securities regulations and regulations governing mining

activities, both in the U.S.

and in other countries;

· the uncertain impact of geopolitical and economic events on the demand for

· our exposure to pricing risk and volatility associated with the value of

bitcoin because we do not hedge our investment in bitcoin;

· the development and acceptance of competing blockchain platforms or technologies;

· challenges of scaling bitcoin, which, if not overcome, may lead to high

fees or slow transaction settlement times;

· the reward for successfully solving a block will halve in the future and

its value may not adjust to compensate us for the reduction in the rewards we receive from our mining efforts;

· potential actions of malicious actors or botnets;

· our reliance on a third-party mining pool service provider for our mining

revenue payouts;

· loss, theft or restriction on access to bitcoins and other digital assets

· the loss or destruction of private keys required to access our bitcoins

and potential data loss relating to our bitcoins;

· the irreversibility of incorrect or fraudulent bitcoin transactions;

· forks in the bitcoin network;

· the open-source structure of the bitcoin network protocol and any failure

to properly monitor and upgrade the protocol;

· the possibility that banks and financial institutions may not provide services

to businesses that engage in cryptocurrency-related activities;

· potential exposure to specifically designated nationals or blocked persons

as a result of our interactions with the bitcoin network;

· the relative novelty and lack of regulation of the digital asset exchanges

on which cryptocurrencies, including bitcoin, trade;

· inadequate sources of recovery if our digital assets are lost, stolen or

· the lack of limitations of FDIC or SIPC protections for the assets we hold;

possible failure to comply with internal control over financial reporting requirements under

Section 404 of the Sarbanes-Oxley Act of 2002;

· the limited rights of legal recourse available to us following any loss

of our bitcoins;

· the possibility that a cryptocurrency other than bitcoin could be more desirable

to the digital asset user base;

· the possibility that our mining costs may exceed our mining revenues;

· damage of the properties included in our mining operation and inability

to get adequate insurance coverage for same;

· our need for significant electrical power to support our mining operations;

· competition from other methods of investing in cryptocurrencies;

· the possibility that operators of bitcoins mining operations may immediately

sell bitcoin rewards earned by mining in the market, thereby constraining the growth of the price of bitcoin;

· risks related to technological obsolescence, the vulnerability of the global

supply chain for cryptocurrency hardware disruption, and difficulty in obtaining new hardware;

· the possible transition of bitcoin mining algorithms to proof of stake validation;

· potential Internet disruptions;

· the limited precedent for financial accounting of digital assets, and the

possibility of future accounting requirements for transactions involving digital assets;

· future developments regarding the treatment of digital assets for U.S.

income and applicable state, local and non-U.S.

tax purposes;

· the price of our common stock may be volatile and could fluctuate widely

· any future issuance of preferred stock may adversely affect holders of our

common stock, as shares of preferred stock may have additional rights, preferences and privileges as compared to the common stock;

· we have not, and do not intend to, pay dividends on shares of our common

· if securities or industry analysts do not publish or do not continue to

publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our stock, our stock price

and trading volume could decline;

· Provisions in the Nevada Revised Statutes and our Bylaws could make it very

difficult for an investor to bring any legal actions against our directors or officers for violations of their fiduciary duties or could

require us to pay any amounts incurred by our directors or officers in any such actions.

Related to Our Business

Our business may be subject to risks

arising from pandemic, epidemic, or an outbreak of diseases, such as the recent outbreak of the COVID-19 illness.

The recent outbreak of the novel strain

of coronavirus, or COVID-19, which has been declared by the World Health Organization to be a “public health emergency of

international concern,” has spread across the globe and is impacting worldwide economic activity.

A public health pandemic,

including COVID-19, poses the risk that we or our employees,

contractors, suppliers, and other partners

may be prevented from conducting business activities for an indefinite period of time, including due to shutdowns that may be requested

or mandated by governmental authorities.

While it is not possible at this time to estimate the impact that COVID-19 could have

on our business, the continued spread of COVID-19 and the measures taken by the governments of countries affected could disrupt

the supply chain and adversely impact our business, financial condition or results of operations.

The COVID-19 outbreak and mitigation

measures may also have an adverse impact on global economic conditions which could have an adverse effect on our business and financial

The extent to which the COVID-19 outbreak impacts our results will depend on future developments that are highly uncertain

and cannot be predicted, including new information that may emerge concerning the severity of the virus and the actions to contain

We lack an established operating history and

have incurred losses in prior periods, expect to incur losses

in the future and we can give no assurance that

our operations will result in profits.

We have a limited operating history

that makes it difficult to evaluate our business.

Historical sales pertaining to our products have been in insufficient to create

positive cashflows or profitability, and we cannot say with certainty when we will begin to achieve profitability.

Since inception, we have sustained

$116,402,606 in cumulative net losses and we had a net loss for the fiscal year September 30, 2020 of $23,346,143.

have operating losses at least until such time as we have developed a substantial and stable revenue base.

We cannot assure you

that we can develop a substantial and stable revenue base or achieve or sustain profitability on a quarterly or annual basis in

Our future success is difficult

to predict because we operate in emerging and evolving markets, and the industries in which we compete are subject to volatile

and unpredictable cycles.

The renewable energy, microgrid and

related industries are emerging and evolving markets which may make it difficult to evaluate our future prospects and which may

lead to period to period variability in our operating results.

Our products and services are based on unique technology which we

believe offers significant advantages to our customers, but the markets we serve are in a relatively early stage of development

and it is uncertain how rapidly they will develop.

It is also uncertain whether our products will achieve high levels of demand

and acceptance as these markets grow.

If companies in the industries we serve do not perceive or value the benefits of our technologies

and products, or if they are unwilling to adopt our products as alternatives to traditional power solutions, the market for our

products and services may not develop or may develop more slowly than we expect, which could significantly and adversely impact

our operating results.

As a supplier to the renewable energy,

microgrid and related industries, we may be subject to business cycles.

The timing, length, and volatility of these business cycles

may be difficult to predict.

These industries may be cyclical due to sudden changes in customers’ manufacturing capacity

requirements and spending, which depend in part on capacity utilization, demand for customers’ products, inventory levels

business has been, and in the future may be, subject to risks arising from pandemic, epidemic, or an outbreak of diseases, such as the

outbreak of the COVID-19 pandemic.

2020, the World Health Organization declared the COVID-19 outbreak to be a pandemic.

Since then, COVID-19 has spread across the globe

and is impacting worldwide economic activity, including through quarantines, travel bans and restrictions, shelter-in-place orders, shutdowns

of businesses, reductions in business activity, supply chain interruptions and overall economic and financial market instability.

measures have impacted, and may further impact, our workforce and operations, as well as the operations of our customers, our partners

and our vendors and suppliers.

Our critical business operations, including our headquarters, and many of our key suppliers, are located

in regions which have been and continue to be impacted by COVID-19.

Our customers and suppliers worldwide have also been affected by COVID-19

and may continue to experience material impacts well beyond the end of the pandemic.

Specifically,

the manufacture of components of our products, the final assembly of our products, and other critical operations are concentrated in certain

geographic locations that have been impacted by COVID-19 and in which local governments continue to take measures to try to contain the

There is considerable uncertainty regarding the impact of such measures and potential future measures, including restrictions

on manufacturing facilities, on our support operations or workforce, or on our customers, partners, vendors and suppliers.

Such measures,

as well as restrictions on or disruptions of transportation, such as reduced availability or increased cost of air transport, port closures,

and increased border controls or closures, could limit our capacity to meet customer demand and have a material adverse effect on our

financial condition and results of operations.

The COVID-19 pandemic and other factors have

adversely affected our supply chain, consistent with its effect across many industries, including creating shipping and logistics challenges

and placing significant limits on component supplies.

These effects on our supply chain have resulted in delayed product availability

in our energy business, especially when combined with the demand for our products, and have adversely impacted, and may continue to adversely

impact, our ability to meet our energy product demand, result in additional costs, or may otherwise adversely impact our business and

results of operations.

They have also significantly increased the costs of shipping miners, related components and infrastructure.

expect these impacts, including delayed product availability, to continue for as long as the global supply chain is experiencing these

of COVID-19 has also caused us to modify our business practices as we comply with state-mandated requirements for safety in the workplace

to ensure the health, safety, and welling-being of our employees.

While the company has implemented a Vaccination and Testing Policy,

we still maintain other measures includ ing personal protective

equipment, social distancing, cleanliness of our facilities, and daily monitoring of the health of employees in our facilities, as well

as modifying our policies on employee travel and the cancellation of physical participation in meetings,

events, and conferences.

take further actions in response to the pandemic as may be required by government authorities or that we may determine are in the best

interests of our employees, customers, partners, and suppliers.

However, we have not developed a specific and comprehensive contingency

plan designed to address the challenges and risks presented by the COVID-19 pandemic and, even if and when we do develop such a plan,

there can be no assurance that such plan will be effective in mitigating the potential adverse effects on our business, financial condition,

and results of operations.

while the extent and duration of the COVID-19 pandemic on the global economy and our business in particular are difficult to assess or

predict, the pandemic has resulted in, and may continue to result in, significant disruption of global financial markets, which may reduce

our ability to access capital or our customers’ ability to pay us for past or future purchases, which could negatively affect our

working capital and liquidity.

A recession or financial market correction resulting from the lack of containment and spread of COVID-19

could impact overall spending, adversely affecting demand for our products and services, our business, and the value of our common stock.

impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change.

The extent of the impact of the

COVID-19 pandemic on our operational and financial performance, including our ability to execute our business strategies and initiatives

in the expected time frame, will depend on future developments, including, but not limited to, the duration and continued spread of the

pandemic, its severity, further related restrictions on travel, any reopening plans, the effectiveness of actions taken in the United

States and other countries to contain and treat the disease, including, without limitation, the effectiveness and timing of vaccination

initiatives in the United States and worldwide and the duration, timing, and severity of the impact on customer spending, including any

recession resulting from the pandemic, all of which are uncertain and cannot be predicted.

An extended period of global supply chain and

economic disruption as a result of the COVID-19 pandemic, even after the pandemic subsides, could have a materially adverse impact on

our business, results of operations, access to sources of capital and financial condition, though the full extent and duration of any

such impact is also uncertain.

Supply chain and shipping disruptions have resulted

in shipping delays, a significant increase in shipping costs, and could increase product costs and result in lost sales, which may have

a material adverse effect on our business, operating results and financial condition.

Supply chain disruptions, resulting from factors such

as the COVID-19 pandemic, labor supply and shipping container shortages, have impacted, and may continue to impact, us and our third-party

manufacturers and suppliers.

These disruptions have resulted in longer lead times and increased product costs and shipping expenses, including

with respect to the delivery of miners that we have purchased.

While we have taken steps to minimize the impact of these increased costs

by working closely with our suppliers and customers, there can be no assurances that unforeseen events impacting the supply chain will

not have a material adverse effect on us in the future.

Additionally, the impacts supply chain disruptions have on our third-party manufacturers

and suppliers are not within our control.

It is not currently possible to predict how long it will take for these supply chain disruptions

Prolonged supply chain disruptions impacting us and our third-party manufacturers and suppliers could interrupt product manufacturing,

increased lead times, increased product costs and result in lost sales and bitcoin production, result in a delay in the delivery of miners

that we have purchased, and continue to increase shipping costs associated with the delivery of our purchased miners, which may have a

material adverse effect on our business, operating results and financial condition.

We have a limited operating history and

a history of operating losses and negative cash flow, and we may never achieve consistent profitability.

Our limited operating history, including our

recent entry into the digital currency mining business, makes it difficult to evaluate our business and predict our future results of

Although we have achieved profitable quarters in the past, to date, we have not maintained consistent profitability from period

to period, and no assurances can be made that we will achieve consistent profitability in the near future, if ever.

From the Company’s

inception through September 30, 2021, we sustained $138,392,118 in cumulative net losses, and we had a net loss for the fiscal year ended

September 30, 2021 of $21,812,010.

We have generated these losses as we attempt to implement our business plan, including expanding

our existing products and customer base.

We will not achieve consistent profitability unless and until we can develop a substantial and

stable revenue base.

future success is difficult to predict because we operate in emerging and evolving industries that are subject to volatile and unpredictable

The renewable energy, bitcoin mining, microgrid

and related industries are emerging and evolving, which may lead to period-to-period variability in our operating results and may make

it difficult to evaluate our future prospects.

