What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-12-14 compared with 2020-12-17 · 2089 added, 1664 removed, 221 unchanged (94% of the section changed)

Financial Statements and

Supplementary Data

Index to Financial Statements Required

by Article 8 of Regulation S-X:

Audited Consolidated Financial Statements:

Report of Independent Registered Public Accounting Firm

Financial Statements and Supplementary

Index to Financial Statements Required by

Article 8 of Regulation S-X:

Audited Consolidated Financial

Reports of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of September 30, 2021 and 2020;

Consolidated Statements of Operations for the years ended September 30, 2020 and 2019;

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Operations and

Comprehensive Loss for the years ended September 30, 2021 and 2020;

Consolidated Statements of Stockholders’ Equity for the years ended September 30, 2021 and 2020

Consolidated Statements of Cash Flows for the years ended September 30, 2021 and 2020;

Notes to Consolidated Financial Statements

the Shareholders and Board of Directors of

on the Financial Statements

have audited the accompanying consolidated balance sheets of CleanSpark, Inc.

and its subsidiaries (collectively, the “Company”)

as of September 30, 2020 and 2019, and the related consolidated statements of operations, stockholders’ equity, and cash

flows for the years then ended, and the related notes (collectively referred to as the “financial statements”).

our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September

30, 2020 and 2019, and the results of their operations and their cash flows for the years then ended, in conformity with accounting

principles generally accepted in the United States of America.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on

the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company

Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company

in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission

and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit

to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not

for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to

error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors

CleanSpark, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheets of CleanSpark, Inc.

and its subsidiaries (collectively, the “Company”) as of September 30, 2021 and 2020, and

the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the two

years in the period ended September 30, 2021, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September

30, 2021 and 2020, and the results of their operations and their cash flows for each of the two years in the period ended September 30,

2021, in conformity with accounting principles generally accepted in the United States of America.

We also have audited the Company’s

internal control over financial reporting as of September 30, 2021, based on criteria established in Internal Control - Integrated

Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report

dated December 14, 2021 expressed an adverse opinion.

Basis for Opinion

The Company’s management is responsible

for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness

of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial

Our responsibility is to express an opinion on the Company’s financial statements and an opinion on the Company’s

internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting

Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with

the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the

financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial

reporting was maintained in all material respects.

Our audits of the financial statements included

performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing

procedures that responds to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures

in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management,

as well as evaluating the overall presentation of the financial statements.

Our audit of internal control over financial reporting included

obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing

and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing

such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinion.

MaloneBailey, LLP

Critical Audit Matters

The critical audit matters communicated

below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated

to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved

our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our

opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate

opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of the Accounting for and

Disclosure of Digital Currency Held

As disclosed in Note 2 to the consolidated

financial statements, the Company’s digital currency held as of September 30, 2021, which mainly consist of Bitcoin, are accounted

for as indefinite-lived intangible assets, and have been included in current assets on the consolidated balance sheet.

The Company’s

digital currency as of September 30, 2021 amounted to approximately $23,603,000.

We identified the accounting for and disclosure of the

digital currency held as a critical audit matter because, currently, no specific definitive guidance exists for the accounting for and

disclosure of digital currencies held in accordance with accounting principles generally accepted in the United States (“GAAP”).

The Company’s management has exercised significant judgment in their determination of how existing GAAP should be applied to the

accounting for its digital currency held, the associated financial statement presentation and accompanying footnote disclosures.

The primary procedures we performed to address

this critical audit matter included the following:

· Evaluated management’s rationale for the application of Accounting

Standards Codification (“ASC”) 350 to account for its digital currency held and examined management’s processes for

determining the amount of impairment expense recognized;

· Evaluated management’s rationale for the inclusion of digital currency

as a current asset on the balance sheet;

· Independently and directly confirmed the balance and ownership of digital

currency that is in the custody of a third party;

· Evaluated management’s disclosures of its digital currency activities

in the financial statement footnotes;

· Examined supporting sale and cash receipt evidence for digital currency

sales, including management’s processes for calculating any gains or losses on sales of its digital currency.

Evaluation of the Accounting for and

Disclosure of Digital Currency Mining Revenue Recognized

As disclosed in Note 2, the Company recognizes

revenue in accordance with ASC 606, Revenue from Contracts with Customers.

The Company provides computing power to the mining pools and

in exchange for providing such computing power, the Company is entitled to a fractional share of the fixed cryptocurrency award the pool

operator receives for successfully adding a block to the blockchain, plus a fractional share of the transaction fees attached to that

The Company’s fractional share is based on the proportion of computing power the Company contributed to the mining pool operator

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

During the year ended September

30, 2021, the Company recognized net digital currency mining revenue of approximately $38,846,000.

We identified the accounting for and

disclosure of digital currency mining revenue recognized as a critical audit matter because, currently, no specific definitive guidance

exists for the accounting for and disclosure of digital currency mining revenue recognized in accordance with GAAP.

The Company’s

management has exercised significant judgment in their determination of how existing GAAP should be applied to the accounting for and

disclosure of digital currency mining revenue recognized.

The primary procedures we performed to address

this critical audit matter included the following:

· Performed a site visitation of the facility where the Company’s mining

hardware is located.

The visitation included an observation of the physical and environmental controls and mining equipment inventory

observation procedures;

· Evaluated management’s rationale for the application of ASC 606 to

account for digital currency awards earned;

· Evaluated management’s disclosures of its digital currency activities

in the financial statement footnotes;

· Evaluated and tested management’s rationale and supporting documentation

associated with the valuation of digital currency awards earned;

· Independently confirmed certain financial data and wallet records directly

with the mining pools;

· Compared the Company’s wallet records of digital currency mining compensation

received to publicly available blockchain records;

· Undertook an analytical review of total digital currency mining revenue

expected to be recognized by the Company by assessing the total hash power contributed onto the network by the Company against total block

rewards and transaction fees issued over the year.

/s/ MaloneBailey, LLP

www.malonebailey.com

have served as the Company's auditor since 2018.

We have served as the Company's auditor

Houston, Texas

December 14, 2021

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors

CleanSpark, Inc.