Our energy products and services are based on unique technology that we believe offers

significant advantages to our customers, but the markets we serve are in a relatively early stage of development and it is uncertain how

rapidly they will develop.

It is also uncertain whether our energy products will achieve high levels of demand and acceptance as these

markets grow.

If companies and customers in the industries we serve do not perceive or value the benefits of our technologies and products,

or if they are unwilling to adopt our products as alternatives to traditional power solutions, the market for our products and services

may not develop or may develop more slowly than we expect, which could significantly and adversely impact our operating results.

As a supplier

to the renewable energy, microgrid and related industries, we may be subject to business cycles, the timing, length, and volatility of

which may be difficult to predict.

The cyclical nature of our business may be driven by sudden changes in customers’ manufacturing

capacity requirements and spending, which depend in part on capacity utilization, demand for customers’ products, inventory levels

relative to demand and access to affordable capital.

These changes may affect the timing and amounts of customers’ purchases

and investments in technology, and affect our orders, net sales, operating expenses, and net income.

In addition, we may not be

able to respond adequately or quickly to the declines in demand by reducing our costs.

To meet rapidly changing demand in

each of the industries we serve, we must effectively manage our resources and production capacity.

During periods of decreasing

demand for our products, we must be able to appropriately align our cost structure with prevailing market conditions, effectively

manage our supply chain, and motivate and retain key employees.

During periods of increasing demand, we must have sufficient inventory

to fulfill customer orders, effectively manage our supply chain, and attract, retain, and motivate a sufficient number of qualified

If we are not able to timely and appropriately adapt to changes in our business environment or to accurately assess

where we are positioned within a business cycle, our business, financial condition, or results of operations may be materially

and adversely affected.

The industries in which we compete

are highly competitive and we may be unable to successfully compete to survive.

We compete in the market for renewable

energy products and microgrid technology and associated services that is intensely competitive.

Evolving industry standards, rapid

price changes and product obsolescence also impact the market.

Our competitors include many domestic and foreign companies, most

of which have substantially greater financial, marketing, personnel and other resources than we do.

Our current competitors or

new market entrants could introduce new or enhanced technologies, products or services with features that render our technologies,

products or services obsolete, less competitive or less marketable.

Our success will be dependent upon our ability to develop products

that are superior to existing products and products introduced in the future, and which are cost effective.

In addition, we may

be required to continually enhance any products that are developed as well as introduce new products that keep pace with technological

change and address the increasingly sophisticated needs of the marketplace.

Even if our current technologies prove to be commercially

feasible, there is extensive research and development being conducted on alternative energy sources that may render our technologies

and protocols obsolete or otherwise non-competitive.

There can be no assurance that we will

be able to keep pace with the technological demands of the marketplace or successfully develop products that will succeed in the

As a small company, we will be at a competitive disadvantage to most of our competitors, which include larger, established

companies that have substantially greater financial, technical, manufacturing, marketing, distribution and other resources than

There can be no assurance that we will have the capital resources available to undertake the research that may be necessary

to upgrade our equipment or develop new devices to meet the efficiencies of changing technologies.

Our inability to adapt to technological

change could have a materially adverse effect on our results of operations.

rely on patents and proprietary rights to protect our technology and enforcing those rights could disrupt our business operation

and divert precious resources that could ultimately harm our future

We rely on a combination of trade secrets,

confidentiality agreements and procedures and patents to protect our proprietary technologies.

In relation to our microgrid business,

we own the following patents:

9,941,696 B2 and patent number 10,658,839 "Establishing Communication and Power Sharing

Links Between Components of a Distributed Energy System, awarded April 10, 2018, The patent covers CleanSpark's ability to receive

data from a plurality of sources within a microgrid, which is then analyzed to forecast power needs across the microgrid, or a

combination of multiple 'fractal' microgrids, and then determining whether or when to share power with the requesting module.

We also own patent numbers 8,518,133

and 8,105,401 ‘Parallel Path, Downdraft Gasifier Apparatus and Method'’ and patent number 9,359,567 ‘Gasification

Method Using Feedstock Comprising Gaseous Fuel’– which covers our Gasifier technology.

We also own patent number 8,342,829

entitled ‘Electrolytic Reactor and Related Methods for Supplementing the Air Intake of an Internal Combustion Engine.’

The claims contained in any patent

may not provide adequate protection for our products and technology.

In the absence of patent protection, we may be vulnerable

to competitors who attempt to copy our products or gain access to our trade secrets and know-how.

In addition, the laws of foreign

countries may not protect our proprietary rights to this technology to the same extent as the laws of the U.S.

If a dispute arises concerning our

technology, we could become involved in litigation that might involve substantial cost.

Litigation could divert substantial management

attention away from our operations and into efforts to enforce our patents, protect our trade secrets or know-how or determine

the scope of the proprietary rights of others.

If a proceeding resulted in adverse findings, we could be subject to significant

liabilities to third parties.

We might also be required to seek licenses from third parties to manufacture or sell our products.

Our ability to manufacture and sell our products may also be adversely affected by other unforeseen factors relating to the proceeding

or its outcome.

As we continue

to grow and to develop our intellectual property, we could attract threats from patent monetization firms or competitors alleging

infringement of intellectual property rights.

Some of our competitors may be able

to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources.

If we do not prevail in this type of litigation, we may be required to:

stop commercial activities relating

to our product;

obtain one or more licenses in order to secure the rights to continue manufacturing or marketing certain products;

or attempt to compete in the market with substantially similar products.

Uncertainties resulting from the initiation and continuation

of any litigation could limit our ability to continue some of our operations.

A material part of our success

will depend on our ability to manage our suppliers and contract manufacturers.

Our failure to manage our suppliers and contract

manufacturers could materially and adversely affect our results of operations and relations with our customers.

We rely upon suppliers to provide the

components necessary to build our products and on contract manufacturers to procure components and assemble our products.

can be no assurance that key suppliers and contract manufacturers will provide components or products in a timely and cost efficient

manner or otherwise meet our needs and expectations.

Our ability to manage such relationships and timely replace suppliers and

contract manufacturers, if necessary, is critical to our success.

Our failure to timely replace our contract manufacturers and

suppliers, should that become necessary, could materially and adversely affect our results of operations and relations with our

If we are the subject

of future product defect or liability suits, our business will likely fail.

In the course of our

planned operations, we may become subject to legal actions based on a claim that our products are defective in workmanship or have

caused personal or other injuries.

We currently maintain liability insurance but there can be no guarantee that such coverage may

not be adequate to cover all potential claims.

Moreover, even if we are able to maintain sufficient insurance coverage in the future,

any successful claim could significantly harm our business, financial condition and results of operations.

We may be exposed to

lawsuits and other claims if our products malfunction, which could increase our expenses, harm our reputation and prevent us from

growing our business.

Any liability for damages resulting

from malfunctions of our products could be substantial, increase our expenses and prevent us from growing or continuing our business.

Potential customers may rely on our products for critical needs and a malfunction of our products could result in warranty claims

or other product liability.

In addition, a well-publicized actual or perceived problem could adversely affect the market’s

perception of our products.

This could result in a decline in demand for our products, which would reduce revenue and harm our

Further, since our products are used in systems that are made up on components made by other manufacturers, we may be

subject to product liability claims even if our products do not malfunction.

Any failure by management to

properly manage growth could have a material adverse effect on our business, operating results, and financial condition.

If our business develops as expected,

we anticipate that we will grow rapidly in the near future.

Our failure to properly manage our expected rapid growth could have

a material adverse effect on our ability to retain key personnel.

Our expansion could also place significant demands on our management,

operations, systems, accounting, internal controls and financial resources.

If we experience difficulties in any of these areas,

we may not be able to expand our business successfully or effectively manage our growth.

Any failure by management to manage growth

and to respond to changes in our business could have a material adverse effect on our business, financial condition and results

of operations.

The lack of management experience

in the renewable energy and microgrid industries could adversely affect our company.

Some members of management and the

board of directors may not have prior experience in the energy industry.

Some members do, however, have extensive work experience

in the reclamation, environmental industries, energy industries, financial/accounting industries, and business management.

lack of experience in the alternative energy industry may impair our managements’ and directors’ ability to evaluate

and make decisions involving our current operations and any future projects we may undertake in the alternative energy industry.

Such impairment and lack of experience could adversely affect our business, financial condition and future operations.

If we are unable to attract and

retain a sufficient number of skilled experts and workers our ability to pursue projects may be adversely affected and our costs

may increase.

Our rate of growth will be confined

by resource limitations as competitors and customers compete for increasingly scarce resources.

We believe that our success depends

upon our ability to attract, develop and retain a sufficient number of affordable trained experts that can execute our operational

The demand for trained software engineers, electrical engineers and other skilled workers is currently high.

unable to attract and retain a sufficient number of skilled personnel, our ability to pursue projects may be adversely affected

and the costs of performing our existing and future projects may increase, which may adversely impact our margins.

We have engaged

in and may engage in acquisitions that could disrupt our business, cause dilution to our stockholders, reduce our financial resources

and harm our operating results.

We have been involved in significant

acquisitions in our lifespan.

In the future, we may seek additional opportunities to expand our product offerings or the markets

we serve by acquiring other companies, product lines, technologies and personnel.

Acquisitions involve numerous risks,

including the following:

o difficulties integrating the operations, technologies, products,

and personnel of an acquired company or being subjected to liability for the target’s pre–acquisition activities or

operations as a successor in interest;

o diversion of management’s attention from normal daily operations

of the business;

o potential difficulties completing projects associated with in–process

research and development;

o difficulties entering markets in which we have no or limited prior

experience, especially when competitors in such markets have stronger market positions;

o initial dependence on unfamiliar supply chains or relatively small

supply partners;

o insufficient revenues to offset increased expenses associated with

acquisitions;

o the potential loss of key employees of the acquired companies;

o the potential for recording goodwill and intangible assets that later

can be subject to impairment.

· Acquisitions may also cause us to:

o issue common stock that would dilute our current shareholders’

percentage ownership;

o assume or otherwise be subject to liabilities of an acquired company;

o record goodwill and non–amortizable intangible assets that

will be subject to impairment testing on a regular basis and potential periodic impairment charges;

o incur amortization expenses related to certain intangible assets;

o incur large acquisition and integration costs, immediate write–offs,

and restructuring and other related expenses;

o become subject to litigation.

Mergers and acquisitions are inherently

No assurance can be given that our acquisitions will be successful.

Further, no assurance can be given that an acquisition

will not adversely affect our business, operating results, or financial condition.

Failure to manage and successfully integrate

an acquisition could harm our business and operating results in a material way.

Even when an acquired company has already developed

and marketed products, there can be no assurance that enhancements to those products will be made in a timely manner or that pre–acquisition

due diligence will identify all possible issues that might arise with respect to such products or the acquired business.

Our business is substantially

dependent on utility rate structures and government incentive programs that encourage the use of alternative energy sources.

reduction or elimination of government subsidies and economic incentives for energy-related technologies would harm our business.

We believe that near-term growth of

energy-related technologies, including power conversion technology, relies partly on the availability and size of government and

economic incentives and grants (including, but not limited to, the U.S.

Investment Tax Credit and various state and local incentive

These changes may affect the timing and amounts of customers’ purchases and

investments in technology, and affect our orders, net sales, operating expenses, and net income.

In addition, we may not be able to respond

adequately or quickly to any declines in demand by reducing our costs.

To meet rapidly changing demand in each of the industries we serve,

we must effectively manage our resources and production capacity.

During periods of decreasing demand for our products, we must be able

to appropriately align our cost structure with prevailing market conditions, effectively manage our supply chain, and motivate and retain

key employees.

During periods of increasing demand for our products, we must have sufficient inventory to fulfill customer orders, effectively

manage our supply chain, and attract, retain, and motivate a sufficient number of qualified individuals.

If we are not able to timely

and appropriately adapt to changes in our business environment or to accurately assess where we are positioned within a business cycle,

our business, financial condition, or results of operations may be materially and adversely affected.

markets in which we participate are highly competitive, and we may be unable to successfully compete.

in the highly competitive market for renewable energy products and microgrid technology and associated services , as well as in

certain operational aspects of our digital currency mining business, including, but not limited to, the acquisition of new miners, obtaining

the lowest cost of electricity, obtaining clean energy sources, obtaining access to energy sites with reliable sources of power, and evaluating

new technology developments in the industry .

Evolving industry standards, rapid price changes and

product obsolescence impact the market and its various participants, including us.

Our competitors include many domestic and foreign companies,

many of which have substantially greater financial, marketing, personnel and other resources than we do, which may cause us to be at a

competitive disadvantage.

Our current competitors or new market entrants could introduce new or enhanced technologies, products or services

with features that render our technologies, products or services obsolete, less competitive or less marketable.

of our energy business will be dependent upon our ability to develop products that are superior

to existing products and products introduced in the future, and which are cost effective.

In addition, we may be required to continually

enhance any products that are developed as well as introduce new products that keep pace with technological change and address the increasingly

sophisticated needs of the marketplace.

Even if our current technologies prove to be commercially feasible, there is extensive research

and development being conducted on alternative energy sources that may render our technologies and protocols obsolete or otherwise non-competitive.

The success of our digital currency mining business will be further dependent upon our ability to purchase additional miners, adapt to

changes in technology in the industry, and to obtain sufficient energy at reasonable prices, amongst other things.

be unable to keep pace with the technological demands of the marketplace or successfully develop products that will succeed in the marketplace.

Since many of our competitors are larger, well-established companies that have substantially greater financial, technical, manufacturing,

marketing, distribution and other resources than us, we are at an inherent competitive disadvantage.

We may not have the capital resources

available to undertake the research that may be necessary to upgrade our equipment or develop new devices to meet the efficiencies of

changing technologies.

Our inability to adapt to technological change could have a materially adverse effect on our results of operations.

rely on a variety of intellectual property rights to protect our technology, and enforcing those rights could disrupt our business operation

and divert resources that could ultimately harm our future prospects.

a combination of trade secrets, confidentiality agreements and procedures and patents to protect our proprietary technologies.

primarily relies upon trade secret laws and contractual restrictions, such as confidentiality agreements and work-for-hire provisions,

to protect our technology, know-how and other proprietary information.

It may be cost prohibitive for us to seek to enforce such rights

through the legal-enforcement mechanisms available to us, and, in any case, such laws and contractual restrictions may not provide meaningful

protection to us against the possible unauthorized use, misappropriation or disclosure of such trade secrets.

to our microgrid business, we also own patents that protect our ability to receive data from a plurality of sources within a microgrid,

which is then analyzed to forecast power needs across the microgrid, or a combination of multiple ‘fractal’ microgrids, and

then determine whether or when to share power with the requesting module.

The claims contained in those and any other patents we own may

not provide adequate protection for our products and technology.

In the absence of patent protection, our competitors may attempt to copy

our products or gain access to our trade secrets and know-how.

In addition, the laws of foreign countries may not protect our proprietary

rights to our technology to the same extent as the laws of the U.S.

our ongoing expansion of our business, including, in particular, through the development of products, may result in claims of intellectual

property infringement, regardless of merit.

If an infringement claim or other dispute arises concerning our technology, we could become

involved in litigation that might involve substantial cost.

Litigation could divert substantial management attention away from our operations

and into efforts to enforce our patents, protect our trade secrets or know-how or determine the scope of the proprietary rights of others.

If a proceeding resulted in adverse findings, we could be subject to significant liabilities to third parties, and we might also be required

to seek licenses from third parties to manufacture or sell our products.

Our ability to manufacture and sell our products may also be

adversely affected by other unforeseen factors relating to any such proceeding or its outcome.

significant part of our success will depend on our ability to manage our suppliers and contract manufacturers, and any failure to do so

could materially and adversely affect our results of operations and relations with our customers.

a limited number of suppliers to provide the components necessary to build our energy products

and contract manufacturers to procure components and assemble our products.

In addition, we rely on a limited number of suppliers

for the purchase and delivery of our miners to support our digital currency mining operations.

can be no assurance that such key suppliers and contract manufacturers will provide components , products

or miners in a timely and cost-efficient manner or otherwise meet our needs and expectations.

disruption in such key suppliers’ or contract manufacturers could delay our ability to provide our products to our customers

or to expand our digital currency mining operations .

Our ability to manage such relationships and

timely replace suppliers and contract manufacturers, if necessary, is critical to our success.

Our failure to timely replace our contract

manufacturers and suppliers, should that become necessary, could materially and adversely affect our results of operations and relations

with our customers.

For example, we depend on Bitmain for the majority of our mining rigs and

Pioneer Custom Electrical Products Corp.

as a sole source contract manufacturer of our switchgear product lines, and any change in their

ability to manufacture and deliver these products could have a significant impact on our results of operations.

Our success is dependent upon our relationships

with certain key customers.

In the past, w e

have derived a significant portion of our revenues from a relatively limited number of customers.

Our dependence on a limited number of

customers may continue in the future.

The loss of any one of our major customers or decrease in demand by those customers could have a

material adverse effect on our business, our results of operations and our cash flows.

have limited experience selling our distributed energy focused products and solutions for use in residential markets, and our increased

efforts in this regard may not be as successful as we expect or at all.

of our recent acquisition of Solar Watt, we now are provid ing solar and alternative energy

solutions for homeowners, as well as commercial businesses, and have developed a proprietary

platform to enable integration and optimization of solar, energy storage and back-up solutions for residential applications.

Historically,

however, our products and solutions have been primarily sold into commercial and governmental markets.

We have limited experience pursuing

the residential markets, and there are unique challenges associated with sales to homeowners and others in the residential market.

can be no assurance that we will be successful in growing profitably (or at all) sales of our residential market focused products and

solutions or otherwise achieving success in our efforts in this regard.

Further, the success of these efforts will depend on part on expansion

of homeowner use of solar energy.

To date, solar energy has only achieved limited market acceptance (particularly in regions outside of

Southern California, in which regions we intend to expand our services and capabilities), and its continued market acceptance and growth

may depend on continued support in the form of performance-based incentives, rebates, tax credits and other incentives from federal, state,

local and foreign governments.

Additionally, there can be no assurance that we will be able to successfully develop our planned proprietary

platform to enable integration and optimization of solar, energy storage and back-up generators for residential applications.

solar energy business is concentrated in Southern California, putting us at risk of region-specific disruptions.

energy customer base is currently concentrated in Southern California, and we expect many of our future solar energy installations to

be in California, which could further concentrate our solar energy customer base and operational infrastructure.

Accordingly, our business

and results of operations are particularly susceptible to adverse economic, regulatory, political, weather and other conditions in California,

including the impacts of the COVID-19 pandemic and any legislative changes related to grid operations .

we are the subject of future product defect or liability suits, or our products are subject to a recall, our business and our reputation

could be adversely affected.

In the course

of our planned operations, we may become subject to legal actions based on a claim that our energy products are defective in workmanship

or have caused personal or other injuries.

We may also be subject to lawsuits and other claims in the future if our products malfunction,

including, for example, if any of our solar service offerings (such as our racking systems, photovoltaic modules, batteries, inverters,

or other products) causes injuries.

Because solar energy systems and many of our other current and anticipated products are electricity-producing

devices, it is possible that customers or their property could be injured or damaged by our products, whether due to product malfunctions,

defects, improper installation or other causes.

Further, since our products are used in systems that are made up of components sourced

from third party manufacturers, we may be subject to product liability claims even if our products do not malfunction.

Additionally, any

of our products could be subject to recalls due to product malfunctions or defects.

The successful

assertion of product liability claims against us could result in potentially significant monetary damages that could require us to make

significant payments, as well as subject us to adverse publicity, damage our reputation and competitive position and adversely affect

sales of our systems and other products.

We rely on third-party manufacturing warranties, warranties provided by our manufacturing partners

and our general liability insurance to cover product liability claims and have not obtained separate product liability insurance.

warranties and insurance coverage may not be adequate to cover all potential claims.

Moreover, even if such warranties and insurance coverage

are sufficient, any successful claim could significantly harm our business, reputation, financial condition and results of operations.

In addition, product liability claims, injuries, defects or other problems experienced by other companies in the industries in which we

operate could lead to unfavorable market conditions for the industry as a whole, and may have an adverse effect on our ability to attract

customers and thereby have an adverse effect our growth and financial performance.

rely heavily on our management team, whose continued service and performance is critical to our future success.

Any failure by management

to properly manage growth, including hiring and retaining competent and skilled management and other personnel, could have a material

adverse effect on our business, operating results, and financial condition.

We currently have four executive officers — our

Chief Executive Officer and President, Zachary Bradford, our Chief Financial Officer, Lori Love, our Chief Revenue Officer, Amer Tadayon,

Matthew Schulz, our Executive Chairman — who are responsible for our management functions and are responsible

for strategic development, financing and other critical functions.

Some of the members of our management team and our board of directors

may not have prior experience in the energy or cryptocurrency mining industries.

This lack of experience may impair our management teams’

and directors’ ability to evaluate and make well-informed decisions involving our current operations and any future projects we

may undertake in the industries in which we operate.

Such impairment and lack of experience could adversely affect our business, financial

condition and future operations.

success depends significantly on the continued service and performance of our existing management team.

The departure, death, disability

or other extended loss of services of any member of our management team, particularly with little or no notice, could cause delays on

projects, frustrate our growth prospects and could have an adverse impact on our client and industry relationships, our project exploration

and development programs, other aspects of our business and our financial condition, results of operations, cash flow and prospects.

growth prospects, and ability to capitalize on market opportunities also depend to a significant extent on our ability to identify, hire,

motivate and retain qualified managerial personnel, including additional senior members of management.

Our growth may be constrained by

resource limitations as competitors and customers compete for increasingly scarce human capital resources.

The demand for trained software

engineers, electrical engineers, professionals familiar with cryptocurrency mining and other skilled workers is currently high.

Our competitors

may be able to offer a work environment with higher compensation or more opportunities than we can.

Any new personnel we hire may not

be or become as productive as we expect, as we may face challenges in adequately or appropriately integrating them into our workforce

If we are unable to attract and retain a sufficient number of skilled personnel, our ability to successfully implement our

business plan, grow our company and maintain or expand our product offerings may be adversely affected, and the costs of doing so may

increase, which may adversely impact our business, financial condition and results of operations.

Our expansion

could also place significant demands on our management, operations, systems, accounting, internal controls and financial resources.

we experience difficulties in any of these areas, we may not be able to expand our business successfully or effectively manage our growth.

Any failure by management to manage growth and to respond to changes in our business could have a material adverse effect on our business,

financial condition and results of operations.

have engaged in, and in the future may engage in, strategic acquisitions and other arrangements that could disrupt our business, cause

dilution to our stockholders, reduce our financial resources and harm our operating results.

We have previously

engaged in strategic transactions, including acquisitions of companies, product lines, technologies and personnel, such as our recent

acquisitions of ATL in December 2020 and Solar Watt in February 2021, and, as part of our growth strategy, in the future, we

may seek additional opportunities to expand our product offerings or the markets we serve by pursuing strategic transactions.

to grow through future acquisitions will depend on the availability of, and our ability to identify, suitable acquisition and investment

opportunities at an acceptable cost, our ability to compete effectively to attract those opportunities and the availability of financing

to complete acquisitions.

Future acquisitions may require us to issue common stock that would dilute our current stockholders’ percentage

ownership, assume or otherwise be subject to liabilities of an acquired company, record goodwill and non-amortizable intangible assets

that will be subject to impairment testing on a regular basis and potential periodic impairment charges,

incur amortization expenses related

to certain intangible assets, incur large acquisition and integration costs, immediate write-offs, and restructuring and other related

expenses, and become subject to litigation.

The benefits of an acquisition may also take considerable time to develop, and we cannot be

certain that any particular acquisition will produce the intended benefits in a timely manner or to the extent anticipated or at all.

We may experience difficulties integrating the operations, technologies, products, and personnel of an acquired company or be subjected

to liability for the target’s pre-acquisition activities or operations as a successor in interest.

Such integration may divert management’s

attention from normal daily operations of our business.

Future acquisitions may also expose us to potential risks, including risks associated

with entering markets in which we have no or limited prior experience (such as our acquisition of our ATL subsidiary, in light of its

cryptocurrency mining operations), especially when competitors in such markets have stronger market positions, the possibility of insufficient

revenues to offset the expenses we incur in connection with an acquisition and potential loss of, or harm to, our relationships with employees,

customers, consumers and suppliers as a result of integration of new businesses.

energy business is substantially dependent on utility rate structures and government incentive programs that encourage the use of alternative

energy sources.