Opinion on Internal Control Over

Financial Reporting

We have audited the internal control over

financial reporting of CleanSpark, Inc.

and its subsidiaries (collectively, the “Company”) as of September 30, 2021 based

on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of

the Treadway Commission (“COSO”).

In our opinion, because of the effect of the material weaknesses described below on the

achievement of the objectives of the control criteria, the Company did not maintain effective internal control over financial reporting

as of September 30, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We do not express an opinion or any other

form of assurance on management’s statements referring to any corrective actions taken by the Company after the date of management’s

We also have audited, in accordance with

the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements

of the Company as of September 30, 2021 and 2020 and for the years then ended and our report dated December 14, 2021 expressed an unqualified

opinion on those financial statements.

The Company acquired ATL Data Centers LLC

and Solar Watt Solutions, Inc.

(collectively, the “Acquired Businesses”) during the year ended September 30, 2021, and management

excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of September 30,

2021, the Acquired Businesses’ internal control over financial reporting associated with total assets of $267.3 million (of

which $27.3 million represents goodwill and intangibles included within the scope of the assessment), and total revenues of $43.2 million

included in the consolidated financial statements of the Company as of and for the year ended September 30, 2021.

Our audit of internal

control over financial reporting of the Company also excluded an evaluation of the internal control over financial

reporting of the Acquired Businesses.

Basis for Opinion

The Company’s management is responsible

for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over

financial reporting, included in the Management’s Report on Internal Control over Financial Reporting (“Management’s

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in

accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and

We conducted our audit in accordance with

the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective

internal control over financial reporting was maintained in all material respects.

Our audit of internal control over financial reporting

included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists,

and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included

performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis

for our opinion.

A material weakness is a deficiency, or

combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material

misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following

material weaknesses have been identified and included in management’s assessment:

(1) the Company did not adequately implement or

properly maintain controls over its financial close and reporting process, its process over the recording of energy and other services

revenue and its process over the accounting and valuation of certain aspects of business combinations involving significant estimates

and (2) the Company did not adequately design and maintain effective general information technology controls over third-party information

systems and applications that are relevant to the preparation of the Company’s financial statements.

These material weaknesses were

considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2021 consolidated financial statements,

and this report does not affect our report on those financial statements.

Definition and Limitations of Internal

Control Over Financial Reporting

A company’s internal control over

financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation

of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance

of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with

accounting principles generally accepted in the United States of America, and that receipts and expenditures of the company are being

made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding

prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material

effect on the financial statements.

Because of its inherent limitations, internal

control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future

periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance

with the policies or procedures may deteriorate.

/s/ MaloneBailey, LLP

www.malonebailey.com

We have served as the Company's auditor

Houston, Texas

December 14, 2021

CLEANSPARK, INC.

CONSOLIDATED BALANCE SHEETS

September 30, 2020

September 30, 2019

and cash equivalents, including restricted cash

receivable, net

expense and other current assets

investment asset

equity security

debt security, AFS, at fair value

current assets

Accounts receivable, net

Contract assets

Prepaid expense and other current assets

Derivative investment asset

Investment in equity securities

Investment in debt security, AFS, at fair value

Total current assets

Fixed assets, net

Operating lease right of use asset

Capitalized software, net

Intangible assets, net

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Accounts payable and accrued liabilities

Contract liabilities

and equipment, net

lease right of use asset

software, net

on mining equipment

long-term asset

AND STOCKHOLDERS' EQUITY

payable and accrued liabilities

lease liability

Due to related parties

Contingent consideration

Loans payable, net of unamortized discounts

Total current liabilities

Long- term liabilities

Convertible notes, net of unamortized discounts

Loans payable

Total liabilities

Stockholders' equity

Common stock;

lease liability

consideration

current liabilities

lease liability, net of current portion

Stockholders'

100,000,000 shares

17,390,979 and 4,679,018

shares issued and outstanding as of September 30, 2020 and September 30, 2019, respectively

Preferred stock;

37,395,945 and 17,390,979 shares

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

10,000,000 shares

3 unchanged sentences

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

Additional paid-in capital

Accumulated deficit

paid-in capital

other comprehensive loss

( 138,392,118 )

Total stockholders' equity

Total liabilities and stockholders' equity

The accompanying notes are an integral

part of these consolidated financial statements.

CLEANSPARK, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

September 30, 2020

September 30, 2019

( 116,402,606 )

stockholders' equity

liabilities and stockholders' equity

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

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

currency mining revenue, net

hardware, software and services revenue

services revenue

revenues, net

Sale of goods revenues $

Service, software and related revenues

Total revenues, net

Cost of revenues

Product sale revenues

Service, software and related revenues

Total cost of revenues

Operating expenses

Professional fees

Payroll expenses

Product development

General and administrative expenses

Impairment expense

Depreciation and amortization

Total operating expenses

Loss from operations

(exclusive of depreciation and amortization shown below)

and administrative expenses

impairment expense (related to Intangible Assets)

and amortization

costs and expenses

from operations

( 28,577,053 )

( 15,143,116 )

income/(expense)

in fair value of contingent consideration

gain on sale of digital currency

gain on sale of equity securities

gain (loss) on equity security

gain on derivative security

( 10,758,750 )

on disposal of assets

other income (expense)

Loss on settlement of debt

Unrealized gain/(loss) on equity security

Unrealized gain on derivative security

Loss on disposal of assets

Interest expense (net)

( 8,203,027 )

before income tax (expense) or benefit

( 21,812,010 )

Total other income (expense)

( 23,346,143 )

tax (expense) or benefit

( 21,812,010 )

( 23,346,143 )

comprehensive loss

( 21,817,402 )

Loss per common share - basic and diluted $

Weighted average common shares outstanding - basic

( 23,346,143 )

stock dividends

comprehensive loss attributable to common shareholders

( 21,994,904 )

( 23,346,143 )

per common share - basic and diluted

average common shares outstanding - basic and diluted

The accompanying

notes are an integral part of these consolidated financial statements.