The reduction or elimination of government subsidies and economic incentives for energy-related technologies would harm

our business.

that near-term growth of energy-related technologies, including power conversion and solar energy technology, relies partly on the availability

and size of government and economic incentives and grants (including, but not limited to, the U.S.

Investment Tax Credit and various state

and local incentive programs).

These incentive programs could be challenged by utility companies, or for other reasons found to be unconstitutional,

and/or could be reduced or discontinued for other reasons.

The reduction, elimination, or expiration of government subsidies and

economic incentives could harm our business.

A combination of utility rate structures

and government subsidies that encourage the use of alternative energy sources is a primary driver of demand for our products.

example, public utilities are often allowed to collect demand charges on commercial and industrial customers in addition to traditional

usage charges.

In addition, the federal government and many states encourage the use of alternative energy sources through a combination

of direct subsidies and tariff incentives such as net metering for users that use alternative energy sources such as solar power.

California also encourages alternative energy technology through its Self-Generation Incentive Program, or SGIP, which offers rebates

for businesses and consumers who adopt certain new technologies.

Other states have similar incentives and mandates which encourage

the adoption of alternative energy sources.

or could be reduced or discontinued for other reasons, all of which are outside of our control.

The reduction, elimination, or expiration

of government subsidies and economic incentives could harm our business.

A combination

of utility rate structures and government subsidies that encourage the use of alternative energy sources is a primary driver of demand

for our energy products.

For example, public utilities are often allowed to collect demand charges on commercial and industrial customers

in addition to traditional usage charges.

In addition, the federal government and many states encourage the use of alternative energy

sources through a combination of direct subsidies and tariff incentives such as net metering for users that use alternative energy sources

such as solar power.

California also encourages alternative energy technology through its Self-Generation Incentive Program, or SGIP,

which offers rebates for businesses and consumers who adopt certain new technologies.

Other states have similar incentives and mandates

which encourage the adoption of alternative energy sources.

Notwithstanding the adoption of other incentive programs, we expect that California

will be the most significant market for the sale of our products in the near term.

will be the most significant market for the sale of our energy products in the near term.

Should California or another state in which

we derive a substantial portion of our product revenues in the future change its utility rate structure or eliminate or significantly

reduce its incentive programs, demand for our products could be substantially affected, which would adversely affect our business

prospects, financial condition and operating results.

we have obtained sufficient funding for the

foreseeable future, if we do not obtain increased

revenues in 2021 and beyond, we may have to seek additional financing or scale

back or cease our activities , which may

significantly harm our chances of success.

we currently operate at a loss, we are dependent on generating additional revenue.

The majority of our financing in 2020 was from

the sale of our common stock.

Subsequently, on October 9, 2020 we obtained approximately $40,000,000 before underwriting and offering

expenses in connection with an underwritten public offering.

While this financing is expected to carry us through 2021 and beyond,

we need to generate cashflows from revenues.

As explained in this annual report, these cashflows are needed to increase our sales

and marketing efforts, for continued upgrades to our software, and for working capital.

believe that near-term growth of energy-related technologies, including power conversion technology, relies partly on the availability

and size of government and economic incentives and grants (including, but not limited to, the U.S.

Investment Tax Credit and various

state and local incentive programs).

These incentive programs could be challenged by utility companies, or for other reasons found

to be unconstitutional, and/or could be reduced or discontinued for other reasons.

The reduction, elimination, or expiration of

government subsidies and economic incentives could harm our business.

reduce its incentive programs, demand for our products could be substantially affected, which would adversely affect our business prospects,

financial condition and operating results.

the future, we may require additional financing to sustain and expand our operations, and we may not be able to obtain financing on acceptable

terms, or at all, which would have a material adverse effect on our business, financial condition, results of operations, cash flow and

to operate profitably and to grow our business is dependent upon, among other things, generating sufficient revenue from our operations

and, when and if needed, obtaining financing.

If we are unable to generate sufficient revenues to operate and/or expand our business,

we will be required to raise additional capital to fund operating deficits (if applicable) and growth of our business, pursue our business

plans and to finance our operating activities, including through equity or debt financings, which may not be available to us on favorable

terms, or at all.

extent that we raise additional capital through the sale of equity or convertible debt securities, stockholder ownership interest in the

Company may be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect rights as

a stockholder.

Debt and equity financings, if available, may involve agreements that include covenants limiting or restricting our ability

to take specific actions, such as redeeming our shares of common stock, making investments, incurring additional debt, making capital

expenditures or declaring dividends.

We maintain our cash at financial institutions,

which at times, exceed federally insured limits.

The majority of our cash is held in accounts

banking institutions that we believe are of high quality.

Cash held in non-interest-bearing and interest-bearing operating accounts

may exceed the Federal Deposit Insurance Corporation insurance limits.

If such banking institutions were to fail, we could lose all or

a portion of those amounts held in excess of such insurance limitations.

If we fail to comply with Section 404

of the Sarbanes-Oxley Act of 2002, the market may have reduced confidence in our

reported financial information.

We must continue to document, test, monitor

and enhance our internal control over financial reporting in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act

We will continue to perform the documentation and evaluations needed to comply with Section 404.

If during this process our management

identifies one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal

controls are effective, which may cause market participants to have reduced confidence in our reported financial condition.

Related to Our Cryptocurrency Mining Operations

our acquisition of ATL in December 2020, we expanded our business to include bitcoin mining, and we are actively trying to grow our

bitcoin mining infrastructure, equipment and capacity.

Bitcoin mining is a significant portion of our business and revenues and is expected

to continue to be the source of a majority of our revenues in the future.

Our bitcoin mining

activities, both now and in the future, may subject us to inherent risks, including the risks described below and elsewhere in this

Annual Report .

regulatory changes or interpretations of our activities require our registration as a money services business (an “MSB”) under

the regulations promulgated by the Financial Crimes Enforcement Network (“FinCEN”) under the authority of the U.S.

Act (the “BSA”), or otherwise under state laws, we may incur significant compliance costs, which could be substantial or cost-prohibitive.

If we become subject to these regulations, our costs in complying with them may have a material adverse effect on our business and the

results of our operations.

extent our bitcoin mining activities cause us to be deemed an MSB under the regulations promulgated by FinCEN under the authority of the

BSA, we may be required to comply with FinCEN regulations, including those that would mandate us to implement anti-money laundering programs,

make certain reports to FinCEN and maintain certain records.

extent that our cryptocurrency activities cause us to be deemed a “money transmitter” (an “MT”)

or be given an equivalent designation, under state law in any state in which we operate, we may be required to seek a license or otherwise

register with a state regulator and comply with state regulations that may include the implementation of anti-money laundering programs,

maintenance of certain records and other operational requirements.

Currently, the New York State Department of Financial Services maintains

a comprehensive “BitLicense” framework for businesses that conduct “virtual currency business activity.” In July 2020,

Louisiana enacted the Virtual Currency Businesses Act, becoming the second state after New York to enact a stand-alone virtual currency

We will continue to monitor for developments in state-level legislation, guidance or regulations applicable to us.

Such additional

federal or state regulatory obligations in the United States or obligations that could arise under the regulatory frameworks of other

countries may cause us to incur significant expenses, possibly affecting its business and financial condition in a material and adverse

Furthermore, we and our service providers may not be capable of complying with certain federal or state regulatory obligations

applicable to MSBs and MTs or similar obligations in other countries.

If we are deemed to be subject to such additional regulatory and

registration or licensing requirements, we may be required to substantially alter our bitcoin mining activities and possibly cease engaging

in such activities.

Any such action may adversely affect our business operations and financial condition and an investment in our company.

regulation regarding the exchange of bitcoins under the CEA by the CFTC is unclear;

to the extent we become subject to regulation by the

CFTC in connection with our exchange of bitcoin, we may incur additional compliance costs, which may be significant.

The Commodity

Exchange Act, as amended (the “CEA”) , does not currently impose any direct obligations

on us related to the mining or exchange of bitcoins.

Generally , the Commodity Futures Trading

Commission (“CFTC”), the federal agency that administers the CEA, regards bitcoin and other cryptocurrencies as commodities.

This position has been supported by decisions of federal courts.

However, the CEA imposes requirements relative

to certain transactions involving bitcoin and other digital assets that constitute a contract of sale of a commodity for future delivery

(or an option on such a contract), a swap, or a transaction involving margin, financing or leverage that does not result in actual delivery

of the commodity within 28 days to persons not defined as “eligible contract participants” or “eligible commercial

entities” under the CEA (e.g., retail persons).

Changes in the CEA or the regulations promulgated by the CFTC thereunder, as well

as interpretations thereof and official promulgations by the CFTC, may impact the classification of bitcoins and, therefore, may subject

them to additional regulatory oversight by the agency.

Although to date the CFTC has not enacted regulations governing non-derivative

or non-financed, margined or leveraged transactions in bitcoin, it has authority to commence enforcement actions against persons who violate

certain prohibitions under the CEA related to transactions in any contract of sale of any commodity, including bitcoin, in interstate

commerce (e.g., manipulation and engaging in certain deceptive practices).

be certain as to how future regulatory developments will impact the treatment of bitcoins under the law.

Any requirements imposed by the

CFTC related to our mining activities or our transactions in bitcoin could cause us to incur additional extraordinary, non-recurring expenses,

thereby materially and adversely impacting an investment in the Company.

In addition, changes

in the classification of bitcoins could subject us, as a result of our bitcoin mining operations, to additional regulatory oversight by

Although to date the CFTC has not enacted regulations governing non-derivative or non-financed, margined or leveraged transactions

in bitcoin, it has authority to commence enforcement actions against persons who violate certain prohibitions under the CEA related to

transactions in any contract of sale of any commodity, including bitcoin, in interstate commerce (e.g., manipulation and engaging in certain

deceptive practices).

if our mining activities or transactions in bitcoin were deemed by the CFTC to constitute a collective investment in derivatives for our

shareholders, we may be required to register as a commodity pool operator with the CFTC through the National Futures Association.

additional registrations may result in extraordinary, non-recurring expenses, thereby materially and adversely impacting an investment

in the Company.

If we determine not to comply with such additional regulatory and registration requirements, we may seek to cease certain

of our operations.

Any such action may adversely affect an investment in the Company.

provision of the CEA, or CFTC rules, orders or rulings (except as noted herein) appears to be currently applicable to our business, this

is subject to change.

the SEC or another regulatory body considers bitcoin or any other cryptocurrency that we may mine in the future to be a security under

securities laws, we may be required to comply with significant SEC registration and/or other requirements.

novel or unique assets such as bitcoin and other digital assets may be classified as securities if they meet the definition of investment

contracts under U.S.

In recent years, the offer and sale of digital assets other than bitcoin, most notably Kik Interactive Inc.’s

Kin tokens and Telegram Group Inc.’s TON tokens, have been deemed to be investment contracts by the SEC.

While we believe that bitcoin

is unlikely to be considered an investment contract, and thus a security under the investment contract definition, we cannot provide any

assurances that digital assets that we mine or otherwise acquire or hold for our own account, including bitcoin, will never be classified

as securities under U.S.

extent that any digital asset we have already mined or will mine is deemed a security, we may be obligated to comply with registration

and/or other requirements by the SEC.

This would cause us to incur significant, non-recurring expenses, thereby materially and adversely

impacting an investment in the Company.

regulations or interpretations change and regulation of bitcoin under the U.S.

securities laws or otherwise is promulgated, we may be

classified as an investment company.

and future legislation and the SEC’s rulemaking and other regulatory developments, including interpretations released by a regulatory

authority, may impact the manner in which bitcoin is treated for classification and clearing purposes.

The SEC’s July 25, 2017

Report expressed its view that digital assets may be securities depending on the facts and circumstances.

As of the date of this Annual

Report, we are not aware of any rules that have been proposed to regulate bitcoin as a security, and SEC staff have publicly suggested

that bitcoin is not a security for purposes of the Investment Company Act of 1940, as amended (the “1940 Act”), because current

purchasers of bitcoin are not relying on the essential managerial and entrepreneurial efforts of others to produce a profit.

be certain, however, as to how future regulatory developments will impact the treatment of bitcoin under the law.

example, in the event that the bitcoin (or, in the future, any digital assets) held by us, whether as a result of our cryptocurrency

mining business or otherwise (including by acquisition), are determined to constitute securities under the U.S.

securities laws and

such assets exceed 40% of our total assets, exclusive of cash, we would inadvertently become an investment company under the 1940

Classification as an investment company under the 1940 Act requires registration with the SEC.