CLEANSPARK, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’

For the Year ended September 30, 2020

Preferred Stock

Additional Paid-in Capital

Accumulated Deficit

Total Stockholders' Equity

Balance, September 30, 2019

$ 111,936,125

STATEMENTS OF STOCKHOLDERS’ EQUITY

the Year Ended September 30, 2021

Paid-in Capital

Comprehensive

Stockholders' Equity

September 30, 2020

( 116,402,606 )

Shares issued for services

Options and warrants issued for services

Shares issued upon conversion of debt and accrued interest

Rounding shares issued for stock split

Shares returned and cancelled

Options issued for business acquisition

Exercise of options and warrants

Shares returned for settlement

Shares issued for business acquisition

Shares issued upon exercise of warrants

Shares issued under registered direct offering

Shares in Escrow for business acquisition

Options and warrants issued for services

Shares issued under underwritten offering,

net of offering costs

Shares returned in relation to business

Preferred stock dividends

( 21,812,010 )

Other comprehensive

Balance, September

( 138,392,118 )

the Year Ended September 30, 2020

Paid-in Capital

Comprehensive

Income (Loss)

Stockholders' Equity

September 30, 2019

$ 111,936,125

For the Year Ended September 30, 2019

Preferred Stock

Additional Paid-in Capital

Accumulated Deficit

Total Stockholders' Equity

Balance, September 30, 2018

$ ( 93,056,463 )

1 unchanged sentence

Options and warrants issued for services

Shares issued upon conversion of debt and

accrued interest

Rounding shares issued for stock split

Shares returned and cancelled

Options issued for business acquisition

Shares issued for business acquisition

Shares issued upon exercise of warrants

Beneficial conversion feature and shares and warrants issued with convertible debt

Shares issued for direct investment

Shares issued for settlement of debt

Commitment shares returned and cancelled

Shares issued upon conversion of debt and accrued interest

Shares and warrants issued under asset purchase agreement

Shares issued under registered direct offering

( 23,346,143 )

Other comprehensive

Balance, September

( 116,402,606 )

$ ( 93,056,463 )

The accompanying notes are an integral part

of these consolidated financial statements.

The accompanying notes

are an integral part of these consolidated financial statements.

STATEMENTS OF CASH FLOWS

For the Year Ended

September 30, 2020

September 30, 2019

Cash Flows from Operating Activities

the Year Ended

Cash Flows from Operating

( 21,812,010 )

( 23,346,143 )

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

Stock based compensation

Impairment expense

Unrealized gain on equity security

Amortization of operating lease right of use asset

Adjustments to reconcile

net loss to net cash used in operating activities:

compensation including expenses in lieu of commission to brokers

Impairment expense on

digital currency

Unrealized gain on equity

Digital currency issued

Realized gain on sale

of equity security

Realized gain on digital

( 3,104,378 )

Depreciation and amortization

Amortization of capitalized software

Loss on settlement of debt

Provision for bad debts

1 unchanged sentence

( 2,790,387 )

Amortization of debt discount

( 2,115,269 )

Gain on forgiveness of debt

in fair value of contingent consideration

Amortization of debt

Shares issued as interest

Loss on asset disposal

Changes in operating assets and liabilities

Decrease (increase) in prepaid expenses and other current assets

Impairment expense on

capitalized software

Impairment of Goodwill

Noncash lease expense

Changes in operating

assets and liabilities

Decrease (increase)

in prepaid expenses and other current assets

( 3,216,288 )

Decrease (increase) in contract assets

(Increase) decrease in contract liabilities, net

Increase in accounts receivable

Decrease in contract

in contract liabilities, net

(Increase) in accounts

( 2,011,250 )

Increase in accounts payable and accrued liabilities

Decrease in lease liability

Decrease in due to related parties

Net cash used in operating activities

Increase in accounts

payable and accrued liabilities

(Increase) in digital

( 38,846,633 )

(Decrease) in lease

( 2,238,378 )

in due to related parties

Net cash used in operating

( 35,429,342 )

( 6,642,734 )

Cash Flows from investing

Purchase of intangible assets

Purchase of fixed assets

Cash consideration for acquisition of p2kLabs, net of cash acquired

Increase in deposits

on mining equipment

( 89,260,010 )

Cash consideration for acquisition of GridFabric, net of cash acquired

Investment in capitalized software

Investment in debt and equity securities

Net cash used in investing activities

Proceeds from sale of

digital currencies

Proceeds from sale of

equity securities

in infrastructure development

Purchase of property

and equipment

( 139,234,948 )

Cash Flows from Financing Activities

Payments on promissory notes

Proceeds from promissory notes

Proceeds from related party debts

Payments on related party debts

Proceeds from convertible debt, net of issuance costs

Payments on convertible debts

Proceeds from exercise of warrants

Proceeds from issuance of common stock

Net cash provided by financing activities

Net increase (decrease) in Cash

Acquisition of ATL Data

Center, net of cash received

Acquisition of p2KLabs,

net of cash received

( 1,141,990 )

Cash, beginning of period

Cash, end of period

Supplemental disclosure of cash flow information

Cash paid for interest

Cash paid for tax

Non-cash investing and financing transactions

Day one recognition of right of use asset and liability

Shares and options issued for business

Shares issued as collateral returned to treasury

Stock issued to promissory notes

Debt discount on convertible debt

Shares and warrants issued for asset acquisition

Shares issued for conversion of debt and accrued interest

Financing of prepaid insurance

Cashless exercise of options/warrants

Option expense capitalized as software development costs

The accompanying notes are an integral

part of these consolidated financial statements.

CLEANSPARK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Acquisition of Solar

Watt Solutions

( 1,000,136 )

Cash consideration for

acquisition of GridFabric, net of cash acquired

Investment in capitalized

Investment in debt and

equity securities

Net cash used in investing

( 217,714,926 )

( 2,383,623 )

Cash Flows from Financing

Payments on promissory

( 5,882,553 )

Proceeds from promissory

Payments on finance

Proceeds from exercise

of options and warrants

Proceeds from

offerings, net

Dividend paid

Net cash provided by

financing activities

Net increase (decrease)

( 4,712,655 )

Cash and cash equivalents, including

restricted cash, beginning of period

and cash equivalents, including restricted cash, end of period

Supplemental disclosure of

cash flow information

Cash paid for

investing and financing transactions

recognition of right of use asset and liability

Remeasurement

of right of use asset and liability due to lease modification

and options issued for business acquisition

issued for services

issued for conversion of debt and accrued interest

Cashless exercise of

issued as collateral returned to treasury

The accompanying

notes are an integral part of these consolidated financial statements.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

ORGANIZATION AND LINE OF BUSINESS

The Company –

CleanSpark, Inc.