If an investment company fails

to register, it would have to stop doing almost all business, and its contracts would become voidable.

Registration is

time-consuming and restrictive and may require a restructuring of our operations, and we would be very constrained in the kind of

business we could engage in as a registered investment company.

Further, we would become subject to substantial regulation

concerning management, operations, transactions with affiliated persons and portfolio composition, and would need to file reports

under the 1940 Act.

The cost of compliance with the 1940 Act and any other regulations applicable to our crypto mining business

would result in our incurring substantial additional expenses, and the failure to properly register with the SEC or otherwise if

required would have a materially adverse impact to conduct our operations.

It may be illegal now, or in the future, to

mine, acquire, own, hold, sell or use bitcoin or other cryptocurrencies, participate in blockchains or utilize similar cryptocurrency

assets in one or more countries, the ruling of which could adversely affect us.

Although currently cryptocurrencies generally are

not regulated or are lightly regulated in most countries, several countries, such as China, India and Russia, may continue taking regulatory

actions in the future that could severely restrict the right to mine, acquire, own, hold, sell or use these cryptocurrency assets or to

exchange for local currency.

For example, in China and Russia (India is currently proposing new legislation), it is illegal to accept

payment in bitcoin and other cryptocurrencies for consumer transactions and banking institutions are barred from accepting deposits of

cryptocurrencies.

In addition, in March 2021, the governmental authorities for the Chinese province of Inner Mongolia banned bitcoin mining

in the province due to the industry’s intense electrical power demands and its negative environmental impacts.

If other countries,

including the U.S., implement similar restrictions, such restrictions may adversely affect us.

Such circumstances could have a material

adverse effect on us, which could have a material adverse effect on our business, prospects or operations and potentially the value of

any bitcoin or other cryptocurrencies we mine or otherwise acquire or hold for our own account, and thus harm investors.

There are several new and existing competitors

in our industry that are purchasing mining equipment at scale, which may cause delays or difficulty in us obtaining new miners.

Many of the competitors in our industry have also

been purchasing mining equipment at scale, which has caused a world-wide shortage of mining equipment and extended the corresponding delivery

schedules for new miner purchases.

There are no assurances that Bitmain, or any other manufacturers, will be able to keep pace with the

surge in demand for mining equipment.

It is uncertain how manufacturers will respond to this increased global demand and whether they

can deliver on the schedules promised to all of their customers.

In the event Bitmain or other manufacturers, are not able to keep pace

with demand, we may not be able to purchase additional miners in sufficient quantities, on the delivery schedules that meet our business

needs, or at favorable prices.

impact of geopolitical and economic events on the demand for bitcoin is uncertain.

crises may trigger large-scale purchases of bitcoin, which could rapidly increase their prices.

This may, however, also increase the likelihood

of a subsequent price swing in the opposite direction as crisis-driven purchasing behavior dissipates, ultimately decreasing the value

of bitcoins or any other digital asset in our possession.

Such risks are similar to the risks of purchasing commodities in generally uncertain

times, such as the risk of purchasing, holding or selling gold.

Alternatively,

global crises and economic downturns may discourage investment in bitcoin and digital assets in general as investors shift their investments

towards less volatile asset classes.

Such events could have a material adverse effect on our business, prospects or operations and potentially

the value of bitcoin we mine or otherwise acquire or hold for our own account.

value of bitcoin may be subject to pricing risk and has historically been subject to wide swings.

Because we do not currently hedge our

investment in bitcoin and do not intend to for the foreseeable future, we may be directly exposed to bitcoin’s price volatility

and surrounding risks.

While bitcoin

prices are determined primarily using data from various exchanges, over-the-counter markets and derivative platforms, they have historically

been volatile and are impacted by a variety of factors.

Such factors include, but are not limited to, the worldwide growth in the adoption

and use of bitcoins, the maintenance and development of the software protocol of the bitcoin network, changes in consumer demographics

and public tastes, fraudulent or illegitimate actors, real or perceived scarcity, and political, economic, regulatory or other conditions.

Furthermore, pricing may be the result of, and may continue to result in, speculation regarding future appreciation in the value of bitcoin,

or our share price, making prices more volatile or creating “bubble” type risks.

we do not use a formula or specific methodology to determine whether or when we will sell bitcoin that we hold, or the number of bitcoins

we will sell.

Rather, decisions to hold or sell bitcoins are currently determined by analyzing forecasts and monitoring the market in

Such decisions, however well-informed, may result in untimely sales and even losses, adversely affecting an investment in us.

At this time, we do not anticipate engaging in any hedging activities related to our holding of bitcoin;

this could expose us to substantial

decreases in the price of bitcoin.

development and acceptance of competing blockchain platforms or technologies may cause consumers to use alternative distributed ledgers

or other alternatives.

The development

and acceptance of competing blockchain platforms or technologies may cause consumers to abandon bitcoin.

As we exclusively mine, and expect

to exclusively mine bitcoin, we could face difficulty adapting to emergent digital ledgers, blockchains, or alternatives thereto.

could prevent us from realizing the anticipated profits from our investments.

Such circumstances could have a material adverse effect

on our business, prospects or operations and potentially the value of any bitcoin we mine or otherwise acquire or hold for our own account

and harm investors.

faces significant challenges with scaling which, if not overcome, may lead to high fees or slow transaction settlement times.

presently limited with respect to how many transactions can occur per second.

Developers and contributors in the bitcoin ecosystem debate

potential solutions to increasing the average number of transactions per second that networks can handle.

Some have implemented mechanisms

or are researching ways to increase scale, such as increasing the allowable sizes of blocks, and therefore the number of transactions

per block, which would increase the number of transactions that could occur per second.

However, it is uncertain how long those mechanisms

being explored to increase the scale of settlement of bitcoin transactions will take to become effective, if at all.

Any failure to improve

bitcoin settlement times could materially affect the price of bitcoin and, as a result, adversely affect an investment in us.

is subject to halving;

the reward for successfully solving a block will halve several times in the future and its value may not adjust

to compensate us for the reduction in the rewards we receive from our mining efforts.

a process designed to control the overall supply and reduce the risk of inflation in cryptocurrencies using a Proof-of-Work consensus

In an event referred to as bitcoin “halving,” the bitcoin reward for mining any block is cut in half.

the mining reward for bitcoin declined from 12.5 to 6.25 bitcoin on May 11, 2020.

This process is scheduled to occur once every 210,000

blocks, or roughly four years, until the total amount of bitcoin rewards issued reaches 21 million, which is expected to occur around

Once 21 million bitcoin are generated, the network will stop producing more.

Currently, there are more than 18 million bitcoin in

While bitcoin prices have had a history of price fluctuations around halving events, there is no guarantee that the price

change will be favorable or would compensate for the reduction in mining reward.

If a corresponding and proportionate increase in the

price of bitcoin does not follow these anticipated halving events, the revenue from our mining operations would decrease, and we may not

have an adequate incentive to continue mining and may cease mining operations altogether, which may adversely affect an investment in

such reductions in bitcoin rewards for uncovering blocks may result in a reduction in the aggregate hash rate of the bitcoin network as

the incentive for miners decreases.

Miners ceasing operations would reduce the collective processing power on the network, which would

adversely affect the confirmation process for transactions and make the bitcoin network more vulnerable to malicious actors or botnets

obtaining control in excess of 50 % of the processing power active on the blockchain.

Such events may adversely affect our activities

and an investment in us.

If a malicious actor or botnet obtains

control of more than 50% of the processing power on the bitcoin network, such actor or botnet could manipulate the network to adversely

affect us, which would adversely affect an investment in us.

If a malicious

actor or botnet, a collection of computers controlled by networked software coordinating the actions of the computers, obtains over 50%

of the processing power dedicated to mining bitcoin, such actor may be able to construct fraudulent blocks or prevent certain transactions

from completing in a timely manner, or at all.

The malicious actor or botnet could control, exclude or modify the order of transactions,

though it could not generate new units or transactions using such control.

The malicious actor could also “double-spend,”

or spend the same bitcoin in more than one transaction, or it could prevent transactions from being validated.

In certain instances, reversing

any fraudulent or malicious changes made to the bitcoin blockchain may not be possible.

there are no known reports of malicious activity or control of blockchains achieved through controlling over 50% of the processing power

on the bitcoin network, it is believed that certain mining pools may have exceeded, and could exceed, the 50% threshold on the bitcoin

This possibility creates a greater risk that a single mining pool could exert authority over the validation of bitcoin transactions.

To the extent that the bitcoin ecosystem, and the administrators of mining pools, do not have adequate controls and responses in place,

the risk of a malicious actor obtaining control of the processing power may increase.

If such an event were to occur, it could have a

material adverse effect on our business, prospects or operations and potentially the value of any bitcoin we mine or otherwise acquire

or hold for our own account and harm investors.

reliance on a third-party mining pool service provider for our mining revenue payouts may adversely affect an investment in us.

We currently rely on Foundry Digital

and Antpool (“pools” or “Cryptocurrency Customers”), open access mining pools that support cryptocurrencies including

bitcoin, to receive our mining rewards and fees from the network.

Our pools have the sole discretion to modify the terms of our agreement

at any time, and, therefore, our future rights and relationship with our pools may change.

In general, mining pools allow miners to combine

their computing and processing power, increasing their chances of solving a block and getting paid by the bitcoin network.

distributed proportionally to our contribution to the pool’s overall mining power, are distributed by the pool operator.

our pools’ operator systems suffer downtime due to a cyber-attack, software malfunction or other similar issues, it will negatively

impact our ability to mine and receive revenue.

Furthermore, while we receive daily reports from our pools detailing the total processing

power provided to the pools and the proportion of that total processing power, we provided to determine the distribution of

to us, we are dependent on the accuracy of our pool’s record keeping.

Therefore, we have little means of recourse against our pools’

operators if we determine the proportion of the reward paid out to us by the mining pool operator is incorrect, other than leaving the

If we are unable to consistently obtain accurate proportionate rewards from our pools, we may experience reduced rewards for our

efforts, which would have an adverse effect on our business and operations.

and other digital assets we mine or hold for our own account may be subject to loss, theft or restriction on access.

a risk that some or all of our bitcoins could be lost or stolen.

Bitcoins are stored in and accessed by cryptocurrency sites commonly

referred to as “wallets.” A hot wallet refers to any cryptocurrency wallet that is connected to the Internet.

Generally, hot

wallets are easier to set up and access than wallets in cold storage, but they are also more susceptible to hackers and other technical

vulnerabilities.

Cold storage refers to any cryptocurrency wallet that is not connected to the Internet.

Cold storage is generally more

secure than hot storage, but is not ideal for quick or regular transactions.

When we keep our bitcoin in cold storage, we may experience

lag time in our ability to respond to market fluctuations in the price of our cryptocurrency assets.

We currently mine bitcoin by contributing to

and benefiting from our pools’ processing power.

Our share of bitcoins mined from our pools are initially received by us in wallets

we control, which are maintained by Coinbase Inc., a U.S.

based digital assets exchange.

We maintain the majority of our bitcoin in cold

storage with a minority allocation kept in hot wallets for working capital purposes.

Bitcoins we mine or hold for our own account may

be subject to loss, theft or restriction on access.

Hackers or malicious actors may launch attacks to steal, compromise or secure bitcoins,

such as by attacking the bitcoin network source code, exchange miners, third-party platforms (including Coinbase), cold and hot storage

locations or software, or by other means.

We may be in control and possession of substantial holdings of bitcoin, and as we increase in

size, we may become a more appealing target of hackers, malware, cyber-attacks or other security threats.

Any of these events may adversely

affect our operations and, consequently, our investments and profitability.

The loss or destruction of private keys

required to access our bitcoins may be irreversible.

Our loss of access to our private keys or our experience of a data loss relating

to our bitcoins could adversely affect an investment in us.

Bitcoins may only be controlled by the possessor

of both the unique public and private keys relating to the local or online digital wallet in which they are held.

We publish the public

key relating to digital wallets in use when we verify the receipt or transfers of bitcoins to and from our wallets and disseminate such

information into the network on an anonymous basis, but we safeguard the private keys relating to such digital wallets.

Digital asset

exchanges, such as Coinbase, where we hold our bitcoin, engage in similar practices.

To the extent such private keys are lost, destroyed

or otherwise compromised, we will be unable to access our bitcoins and such private keys may not be capable of being restored by any network.