(“CleanSpark”,

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

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

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

operations in 1992.

On March 25, 2014, we began operations

in the alternative energy sector.

In December 2014, the Company changed

its name to Stratean Inc.

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

On July 1, 2016, the Company entered

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

CleanSpark Technologies LLC and Specialized Energy Solutions, Inc.

(together, the “Seller”).

Pursuant to the Purchase

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

In October 2016, the Company changed

its name to CleanSpark, Inc.

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

On January 22, 2019, CleanSpark entered

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

As a result of the transaction Pioneer Critical Power Inc.

became a wholly owned subsidiary of CleanSpark Inc.

On February 1, 2019,

Pioneer Critical Power, Inc.

was renamed CleanSpark Critical Power Systems, Inc.

December 5, 2019, the Board of Directors approved a reverse stock split of the Company’s common stock, par value $ 0.001 per

On December 10, 2019, the Financial Industry Regulatory Authority (“FINRA”) approved the Company’s 1:10

reverse stock split of the Company’s common stock.

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

Unless otherwise

noted, impacted amounts and share information in the consolidated financial statements and notes thereto as of and for the fiscal

years ended September 30, 2020 and 2019, have been adjusted for the stock split as if such stock split occurred on the first day

of the first period presented.

On January 31, 2020, the Company entered into a Stock

Purchase Agreement with p2klabs, Inc (“p2k”), and its sole stockholder, (“Seller”), whereby the Company

purchased all of the issued and outstanding shares of p2k from the Seller.

As a result of the transaction, p2k, is now a wholly-owned

subsidiary of the Company.

(See note 5 for details.)

On August 31, 2020, the Company

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

whereby the Company purchased all of the issued and outstanding membership units of GridFabric from the Seller.

As a result of

the transaction, GridFabric, is now a wholly-owned subsidiary of the Company.

(See note 3 for details.)

Lines of Business

business Segment

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

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

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

military and commercial residential properties.

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

protocol software solutions to commercial and utility customers.

Agency Segment

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

SUMMARY OF SIGNIFICANT

This summary of significant accounting

policies of CleanSpark is presented to assist in understanding the Company’s consolidated financial statements.

The consolidated

financial statements and notes are representations of the Company’s management, who

are responsible for their integrity and objectivity.

These accounting policies conform to accounting principles generally

accepted in the United States of America and have been consistently applied in the preparation of the consolidated financial statements.

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

As shown in the accompanying consolidated financial

statements, the Company incurred net losses of $ 23,346,143

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

Nevada on October 15, 1987

as SmartData Corporation.

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

CleanSpark, Inc.

a bitcoin mining and diversified energy company incorporated in Nevada.

The Company sustainably mines bitcoin and provides advanced

energy technology solutions to commercial and residential customers to solve modern energy challenges.

The Company, through itself and

its wholly owned subsidiaries, has operated in the digital currency mining sector since December 2020, and in the alternative energy

sector since March 2014.

CleanSpark, Inc.

to develop a long-term sustainability and clean energy plan to support its bitcoin mining operations.

Digital Currency

Mining Segment

wholly owned subsidiaries, ATL Data Centers LLC (“ATL”) and CleanBlok, Inc.

(“CleanBlok”) ,

the Company mines bitcoin.

The Company entered the bitcoin mining industry through our acquisition of ATL in December 2020.

a second data center in August 2021 and have had a co-location agreement with N ew York-based Coinmint in place since

Bitcoin mining has now become the Company’s principal revenue generating business activity.

We currently intend

to acquire additional facilities, equipment and infrastructure capacity to continue to expand

our bitcoin mining operations.

subsidiaries CSRE Properties Norcross, LLC and CSRE Property Management Company, LLC and CSRE Properties, LLC, we maintain real property

holdings for ATL Data Centers LLC and CleanBlok Inc.

Company provides energy solutions through our wholly owned subsidiaries CleanSpark,

LLC, CleanSpark Critical Power Systems, Inc., GridFabric, LLC, and Solar Watt Solutions, Inc.

solutions consist of engineering, design and software solutions , custom hardware solutions, Open Automated Demand response

(“OpenADR”), solar, energy storage for microgrid and distributed energy systems to

military, commercial and residential customers in Southern California and throughout the world .

The Company’s

solutions are supported by a proprietary suite of software solutions that include microgrid energy modeling, energy market communications

and energy management solutions.

business activities

Through our wholly

owned subsidiary p2kLabs, Inc., we provide design, software development, and other technology-based consulting services.

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

Through ATL, we also provide traditional

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

services, virtual storage, and data backup services.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Presentation and Liquidity

The accompanying audited

financial statements of the Company have been prepared by the Management in accordance with accounting principles generally accepted

in the United States of America and the rules of the Securities and Exchange Commission and have been filed with the SEC on December

14, 2021 (“Form 10-K”).

As shown in the accompanying

audited consolidated financial statements, the Company incurred a net loss of $ 21,812,010

and $ 23,346,143

during the years ended September 30, 2020

and September 30, 2019, respectively.

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

operations for a minimum of 12 months we have

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

As of September 30, 2020, the Company had working capital of approximately $ 2,869,329 .

Principles of Consolidation

The accompanying consolidated financial

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

II, LLC, CleanSpark Critical Power Systems Inc, p2kLabs, Inc, and GridFabric, LLC.

All material intercompany transactions have

been eliminated upon consolidation of these entities.

Use of estimates

preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States

of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure

of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues

and expenses during the reporting period.

Actual results could differ from those estimates.

Significant estimates include estimates

used to review the Company’s goodwill impairment, intangible assets acquired, impairments and estimations of long-lived assets,

revenue recognition on percentage of completion type contracts, allowances for uncollectible accounts, and the valuations of non-cash

capital stock issuances.

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

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

are not readily apparent from other sources.