Any loss of private keys relating to digital wallets used to store our bitcoins whether by us or digital asset exchanges where we hold

our bitcoin, could have a material adverse effect on our business, prospects or operations and potentially the value of any bitcoin we

mine or otherwise acquire or hold for our own account.

or fraudulent bitcoin transactions may be irreversible.

transactions are irreversible and stolen or incorrectly transferred bitcoins may thus be irretrievable.

While we exchange our bitcoins

directly for U.S.

dollars on Coinbase and do not presently use, or expect to use, our bitcoins for any other transactions, any incorrectly

executed or fraudulent cryptocurrency transactions may still adversely affect our investments and assets.

in the bitcoin network may occur in the future, which may affect the value of bitcoins held by us.

group of contributors can propose refinements or improvements to the bitcoin network’s source code that alter the protocols and

software that govern the bitcoin network and the properties of bitcoin, including the irreversibility of transactions and limitations

on the mining of new bitcoin.

This is known as a “fork.” In the event a developer or group of developers proposes modifications

to the bitcoin network that are not accepted by a majority of miners and users, but that is nonetheless accepted by a substantial plurality

of miners and users, two or more competing and incompatible blockchain implementations could result.

This is known as a “hard fork.”

of bitcoin after the creation of a fork is subject to many factors, including, but not limited to, the value of the fork product, market

reaction to the creation of the fork product, and the occurrence of forks in the future.

As such, existing forks, such as Bitcoin Cash

and Bitcoin Gold, and future forks may have a negative effect on bitcoin’s value and may adversely affect an investment in us.

open-source structure of the bitcoin network protocol means that the contributors to the protocol are generally not directly compensated

for their contributions in maintaining and developing the protocol.

A failure to properly monitor and upgrade the protocol could damage

the bitcoin network and an investment in us.

As an open-source

project, bitcoin does not generate revenues for its contributors, and contributors are generally not compensated for maintaining and updating

the bitcoin network protocol.

The lack of guaranteed financial incentives for contributors to maintain or develop the bitcoin network

and the lack of guaranteed resources to adequately address emerging issues with the bitcoin network may reduce incentives to address the

issues adequately or in a timely manner.

To the extent that contributors may fail to adequately update and maintain the bitcoin network

protocol, it could have a material adverse effect on our business, prospects, or operations and potentially the value of any bitcoin or

other cryptocurrencies we mine or otherwise acquire or hold for our own account.

and financial institutions may not provide banking services, or may cut off services, to businesses that engage in cryptocurrency-related

of companies that engage in bitcoin and/or other cryptocurrency-related activities have been unable to find banks or financial institutions

that are willing to provide them with bank accounts and other services.

Similarly, a number of companies and individuals or businesses

associated with cryptocurrencies may have had and may continue to have their existing bank accounts closed or services discontinued with

financial institutions.

To the extent that such events may happen to us, they could have a material adverse effect on our business, prospects

or operations and potentially the value of any bitcoin or other cryptocurrencies we mine or otherwise acquire or hold for our own account.

interactions with the bitcoin network may expose us to SDN or blocked persons or cause us to violate provisions of law that did not contemplate

distributed ledger technology.

The Office of Financial Assets Control (“OFAC”)

of the US Department of Treasury requires us to comply with its sanction program and not conduct business with persons named on its specially

designated nationals (“SDN”) list.

However, because of the pseudonymous nature of blockchain transactions, we may inadvertently

and without our knowledge engage in transactions with persons named on OFAC’s SDN list.

We also may not be adequately capable of

determining the ultimate identity of the persons with whom we transact.

digital asset exchanges on which cryptocurrencies, including bitcoin, trade are relatively new and largely unregulated, and thus may be

exposed to fraud and failure.

Such failures may result in a reduction in the price of bitcoin and other cryptocurrencies and can adversely

affect an investment in us.

asset exchanges on which cryptocurrencies trade are relatively new and, in most cases, largely unregulated.

Many digital exchanges do

not provide the public with significant information regarding their ownership structure, management teams, corporate practices or regulatory

As a result, the marketplace may lose confidence in, or may experience problems relating to, cryptocurrency exchanges, including

prominent exchanges handling a significant portion of the volume of digital asset trading.

of stability in the digital asset exchange market and the closure or temporary shutdown of digital asset exchanges due to fraud, business

failure, hackers or malware, or government-mandated regulation may reduce confidence in digital asset networks and result in greater volatility

in cryptocurrency values.

These potential consequences of a digital asset exchange’s failure could adversely affect an investment

may not have adequate sources of recovery if our digital assets are lost, stolen or destroyed.

on Coinbase to facilitate the custody of our bitcoins.

If our bitcoins are lost, stolen or

destroyed under circumstances rendering a party, including Coinbase, liable to us, the responsible party may not have the financial resources

sufficient to satisfy our claim.

For example, as to a particular event of loss, the only source of recovery for us might be limited, to

the extent identifiable, to other responsible third parties (e.g., a thief or terrorist), any of which may not have the financial resources

(including liability insurance coverage) to satisfy a valid claim of ours.

held by us are not subject to FDIC or SIPC protections.

hold our bitcoins with a banking institution or a member of the Federal Deposit Insurance Corporation (“FDIC”) or the Securities

Investor Protection Corporation (“SIPC”), and, therefore, our bitcoins are not subject to the protections enjoyed by depositors

with FDIC or SIPC member institutions.

As a result, we may suffer a loss with respect to our bitcoins that is not covered by insurance,

and we may not be able to recover any of our carried value in these bitcoins if they are lost or stolen or suffer significant and sustained

reduction in conversion spot price.

If we are not otherwise able to recover damages from a malicious actor in connection with these losses,

our business and results of operations may suffer, which may have a material negative impact on our stock price.

limited rights of legal recourse available to us expose us and our investors to the risk of loss of our bitcoins for which no person is

time, there is no specifically enumerated U.S.

or foreign governmental, regulatory, investigative or prosecutorial authority or mechanism

through which to bring an action or complaint regarding missing or stolen cryptocurrency.

To the extent that we are unable to recover

our losses from such action, error or theft, such events could have a material adverse effect on our business, prospects or operations

of and potentially the value of any bitcoin we mine or otherwise acquire or hold for our own account.

sale of our bitcoins to pay for expenses at a time of low bitcoin prices could adversely affect an investment in us.

sell our bitcoins to pay for expenses on an as-needed basis, irrespective of then-current prices.

Consequently, we may sell our bitcoins

at a time when bitcoin prices are low, which could adversely affect an investment in us.

At this time, we do not mitigate against the

potential for decreasing price by engaging in hedging activities related to our bitcoin holdings.

See the above risk factor entitled,

“The value of bitcoin may be subject to pricing risk and has historically been subject to wide swings.

Because we do not currently

hedge our investment in bitcoin and do not intend to for the foreseeable future, we may be directly exposed to bitcoin’s price volatility

and surrounding risks”.

for bitcoin is driven, in part, by its status as a prominent and secure cryptocurrency.

It is possible that a cryptocurrency other than

bitcoin could have features that make it more desirable to a material portion of the digital asset user base, resulting in a reduction

in demand for bitcoins.

holds a “first-to-market” advantage over other cryptocurrencies.

This first-to-market advantage is driven in large part by

having the largest user base and, more importantly, the largest combined mining power in use.

Nonetheless, another form of cryptocurrency

could become materially popular due to either a perceived or exposed shortcoming of the bitcoin network or a perceived advantage of another

form of digital currency.

If another form of digital currency obtains significant market share, this could reduce the interest in, and

value of, bitcoin and the profitability of our bitcoin operations.

mining costs may be in excess of our mining revenues, which could seriously harm our business and adversely impact an investment in us.

operations are costly and our expenses may increase in the future.

Increases in mining expenses may not be offset by corresponding increases

Our expenses may become greater than we anticipate, and our investments to make our business more cost-efficient may not succeed.

Increases in our costs without corresponding increases in our revenue would adversely affect our profitability and could seriously harm

our business and an investment in us.

properties included in our mining operation may experience damages, including damages that are not covered by insurance.

mining locations and any future sites we establish will be subject to a variety of risks relating to physical condition and operation,

including but not limited to:

· construction or repair defects or other structural

or building damage;

any noncompliance with or liabilities under applicable environmental, health or safety regulations or requirements

or building permit requirements;

· any damage resulting from natural disasters, such

as hurricanes, earthquakes, fires, floods and windstorms;

· claims by employees and others for injuries sustained

at our properties.

our mining sites are equipped with standard security measures normally associated with a traditional data center, our mining sites could

still be rendered inoperable, temporarily or permanently, as a result of a fire or other natural disaster or by a terrorist or other events

outside of our control.

The measures we take to prevent and insure against these risks may not be sufficient or effective.

are subject to risks associated with our need for significant electrical power.

The operation

of a bitcoin mining facility can require massive amounts of electrical power.

Any mining site we currently operate or establish in the

future can only be successful if we can continue to obtain sufficient electrical power for that site on a cost-effective basis.

extent that we establish multiple sites, there may be significant competition for suitable locations, and government regulators may potentially

restrict the ability of electricity suppliers to provide electricity to mining operations in times of electricity shortage or may otherwise

potentially restrict or prohibit the provision or electricity to mining operations.

Additionally,

our facilities could be adversely affected by a power outage.

Although we maintain limited backup power at certain sites, it would not

be feasible to run miners on back-up power generators in the event of a government restriction on electricity or a power outage.

extent we are unable to receive adequate power supply and are forced to reduce or cease our operations due to the availability or cost

of electrical power, our business would be adversely affected.

operations and profitability may be adversely affected by competition from other methods of investing in cryptocurrencies.

with other users and/or companies that are mining cryptocurrencies and other potential financial vehicles, including securities backed

by or linked to cryptocurrencies.

Market and financial conditions, and other conditions beyond our control, may make it more attractive

to invest in other financial vehicles, or to invest in cryptocurrencies directly, which could limit the market for our shares and reduce

their liquidity.

The emergence of other financial vehicles and exchange-traded funds have increased scrutiny on cryptocurrencies, and

such scrutiny could be applicable to us and impact our ability to successfully establish or maintain a public market for our securities.

Such circumstances could have a material adverse effect on our business, prospects or operations and potentially the value of any bitcoin

we mine or otherwise acquire or hold for our own account, and harm investors.

the extent that the profit margins of bitcoin mining operations are not high, operators of bitcoin mining operations are more likely to

immediately sell bitcoin rewards earned by mining in the market, thereby constraining the growth of the price of bitcoin.

Bitcoin mining

operations have evolved from individual users mining with computer processors, graphics processing units and first-generation ASIC

Currently, new processing power is predominantly added by incorporated and unincorporated professionalized mining operations.

Professionalized mining operations may use proprietary hardware or sophisticated ASIC machines acquired from ASIC manufacturers.

require the investment of significant capital for the acquisition of this specialized hardware, the leasing of operating space (often

in data centers or warehousing facilities), incurring of electricity costs and the employment of technicians to operate the mining farms.

As a result, professionalized mining operations are of a greater scale than those prior and have more defined and regular expenses and

These regular expenses and liabilities require professionalized mining operations to maintain profit margins on the sale

To the extent the price of bitcoin declines and such profit margin decreases, professionalized miners will be pressured to

immediately sell bitcoin earned from mining operations, whereas it is believed that smaller, individual operations in past years

were more likely to hold newly mined bitcoin for lengthier periods.

The immediate selling of newly mined bitcoin greatly increases the

trading volume of bitcoin, creating downward pressure on the market price of bitcoin.

are risks related to technological obsolescence, the vulnerability of the global supply chain for cryptocurrency hardware disruption,

and difficulty in obtaining new hardware which may have a negative effect on our business.

operations can only be successful and ultimately profitable if the costs, including hardware and electricity costs, associated with mining

bitcoin are lower than the price of a single bitcoin.

As our mining facility operates, our miners experience ordinary wear and tear, and

may also face more significant malfunctions caused by a number of extraneous factors beyond our control.

The degradation of our miners

will require us to, over time, replace those miners which are no longer functional.

Additionally, as the technology evolves, we may be

required to acquire newer models of miners to remain competitive in the market.

This upgrading process requires substantial capital investment,

and we may face challenges in doing so on a timely and cost-effective basis.

Further, the global supply of miners is unpredictable

and presently heavily dependent on manufacturers based in China, which was severely affected by the emergence of the COVID-19 coronavirus

global pandemic.