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

including, but not limited to, the ultimate impact that COVID-10 may have on the Company’s operations.

Revenue Recognition

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

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

be followed in evaluating revenue recognition:

during the years ended September 30, 2021 and September 30, 2020, respectively.

Company has experienced negative cash flows from operations, the Company has sufficient capital to support its ongoing operations from

cash flows provided from operational activities, including potential sale of digital currency, and has access to additional capital through

the registered sale of equity securities pursuant to a registration statement on Form S-3.

In addition, the Company is continuing to

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

As of September 30, 2021 and September 30, 2020,

the Company had working capital of $ 47,663,299 and

$ 2,869,329 , respectively.

of Consolidation

The accompanying audited

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

LLC, CleanSpark II, LLC, CleanSpark Critical Power Systems Inc., p2kLabs, Inc, GridFabric, LLC, ATL Data Centers LLC, CleanBlok, Inc.,

CSRE Properties, LLC, Solar Watt Solutions, Inc, CSRE Properties Norcross, LLC and CSRE Property Management Company, LLC.

All intercompany

transactions have been eliminated upon consolidation of these entities.

The accompanying consolidated

financial statements of the Company have been prepared assuming the Company will continue as a going concern.

The going concern basis

of presentation assumes that the Company will continue in operation one year after the date these financial statements are issued and

will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

The evaluation of

going concern under the accounting guidance requires significant judgment which involves the Company to consider that it has historically

incurred losses in recent years as it has prepared to grow its business through acquisition opportunities.

The Company must also consider

its current liquidity as well as future market and economic conditions that may be deemed outside the control of the Company as it relates

to obtaining financing and generating future profits.

As of September 30, 2021, the Company had approximately $ 18

million of available cash on-hand and Bitcoin with a fair market value of $ 27.5

In determining whether there is substantial doubt about the Company’s ability

to continue as a going concern, the Company may consider the effects of any mitigating plans for additional sources of financing.

Company identified additional financing sources it believes are currently available to fund its operations and drive future growth that

include (i) the ability to access capital using the at-the-market (“ATM”) equity offering program available to the Company

whereby the Company may sell additional shares of its common stock (discussed in Note 11 – Stockholders’ Equity), and (ii) the ability

to raise additional financing from other sources.

(Refer to Note 11 for further details)

preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America

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

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

the reporting period.

Significant estimates include estimates used to review the Company’s goodwill and digital currency impairment,

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

revenue recognition from digital currency mining, valuation of derivative assets and liabilities, available-for-sale investments, allowances

for uncollectible accounts, valuation of digital currencies, valuation of contingent consideration, warranty, and the valuations of share

based awards.

The Company bases its estimates on historical experience

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

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

Actual results may differ

from these estimates under different assumptions or conditions including, but not limited to, the ultimate impact that COVID-19 may have

on the Company’s operations.

We recognize revenue in accordance with generally

accepted accounting principles as outlined in the Financial Accounting Standard Board's (“FASB”) Accounting Standards Codification

(“ASC”) 606, Revenue From Contracts with Customers, which requires that five steps be followed in evaluating revenue recognition:

(i) identify the contract with the customer;

(ii) identity the performance obligations

in the contract;

(iii) determine the transaction price;

(ii) identity the performance obligations in the contract;

(iii) determine the transaction

(iv) allocate the transaction price;

and (v) recognize revenue when or

as the entity satisfied a performance obligation.

We did not have a cumulative impact

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

Our accounting policy on revenue recognition

by type of revenue is provided below.

Engineering & Construction

Contracts and Service Contracts

The Company recognizes engineering

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

to the customer.

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

obligation) and are not segmented between types of services.

The Company recognizes revenue based primarily on contract cost incurred

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

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

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

Customer-furnished materials, labor

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

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

Our accounting

policy on revenue recognition by type of revenue is provided below.

from digital currency mining

The Company has entered in digital asset mining

pools to provide computing power to the mining pools.

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

Company’s enforceable right to compensation only begins when the Company starts providing computing power to the mining pool

In exchange for providing computing power, the Company is entitled to a fractional share of the fixed cryptocurrency award

the mining pool operator receives ( less net digital asset transaction fees to the mining pool operator), for successfully

adding a block to the blockchain, , plus a fractional share of the transaction fees attached to that block..

The Company’s

fractional share is based on the proportion of computing power the Company contributed to the mining pool operator to the total

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

The transaction consideration the

Company receives is noncash consideration, in the form of digital currency, which the Company measures at fair value on the date

received which is not materially different than the fair value at contract inception or time the Company has earned the award

from the mining pools.

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

Fair value of the

digital currency award received is determined using the spot price of the related digital currency on the date earned.

There is currently

no definitive guidance under GAAP or alternative accounting framework for the accounting for digital currencies recognized as revenue

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

In the event authoritative

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

consolidated financial position and results from operations.

The total revenue recognized from digital currency mining for the years

ended September 30, 2021 and September 30, 2020 is $ 38,846,633

respectively.

& Construction Contracts and Service Contracts

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

of control to the customer.

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

performance obligation) and are not segmented between types of services.

The Company recognizes revenue based primarily on contract cost

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

The input method is the most faithful depiction of the

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

Customer-furnished materials,

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

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

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

Customer-furnished materials are only included in revenue

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

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

The Company recognizes revenue, but not profit, on

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

Revenue on these uninstalled

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

Changes to total estimated contract cost or losses,

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

Pre-contract costs are expensed

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

Project mobilization costs are generally charged to project

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

Customer-furnished materials are only included in revenue and cost

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

or there is a reasonable basis for estimating the amount.

The Company recognizes revenue, but not profit, on certain uninstalled materials

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

Revenue on these uninstalled materials is recognized when

the cost is incurred (when control is transferred).

Changes to total estimated contract cost or losses, if any, are recognized in the

period in which they are determined as assessed at the contract level.

Pre-contract costs are expensed as incurred unless they are expected

to be recovered from the client.

Project mobilization costs are generally charged to project costs as incurred when they are an integrated

part of the performance obligation being transferred to the client.

Customer payments on engineering and construction contracts are typically

due within 30 to 45 days of billing, depending on the contract.

The Company recognizes

energy (solar panel and battery) installation contract revenue for residential customers at a point in time upon completion of the installation.

The revenues associated with energy installations for commercial customers are recognized over a period of time as noted in the engineering

and construction contract revenue disclosure above.

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

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

performed and contractually billable.

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

For contracts

with multiple performance obligations, the Company allocates the transaction price to each performance obligation using an estimate of

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

Revenue recognized on service contracts that have not been billed

to clients is classified as a current asset under contract assets on the Consolidated Balance Sheets.

Amounts billed to clients in excess

of revenue recognized on service contracts to date are classified as a current liability under contract liabilities.

Customer payments

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

For service contracts (including maintenance

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

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

contractually billable.

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

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

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

Revenue recognized on service contracts

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

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

contract liabilities.

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

Revenues from Sale of Equipment

Performance Obligations Satisfied

at a point in time.

We recognize revenue on agreements

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

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

The total revenue

recognized from sale of residential battery, residential solar and commercial solar for the years ended September 30, 2021 and September

30, 2020 is $ 3,727,335

respectively.

from Sale of Equipment

Obligations Satisfied at a point in time.

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

We recognize revenue at the point

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

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

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

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

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

receipt of the shipment.

In situations where arrangements include

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

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

We generally do not provide for anticipated

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

Our billing terms for these point in

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

however, within certain businesses, we receive

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

partners, which are recorded as contract liabilities.

Due to the customized nature of the equipment, the Company does

not allow for customer returns.

Service Performance obligations

satisfied over time.

We enter into long-term product service

agreements with our customers primarily within our microgrid segment.

These agreements require us to provide preventative maintenance,

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

these contracts will generally range from 1 to 10 years.

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

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

decision (e.g., equipment upgrade).

In situations

where an alternative shipment arrangement has been made, the Company recognizes the shipping revenue upon customer receipt of the shipment.

In situations

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

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

We generally do not provide

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

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

however, within certain

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

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

customized nature of the equipment, the Company does not allow for customer returns.

Performance obligations satisfied over time.

We enter into

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

These agreements require us to provide

preventative maintenance, and standby support services that include certain levels of assurance regarding system performance throughout

the contract periods, these contracts will generally range from 1 to 10 years.

We account for items that are integral to the maintenance

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

purchasing decision (e.g., equipment upgrade).

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

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

effectively like a new contract).

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

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

Our billing terms

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

Contract assets represent revenue

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

contract work in progress (typically for fixed-price contracts) of $ 4,103 and $ 57,077 as of September 30, 2020 and September 30,

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

like a new contract).

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

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

Our billing terms for these contracts

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

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

contracts) of $ 0 and

contract work in progress (typically for fixed-price contracts) of $ 0 and $ 4,103 as

of September 30, 2021 and September 30, 2020, respectively.

Unbilled receivables, which represent an unconditional right to payment

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

There are no advances that are payments on account of contract assets that have been deducted from contract assets as of September

30, 2021 and September 30, 2020.

Contract liabilities mostly represent customer deposits.

The Company recorded $ 296,964 and $ 64,198 in

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

The total revenue

recognized from sale of switchgear for the years ended September 30, 2021 and September 30, 2020 is $ 4,448,726

and $ 7,505,761

respectively.

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

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

Advances that are payments on account

of contract assets of $ 0 and $ 0 as of September 30, 2020 and September 30, 2019, respectively, have been deducted from contract

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

The Company recorded

$ 64,198 and $ 499,401 in contract liabilities as of September 30, 2020 and September 30, 2019, respectively.

from software

The Company derives its software revenue from both subscription

fees from customers for access to its energy software offerings and software license sales and support services.

derives its software revenue from both subscription fees from customers for access to its energy software offerings and software license

sales and support services.

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

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

The Company’s policy is

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

The Company’s

subscription agreements generally have monthly or annual contractual terms.

Revenue is recognized ratably over the related contractual

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

Access to the platform represents a series of distinct

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

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

The total revenue recognized from design,

software development and other technology-based consulting services for the years ended September 30, 2021 and September 30, 2020 is

and $ 2,431,419 ,

respectively.

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

For service contracts performed under Master

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

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

In the case of a milestone-based

SOW, the Company recognizes revenues as each deliverable is signed off by the customer.

The total revenue

recognized from design, software development and other technology-based consulting services for the years ended September 30, 2021 and

September 30, 2020 is $ 1,676,505

and $ 2,431,419 ,

respectively.

Revenues from

software licenses are generally recognized upfront when the software is made available to the customer and revenues from the related

support is generally recognized ratably over the contract term.

The Company’s policy is to exclude sales and other indirect

taxes when measuring the transaction price of its subscription agreements.

The Company’s subscription agreements

generally have monthly or annual contractual terms.

Revenue is recognized ratably over the related contractual term beginning on

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

Access to the platform represents a series of distinct services as

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

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

Revenues from design, software

development and other technology-based consulting services

For service contracts performed under

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

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

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

Variable Consideration

The nature of the Company’s contracts

gives rise to several types of variable consideration, including claims and unpriced change orders;

data center services

The Company provides

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

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

The performance

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

The transaction price is the price agreed with

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

The total revenue

recognized from data center services for the years ended September 30, 2021 and September 30, 2020 is $ 554,345

respectively.

Consideration

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

awards and incentive fees;

and liquidated damages and penalties.

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

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

The Company estimates the amount of revenue to be recognized

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

whichever is expected to better predict the amount.

Factors considered in determining whether revenue associated with claims (including

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

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

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

are identifiable and

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

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

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

The Company recognizes revenue for

variable consideration

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

The Company estimates

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

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

Factors considered in determining whether revenue

associated with claims (including change orders in dispute and unapproved change orders in regard to both scope and price) should be

recognized include the following:

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

caused by circumstances that were unforeseen at the contract date and not the result of deficiencies in the company’s performance,

(c) claim-related costs are identifiable and considered reasonable in view of the work performed, and (d) evidence supporting the claim

is objective and verifiable.

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

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

Back charges to suppliers or subcontractors

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

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

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

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

The warranty periods

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

Historically,

warranty claims have not resulted in material costs incurred.