We currently utilize several types of ASIC miners as part of our mining operation, including Bitmain Antminers, Avalon

miners and MicroBT WhatsMiners, which are all produced in China, Malaysia, and Indonesia.

Geopolitical matters, including the U.S.

with China, may impact our ability to import ASIC miners.

As a result, we may not be able to obtain adequate replacement parts for our

existing miners or obtain additional miners from manufacturers on a timely basis.

Such events could have a material adverse effect on

our business, prospects or operations and potentially the value of any bitcoin we mine or otherwise acquire or hold for our own account,

and harm investors.

is a possibility of bitcoin mining algorithms transitioning to proof of stake validation and other mining related risks, which could make

us less competitive and ultimately adversely affect our business and an investment in us.

stake is an alternative method in validating cryptocurrency transactions.

Should the bitcoin mining algorithm shift from a proof of work

validation method to a proof of stake method, mining would require less energy and may render any company that maintains advantages in

the current climate (for example, from lower priced electricity, processing, real estate, or hosting) less competitive.

As a result of

our efforts to optimize and improve the efficiency of our bitcoin mining operations, we may be exposed to the risk in the future of losing

the benefit of our capital investments and the competitive advantage we hope to gain and may be negatively impacted if a switch to proof

of stake validation were to occur.

Such events could have a material adverse effect on our business, prospects or operations and potentially

the value of any bitcoin we mine or otherwise acquire or hold for our own account.

may face risks of Internet disruptions, which could have an adverse effect on not only the price of bitcoin but our ability to mine bitcoin.

of the Internet may adversely affect the mining and use of cryptocurrencies, including bitcoin.

Generally, cryptocurrencies and our business

of mining bitcoin is dependent upon the Internet.

A significant disruption in Internet connectivity could disrupt bitcoin’s network

operations until the disruption is resolved and have an adverse effect on the price of bitcoin and our ability to mine bitcoin.

there has been limited precedent set for financial accounting of digital assets, including bitcoin, it is unclear how we will be required

to account for transactions involving digital assets.

Because there

has been limited precedent set for the financial accounting of cryptocurrencies and related revenue recognition and no official guidance

has yet been provided by the Financial Accounting Standards Board or the SEC, it is unclear how companies may in the future be required

to account for cryptocurrency transactions and assets and related revenue recognition.

A change in regulatory or financial accounting

standards or interpretation by the SEC could result in changes in our accounting treatment and the necessity to restate our financial

Such a restatement could adversely impact the accounting for the bitcoins we hold and bitcoin transactions and, more generally,

negatively impact our business, prospects, financial condition and results of operations.

developments regarding the treatment of digital assets for U.S.

federal income and applicable state, local and non-U.S.

tax purposes could

adversely impact our business.

new and evolving nature of digital assets and the absence of comprehensive legal guidance with respect to digital assets and related transactions,

many significant aspects of the U.S.

federal income and applicable state, local and non-U.S.

tax treatment of transactions involving digital

assets, such as the purchase and sale of bitcoin and the receipt of staking rewards and other digital asset incentives and rewards products,

are uncertain, and it is unclear what guidance may be issued in the future with respect to the tax treatment of digital assets and related

transactions.

guidance indicates that for U.S.

federal income tax purposes digital assets such as bitcoins should be treated and taxed as property,

and that transactions involving the payment of bitcoins for goods and services should be treated in effect as barter transactions.

IRS has also released guidance to the effect that, under certain circumstances, hard forks of digital currencies are taxable events giving

rise to taxable income and guidance with respect to the determination of the tax basis of digital currency.

However, current IRS guidance

does not address other significant aspects of the U.S.

federal income tax treatment of digital assets and related transactions.

although current IRS guidance addresses the treatment of certain forks, there continues to be uncertainty with respect to the timing and

amount of income inclusions for various crypto asset transactions, including, but not limited to, staking rewards and other crypto asset

incentives and rewards products.

While current IRS guidance creates a potential tax reporting requirement for any circumstance where the

ownership of a bitcoin passes from one person to another, it preserves the right to apply capital gains treatment to those transactions,

which is generally favorable for investors in bitcoin.

be no assurance that the IRS will not alter its existing position with respect to digital assets in the future or that other state, local

taxing authorities or courts will follow the approach of the IRS with respect to the treatment of digital assets such as

bitcoins for income tax and sales tax purposes.

Any such alteration of existing guidance or issuance of new or different guidance may

have negative consequences including the imposition of a greater tax burden on investors in bitcoin or imposing a greater cost on the

acquisition and disposition of bitcoin, generally;

in either case potentially having a negative effect on the trading price of bitcoin

or otherwise negatively impacting our business.

In addition, future technological and operational developments that may arise with respect

to digital currencies may increase the uncertainty with respect to the treatment of digital currencies for U.S.

federal income and applicable

state, local and non-U.S.

tax purposes.

Risks Related to Our Securities

Our common stock price may be volatile and could fluctuate

widely in price, which could result in substantial losses for investors.

The market price of our common stock

is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our

control, including:

The price of our common stock may be volatile and could

fluctuate widely, which could result in substantial losses for investors.

The market price of our common stock is likely

to be highly volatile and could fluctuate widely in response to various factors, many of which are beyond our control, including, without

· technological innovations or new products and services by us or our competitors;

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· period-to-period fluctuations in our financial results.

Because we have limited revenues to

date, you should consider any one of these factors to be material.

Our stock price may fluctuate widely as a result of any of the

In addition, the

securities markets have from time to time

experienced significant price and volume

fluctuations that are unrelated to

the operating performance of particular

These market fluctuations may also materially

and adversely affect the market price

of our common stock.

We have the right to issue shares

of preferred stock.

If we were to issue preferred stock, it is likely to have rights, preferences and privileges that may adversely

affect the common stock.

securities markets have from time to time experienced

significant price and volume fluctuations

that are unrelated to the operating performance

of particular companies.

These market fluctuations

may also materially and adversely

affect the market price of our common stock.

We have the right to designate and issue

additional shares of preferred stock.

If we were to designate and/or issue additional preferred stock, it is likely to have rights, preferences

and privileges that may adversely affect the common stock.

We are authorized

to issue 10,000,000 shares of

“blank check” preferred stock, with

such rights, preferences and privileges

as may be determined from time-to-time

by our board of directors.

to issue 10,000,000 shares of blank- check

Preferred Stock, with such

rights, preferences and privileges as

may be determined from time

to time by our Board of Directors.

Our Board of Directors is empowered,

without stockholder approval, to

issue preferred stock in one or more series,

and to fix for any

series the dividend rights, dissolution or liquidation

preferences, redemption prices, conversion rights, voting rights, and

other rights, preferences and privileges

for the preferred stock.

have 1,750,000 shares of our series A preferred stock outstanding,

the features of which are contained elsewhere

in this annual report.

without stockholder approval, to issue

Preferred Stock in one or more series, and to

fix for any series the

dividend rights, dissolution or liquidation preferences, redemption prices, conversion

rights, voting rights, and other rights, preferences

and privileges for the

Preferred Stock.

Currently, 2,000,000 shares are designated as Series A Preferred

Stock, of which 1,750,000 shares are outstanding,

the features of which are discussed elsewhere

in this Annual R eport.

of shares of Preferred Stock, depending

on the rights, preferences and privileges

attributable to the preferred stock,

could reduce the voting rights and powers

attributable to the Preferred Stock, could

reduce the voting rights and powers

of the common stock and the

portion of our assets allocated for distribution

to common stockholders in a liquidation

event, and could also result in

dilution in the book value

per share of the common stock .

The preferred stock could also be utilized, under certain circumstances,

as a method for raising additional capital

or discouraging, delaying or preventing a

change in control of the Company,

to the detriment of the investors in

the common stock offered hereby.

assure you that we will not, under certain

circumstances, issue shares of our preferred stock.

We have not paid dividends in

the past and have no immediate plans to pay dividends.

to common stockholders in a liquidation event,

and could also result in dilution

in the book value per share

of the common stock .

The preferred stock

could also be utilized, under certain circumstances,

as a method for raising additional capital or

discouraging, delaying or preventing a change

in control of the Company, to the

detriment of the investors in the common stock

offered hereby.

We cannot assure that we

will not, under certain circumstances, issue

shares of our Preferred Stock.

We have not paid dividends on shares

of our common stock in the past and have no immediate plans to pay do so in the future.

We have not paid, and do not plan to pay,

any cash dividends with respect to our common stock in the immediate future.

We plan to reinvest

4 unchanged sentences

remain competitive.

We do not plan to pay any

cash dividends with respect to

our securities in the foreseeable future.

We cannot assure you

that we would, at any

time, generate sufficient surplus cash that

would be available for distribution

to the holders of our common stock

as a dividend.

Therefore, you should

not expect to receive cash dividends

We cannot assure

stockholders that we would,

at any time, generate sufficient surplus cash

that would be available

for distribution to the holders of our

common stock as a dividend.

Therefore, stockholders

should not expect to receive cash dividends

on our common stock.

1 unchanged sentence

or industry analysts do not publish or

do not continue to publish research or

reports about our business, or if they issue

an adverse or misleading opinion regarding our stock, our stock price and trading

do not continue to publish research or reports

about our business, or if they issue an adverse

or misleading opinion regarding our stock, our stock price and trading

volume could decline.

market for our common stock is influenced

by the research and reports that

market for our common stock is influenced by

the research and reports that

industry or securities analysts publish about us or our business.

2 unchanged sentences

our stock, our stock price would likely

If one or more of these analysts

ceases coverage of our company or

fail to publish reports on us regularly,

we could lose visibility in the

financial markets, which in turn could

cause our stock price or trading volume

Provisions in the Nevada Revised Statutes and our

Bylaws could make it very difficult for an investor to bring any legal actions against our directors or officers for violations

of their fiduciary duties or could require us to pay any amounts incurred by our directors or officers in any such actions.

of our board of directors and our officers will have no liability for breaches of their fiduciary duty of care as a director or

officer, except in limited circumstances, pursuant to provisions in the Nevada Revised Statutes and our Bylaws as authorized by

the Nevada Revised Statutes.

Specifically, Section 78.138 of the Nevada Revised Statutes provides that a director or officer is

not individually liable to the company or its shareholders or creditors for any damages as a result of any act or failure to act

in his or her capacity as a director or officer unless it is proven that (1) the director’s or officer’s act or failure

to act constituted a breach of his or her fiduciary duties as a director or officer and (2) his or her breach of those duties

involved intentional misconduct, fraud or a knowing violation of law.

This provision is intended to afford directors and officers

protection against and to limit their potential liability for monetary damages resulting from suits alleging a breach of the duty

of care by a director or officer.

you may be unable to prevail in a legal action against our directors or officers even if they have breached their fiduciary duty

In addition, our Bylaws allow us to indemnify our directors and officers from and against any and all costs, charges and

expenses resulting from their acting in such capacities with us.

This means that if you were able to enforce an action against

our directors or officers, in all likelihood, we would be required to pay any expenses they incurred in defending the lawsuit and

any judgment or settlement they otherwise would be required to pay.

Accordingly, our indemnification obligations could divert needed

financial resources and may adversely affect our business, financial condition, results of operations and cash flows, and adversely

affect prevailing market prices for our common stock.

Risks Related to Our ATL Data Centers

On December 9, 2020, we acquired ATL

Data Centers LLC (“ATL”) that, in addition to being a traditional data center operation, operates, currently, 3,471

bitcoin mining units (“ASICs”), with the Company’s intent to significantly increase that number.

Government regulation

of blockchain and cryptocurrency is being actively considered by the United States federal government via its agencies and regulatory

bodies, as well as similar entities in other countries and transnational organizations, such as the European Union.

State and local

regulations also may apply to our activities and other activities in which we may participate in the future.

Other governmental

or semi-governmental regulatory bodies have shown an interest in regulating or investigating companies engaged in the blockchain

or cryptocurrency business.

For instance, the SEC has taken an active role in regulating the use of public offerings of proprietary

coins (so-called “Initial Coin Offerings”) and has made statements and official promulgations as to the status of certain

cryptocurrencies as “securities” subject to regulation by the SEC.

Presently, we do not believe any U.S.

or State regulatory body has taken any action or position adverse to our main cryptocurrency, bitcoin, with respect to its production,

sale, and use as a medium of exchange;

however, future changes to existing regulations or entirely new regulations may affect our

business in ways it is not presently possible for us to predict with any reasonable degree of reliability.