Practical Expedients

If the Company has a right to consideration

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

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

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

The Company does not adjust the contract

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

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

The Company has made an accounting

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

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

For the year ended September 30, 2020

and 2019, the Company reported revenues of $ 10,028,701 and $ 4,532,782 , respectively.

Cash and cash equivalents

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

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

There was $ 3,126,202 and $ 7,838,857 in cash and no cash

equivalents as of September 30, 2020 and September 30, 2019, respectively.

The warranty periods typically

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

Historically, warranty claims

have not resulted in material costs incurred.

If the Company

has a right to consideration from a customer in an amount that corresponds directly with the value of the Company’s performance

completed to date (a service contract in which the company bills a fixed amount for each hour of service provided), the Company recognizes

revenue in the amount to which it has a right to invoice for services performed.

does not adjust the contract price for the effects of a significant financing component if the Company expects, at contract inception,

that the period between when the company transfers a service to a customer and when the customer pays for that service will be one year

has made an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by governmental authorities

that are collected by the Company from its customers (use taxes, value added taxes, some excise taxes).

ended September 30, 2021 and 2020, the Company reported revenues of $ 49,438,115

and $ 10,028,701 ,

respectively.

includes the following in cost of revenues:

energy costs, materials costs, manufacturing and logistics costs, freight costs, inventory

write-downs, hosting services costs.

The recognition of cost of revenue for our energy segment is dependent upon the revenue stream that

it pertains to, refer below:

Delivered at a Point in Time.

Cost of revenue from these products is recognized when the

Company transfers control of the product to the customer, which is generally upon shipment.

Delivered Over Time.

Cost of revenue from these products is recognized over the related service

and cash equivalents including restricted cash

Cash and cash equivalents include cash and

amounts due from banks and restricted cash.

The Company’s restricted cash represents amounts held in trust for certain construction

The following table sets forth a reconciliation of cash, cash equivalents, and restricted

cash reported in the consolidated balance sheets that agrees to the total of those amounts as presented in the consolidated statements

of cash flows.

Cash and cash equivalents, excluding restricted cash

Restricted cash – construction escrow account

Cash and cash equivalents per consolidated Balance

Accounts receivable

of uncollateralized customer obligations due under normal trade terms.

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

They are initially recorded at the invoiced amount

upon the sale of goods or services to customers, and do not bear interest.

The Company performs ongoing credit evaluation of its customers

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If management

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

be collected is recorded.

Accounts receivable are presented net of an allowance for doubtful accounts of $ 42,970 and $ 254,570 at

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

Retention receivable is the

amount withheld by a customer until a contract is completed.

Retention receivables of $ 615

and $ 159,989 were included in

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

Investment securities

Investment securities include debt securities and equity securities.

Debt securities are classified as available for sale (“AFS”) and are reported as an asset in the Consolidated Balance

Sheet at their estimated fair value.

As the fair values of AFS debt securities change, the changes are reported net of income tax

as an element of OCI, except for other-than-temporarily-impaired securities.

When AFS debt securities are sold, the unrealized

gains or losses are reclassified from OCI to non-interest income.

Securities classified as AFS are securities that the Company

intends to hold for an indefinite period of time, but not necessarily to maturity.

Any decision to sell a security classified as

AFS would be based on various factors, including significant movements in interest rates, changes in the maturity mix of the Company’s

assets and liabilities, liquidity needs, decline in credit quality, and regulatory capital considerations.

Interest income is recognized based on the coupon rate and increased

by accretion of discounts earned or decreased by the amortization of premiums paid over the contractual life of the security.

For individual debt securities where the Company either intends

to sell the security or more likely than not will not recover all of its amortized cost, the OTTI is recognized in earnings equal

to the entire difference between the security's cost basis and its fair value at the balance sheet date.

For individual debt securities

for which a credit loss has been recognized in earnings, interest accruals and amortization and accretion of premiums and discounts

are suspended when the credit loss is recognized.

Interest received after accruals have been suspended is recognized in income

on a cash basis.

The Company holds investments in both publicly held and privately

held equity securities.

Privately held equity securities are recorded at cost and adjusted

for observable transactions for same or similar investments of the issuer (referred to as the measurement alternative) or impairment.

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

securities on the consolidated statement of operations.

Publicly held equity securities are based on fair value accounting

with unrealized gains or losses resulting from changes in fair value reflected as unrealized gains or losses on equity securities

in our consolidated statements of operations.

Concentration Risk

At times throughout the year, the

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

As of September 30, 2020, the cash balance

in excess of the FDIC limits was $ 2,876,202 .

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

exposed to any significant credit risk in these accounts.

The Company had certain customers whose revenue individually represented

10% or more of the Company’s total revenue.

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

Accounts receivable,

net consists of the following:

Accounts Receivable,

Other receivables

Retainage receivable

for doubtful allowances

Total Accounts Receivable,

Inventory is stated at the lower cost or net realizable

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

For solar panel and battery installations, the Company transfers component

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

The Company periodically reviews inventories for unusable

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

Based on this evaluation, provisions are made to write

inventories down to their net realizable value.

There were no write-downs of inventory as of September 30, 2021 and 2020, respectively.

The composition of inventory for the years ended as of September 30, 2021 and 2020 are as follows:

Batteries and solar panels

Supplies and other

Total inventory

has presented inventory amounting to $ 247,500 separate

from Prepaid and other current assets to Inventory as of September 30, 2020.

expense and other current assets

records a prepaid expense for costs paid but not yet incurred.

Those expected to be incurred within one year are recognized and shown

as a short-term pre-paid expense.

Any costs expected to be incurred outside of one year would be considered other long term assets.

current assets are assets that consist of deposits and interest receivable.

Deposits and interest we expect to receive within one year

are shown as short-term.

Those we expect to receive outside of one year are shown as other long term assets.

Investment securities include debt securities

and equity securities.

Debt securities are classified as available for sale (“AFS”) and are reported as an asset in the Consolidated

Balance Sheets at their estimated fair value.

As the fair values of AFS debt securities change, the changes are reported net of income

tax as an element of OCI, except for other-than-temporarily-impaired securities.

When AFS debt securities are sold, the unrealized gains

or losses are reclassified from OCI to non-interest income.