As the regulatory and

legal environment evolves, we may become subject to new laws, such as further regulation by the SEC and other agencies, which may

affect our mining and other activities.

If regulatory changes or interpretations

of our activities require our registration as a money services business (“MSB”) under the regulations promulgated by

FinCEN under the authority of the U.S.

Bank Secrecy Act, or otherwise under state laws, we may incur significant compliance costs,

which could be substantial or cost-prohibitive.

If we become subject to these regulations, our costs in complying with them may

have a material negative effect on our business and the results of our operations.

To the extent that the activities of

ATL cause it to be deemed an MSB under the regulations promulgated by FinCEN under the authority of the U.S.

Bank Secrecy Act,

we may be required to comply with FinCEN regulations, including those that would mandate us to implement anti-money laundering

programs, make certain reports to FinCEN and maintain certain records.

To the extent that the activities of

ATL cause it to be deemed a “money transmitter” (“MT”) or equivalent designation, under state law in any

state in which ATL operates, ATL may be required to seek a license or otherwise register with a state regulator and comply with

state regulations that may include the implementation of anti-money laundering programs, maintenance of certain records and other

operational requirements.

Currently, the NYSDFS has finalized its “BitLicense” framework for businesses that conduct

“virtual currency business.

ATL will continue to monitor for developments in such legislation, guidance or regulations applicable

Such additional federal or state regulatory

obligations may cause ATL to incur extraordinary expenses, possibly affecting its business and financial condition in a material

and adverse manner.

Furthermore, ATL and its service providers may not be capable of complying with certain federal or state regulatory

obligations applicable to MSBs and MTs.

If ATL is deemed to be subject to and determines not to comply with such additional regulatory

and registration requirements, we may act to dissolve and liquidate ATL.

Any such action may adversely affect business operations

and financial condition.

Current regulation of the exchange

of bitcoins under the CEA by the CFTC is unclear;

to the extent we become subject to regulation under the CFTC in connection with

our exchange of bitcoin, we may incur additional compliance costs, which may be significant.

Current legislation, including the Commodities

Exchange Act of 1936, as amended (the “CEA”) is unclear with respect to the exchange of bitcoins.

Changes in the CEA

or the regulations promulgated thereunder, as well as interpretations thereof and official promulgations by the Commodities Futures

Tradition Commission (“CFTC”), which oversees the CEA much like the SEC oversees the Securities Act and the Exchange

Act, may impact the classification of bitcoins and therefore may subject them to additional regulatory oversight by the CFTC.

Presently, bitcoin derivatives are not

excluded from the definition of a “commodity future” by the CFTC.

We cannot be certain as to how future regulatory

developments will impact the treatment of bitcoins under the law.

Bitcoins have been deemed to fall within the definition of a

commodity and, we may be required to register and comply with additional regulation under the CEA, including additional periodic

report and disclosure standards and requirements.

Moreover, we may be required to register as a commodity pool operator or as a

commodity pool with the CFTC through the National Futures Association.

Such additional registrations may result in extraordinary,

non-recurring expenses, thereby materially and adversely impacting an investment in us.

If we determine not to comply with such

additional regulatory and registration requirements, we may seek to cease certain of our operations.

Any such action may adversely

affect an investment in us.

As of the date of this annual report, no CFTC orders or rulings are applicable to our business.

If we acquire digital securities, even

unintentionally, we may violate the Investment Company Act of 1940 and incur potential third-party liabilities.

The Company intends

to comply with the 1940 Act in all respects.

To that end, if holdings of cryptocurrencies are determined to constitute investment

securities of a kind that subject the Company to registration and reporting under the 1940 Act, the Company will limit its holdings

to less than 40% of its assets.

Section 3(a)(1)(C) of the 1940 Act defines “investment company” to mean any issuer

that is engaged or proposes to engage in the business of investing, reinvesting, owning, holding, or trading in securities, and

owns or proposes to acquire investment securities having a value exceeding 40% of the value of such issuer’s total assets

(exclusive of Government securities and cash items) on an unconsolidated basis.

Section 3(a)(2) of the 1940 Act defines “investment

securities” to include all securities except (A) Government securities, (B) securities issued by employees’ securities

companies, and (C) securities issued by majority-owned subsidiaries which (i) are not investment companies and (ii) are not relying

on the exception from the definition of investment company in section 3(c)(1) or 3(c)(7) of the 1940 Act.

As noted above, the SEC

has not stated whether bitcoin and cryptocurrency is an investment security, as defined in the 1940 Act.

The further development and acceptance

of digital asset networks and other digital assets, which represent a new and rapidly changing industry, are subject to a variety

of factors that are difficult to evaluate.

The slowing or stopping of the development or acceptance of digital asset systems may

adversely affect an investment in us.

Digital assets such as bitcoins, that may be

used, among other things, to buy and sell goods and services are a new and rapidly evolving industry of which the digital asset

networks are prominent, but not unique, parts.

The growth of the digital asset industry in general, and the digital asset networks

of bitcoin in particular, are subject to a high degree of uncertainty.

The factors affecting the further development of the digital

asset industry, as well as the digital asset networks, include:

continued worldwide growth in the adoption and use of bitcoins and other digital assets;

government and quasi-government regulation of bitcoins and other digital assets and their use, or restrictions on or regulation of access to and operation of the digital asset network or similar digital assets systems;

the maintenance and development of the open-source software protocol of the bitcoin network and ether network;

changes in consumer demographics and public tastes and preferences;

the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies;

general economic conditions and the regulatory environment relating to digital assets;

the impact of regulators focusing on digital assets and digital securities and the costs associated with such regulatory oversight.

A decline in the popularity or acceptance of

the digital asset networks of bitcoin or ether, or similar digital asset systems, could adversely affect an investment in us.

Since there has been limited precedent

set for financial accounting or taxation of digital assets other than digital securities, it is unclear how we will be required

to account for digital asset transactions and the taxation of our businesses.

There is currently no authoritative literature

under accounting principles generally accepted in the United States which specifically addresses the accounting for digital assets,

including digital currencies.

Therefore, by analogy, we intend to record digital assets similar to financial instruments under

ASC 825, Financial Instruments, because the economic nature of these digital assets is most closely related to a financial instrument

such as an investment in a foreign currency.

We believe that the Company will recognize

revenue when it is realized or realizable and earned.

Our material revenue stream is expected to be related to the mining of digital

We will derive revenue by providing transaction verification services within the digital currency networks of crypto-currencies,

such as bitcoin commonly termed “crypto-currency mining.” In consideration for these services, ee expect to receive

digital currency (also known as “Coins”).

Coins are generally recorded as revenue, using the average spot price on

the date of receipt.

The Coins are recorded on the balance sheet at their fair value.

Gains or losses on sale of Coins are recorded

in the statement of operations.

Expenses associated with running the crypto-currency mining business, such as equipment deprecation,

and electricity cost are recorded as cost of revenues.

In 2014, the IRS issued guidance in Notice

2014-21 that classified cryptocurrency as property, not currency, for federal income tax purposes.

But according to the requirements

of FATCA, which requires foreign financial institutions to provide the IRS with information about accounts held by U.S.

or foreign entities controlled by U.S.

taxpayers, cryptocurrency exchanges, in the ordinary course of doing business, are considered

financial institutions.

On November 30, 2016, a federal judge in the

Northern District of California granted an IRS application to serve a “John Doe” summons on Coinbase Inc., which operates

a cryptocurrency wallet and exchange business.

The summons asked Coinbase to identify all U.S.

customers who transferred convertible

cryptocurrency from 2013 to 2015.

The IRS is trying to get cryptocurrency owners to report the value of their wallets to the federal

government and the IRS is treating cryptocurrency as both property and currency.

The American Institute of Certified Public

Accountants recommended in a June 2016 letter to the IRS that cryptocurrency accounts be reported in the summary information section

of Form 8938, Statement of Specified Foreign Financial Assets, which breaks with the IRS’s 2014 guidance that cryptocurrency

be treated as property.

Property is divided into certain sections within

the Internal Revenue Code (“IRC”) that determine everything from how the property is treated at sale, to how the property

is depreciated, to the nature and character of the gain on sale of the asset.

For instance, IRC §1231 property (real or depreciable

business property held for more than one year) is treated as capital in nature when sold for a profit, but it is treated as ordinary

when the property is sold for a loss.

IRC §1245 property, on the other hand, is treated as ordinary in nature.

property encompasses most types of property.

IRC §1250 property covers everything else.

IRC §1250 states that a gain

from selling real property that has been depreciated should be taxed as ordinary income, to the extent that the accumulated depreciation

exceeds the depreciation calculated using the straight-line method, which is the most basic depreciation method used on an income

IRC §1250 bases the amount of tax due on the type of property, such as residential or nonresidential property,

and on how many months the property was owned.

IRS guidance is silent on which section of

the tax code cryptocurrency falls into.

For instance, IRC §1031 allows for the like-kind exchange of certain property.

§1031 exchanges typically are done with real estate or business assets.

However, with the classification of cryptocurrency

as property by the IRS, many tax professionals will argue that cryptocurrency can be exchanged using IRC §1031.

We believe that all of our digital asset mining

activities will be accounted for on the same basis regardless of the form of digital asset.

A change in regulatory or financial

accounting standards or interpretation by the IRS or accounting standards or the SEC could result in changes in our accounting

treatment, taxation and the necessity to restate our financial statements.

Such a restatement could negatively impact our business,

prospects, financial condition and results of operations.

Digital assets held by us are not subject

to FDIC or SIPC protections.

We do not hold our digital assets with a banking

institution or a member of the Federal Deposit Insurance Corporation (“FDIC”) or the Securities Investor Protection

Corporation (“SIPC”) and, therefore, our digital assets are not subject to the protections enjoyed by depositors with

FDIC or SIPC member institutions.

Because many of our digital assets are

held by digital asset exchanges, we face heightened risks from cybersecurity attacks and financial stability of digital asset exchanges.

ATL may transfer their digital asset from its

wallet to digital asset exchanges prior to selling them.

Digital assets not held in ATL ‘s wallet are subject to the risks

encountered by digital asset exchanges including a DDoS Attack or other malicious hacking, a sale of the digital asset exchange,

loss of the digital assets by the digital asset exchange and other risks similar to those described herein.

ATL does not maintain

a custodian agreement with any of the digital asset exchanges that hold the ATL digital assets.

These digital asset exchanges do

not provide insurance and may lack the resources to protect against hacking and theft.

If this were to occur, ATL may be materially

and adversely affected.

If one or more of these analysts ceases

coverage of our company or fail

to publish reports on us regularly, we

could lose visibility in the financial markets,

which in turn could cause

our stock price or trading volume to decline.

Provisions in the Nevada Revised Statutes and our Bylaws

could make it very difficult for an investor to bring any legal actions against our directors or officers for violations of their fiduciary

duties or could require us to pay any amounts incurred by our directors or officers in any such actions.

of our Board of Directors and our officers will have no liability for breaches of their fiduciary duty of care as a director or officer,

except in limited circumstances, pursuant to provisions in the Nevada Revised Statutes and our Bylaws as authorized by the Nevada Revised

Specifically, Section 78.138 of the Nevada Revised Statutes provides that a director or officer is not individually liable to

the company or its shareholders or creditors for any damages as a result of any act or failure to act in his or her capacity as a director

or officer unless it is proven that (1) the directors or officers act or failure to act constituted a breach of his or her fiduciary duties

as a director or officer and (2) his or her breach of those duties involved intentional misconduct, fraud or a knowing violation of law.

This provision is intended to afford directors and officers protection against and to limit their potential liability for monetary damages

resulting from suits alleging a breach of the duty of care by a director or officer.

stockholders may be unable to prevail in a legal action against our directors or officers even if they have breached their fiduciary duty

In addition, our Bylaws allow us to indemnify our directors and officers from and against any and all costs, charges and expenses

resulting from their acting in such capacities with us.

This means that if one were able to enforce an action against our directors or

officers, in all likelihood, we would be required to pay any expenses they incurred in defending the lawsuit and any judgment or settlement

they otherwise would be required to pay.

Accordingly, our indemnification obligations could divert needed financial resources and may

adversely affect our business, financial condition, results of operations and cash flows, and adversely affect prevailing market prices

for our common stock.

Unresolved Staff Comments

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

What changed 10-K

Item 1A. Risk Factors