Securities classified as AFS are securities that the Company intends to hold

for an indefinite period of time, but not necessarily to maturity.

Any decision to sell a security classified as AFS would be based on

various factors, including significant movements in interest rates, changes in the maturity mix of the Company’s assets and liabilities,

liquidity needs, decline in credit quality, and regulatory capital considerations.

Interest income

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

over the contractual life of the security.

For individual

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

OTTI (other than temporary impairment) is recognized in earnings equal to the entire difference between the security's cost basis and

its fair value at the balance sheet date.

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

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

Interest received

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

The Company holds investments in both publicly

held and privately held equity securities.

However, as described in Note 1, the Company is primarily doing business of in the digital

currency mining sector and alternative energy sector, and not in the business of investing in securities.

Privately held equity securities are recorded

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

or impairment.

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

on equity securities on the consolidated statement of operations and comprehensive loss.

Publicly held equity securities are based

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

on equity securities in our consolidated statements of operations and comprehensive loss.

Concentration

At times throughout

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

The cash balance, in excess of the

FDIC limits was $ 17,790,327

and $ 2,876,202

for periods ended September 30, 2021 and September 30, 2020, respectively.

The accounts offered by custodians of the Company’s bitcoin are not insured by the FDIC.

The fair market value of bitcoin held in

accounts covered by FDIC limits was $ 27,554,031

for the periods ended September 30, 2021 and 2020, respectively.

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

The Company has certain customers and vendors

who individually represented 10% or more of the Company’s revenue or capital expenditures.

(see Note 16 for details)

Warranty Liability

Company establishes warranty liability reserves to provide for estimated future expenses as a result of installation and product

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

Liability estimates are

determined based on

management’s judgment, considering such factors as historical experience, the likely current cost of corrective action, manufacturers’

and subcontractors’ participation in sharing the cost of corrective action, consultations with third party experts such as

engineers, and discussions with the Company’s general counsel and outside counsel retained to handle specific product liability

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

years with full reimbursement to replace and install replacement parts.

Warranty costs and associated liabilities for the years

ended September 30, 2020 and 2019 were $ 0 and $ 0 , respectively.

Stock -based compensation

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

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

based on the grant-date fair value of the award.

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

the requisite service period.

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

management, accounting, operations, corporate communication, financial and administrative consulting services.

Earnings (loss) per share

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

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

of “basic” and “diluted” earnings per share.

Basic earnings per share includes no dilution and is computed

by dividing net income or loss available to common stockholders by the weighted average common shares outstanding the period.

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

The calculation

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

however, potential common shares are excluded if their

effect is anti-dilutive.

As of September 30, 2020, there are 1,577,013 shares issuable upon exercise of outstanding options and

warrants which have been excluded as anti-dilutive.

Property and equipment

Property and equipment are stated

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

In accordance with ASC 842, the Company

assesses whether an arrangement contains a lease at contract inception.

When an arrangement contains a lease, the Company categorize

leases with contractual terms longer than twelve months as either operating or finance.

Finance leases are generally those leases that

allow us to substantially utilize or pay for the entire asset over its estimated life.

Assets acquired under finance leases are recorded

in “Fixed Assets, net.” All other leases are categorized as operating leases.

The Company records right-of use ("ROU")

assets and lease obligations for its finance and operating leases, which are initially recognized based on the discounted future lease

payments over the term of the lease.

As the rate implicit in the Company's leases is not easily determinable, the Company’s applicable

incremental borrowing rate is used in calculating the present value of the sum of the lease payments.

Lease term is defined as the non-cancelable

period of the lease plus any options to extend or terminate the lease when it is reasonably certain that the Company will exercise the

The Company has elected not to recognize ROU asset and lease obligations for its short-term leases, which are defined as leases

with an initial term of 12 months or less.

Some leases include multiple year renewal

The Company’s decision to exercise these renewal options is based on an assessment of its current business needs and market

factors at the time of the renewal.

Currently, the Company has no leases for which the option to renew is reasonably certain and therefore,

options to renew were not factored into the calculation of its right of use asset and lease liability as of September 30, 2021.

For all classes of underlying assets, the

Company has elected to not separate lease from non-lease components.

establishes warranty liability reserves to provide for estimated future expenses as a result of installation and product defects, product

recalls and litigation incidental to the Company’s business.

Liability estimates are determined based on management’s judgment,

considering such factors as historical experience, the likely current cost of corrective action, manufacturers and subcontractors participation

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

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

The Company’s manufacturers and service

providers currently provide substantial warranties between ten to twenty-five years with full reimbursement to replace and install replacement

While it is probable that the Company will incur costs associated with future warranty claims, the Company cannot reasonably estimate

the loss of future warranty claims.

Thus, the loss on warranty claims will be charged to the income of the period in which the loss can

be reasonably estimated and shall not be charged retroactively to an earlier period, in accordance with the provisions of ASC 450.

were no warranty

costs and associated liabilities as of September 30, 2021 and September 30, 2020.

-based compensation

follows the guidelines in FASB Codification Topic ASC 718-10 Compensation-Stock Compensation, which requires companies to measure the

cost of employee and non-employee services received in exchange for an award of an equity instrument based on the grant-date fair value

of the award.

Stock-based compensation expense for stock options is recognized on a straight-line basis over the requisite service period.

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

corporate communication, financial and administrative consulting services.

The Company determines the grant date fair value of the options

using the Black-Scholes option-pricing model.

For discussion of accounting for RSUs, please refer Note 13 – Stock-Based Compensation.

(loss) per share

The Company reports earnings (loss) per share in accordance

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

earnings per share.

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

by the weighted average common shares outstanding during the period.

Diluted earnings per share reflect the potential dilution of securities

that could share in the earnings of an entity.

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

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

As of September 30, 2021 and 2020, there were 2,173,578 shares

and 1,577,013 shares, respectively, issuable upon exercise of outstanding options warrants and restricted stock units, as well

as 5,250,000 shares issuable upon preferred stock conversions, that were excluded from the current and prior period calculations of diluted

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

and equipment

In accordance with the Financial Accounting

Standards Board ASC 360-10, "Property, Plant and Equipment” the carrying value of property and equipment, and other long-lived

assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment.

The Company recognizes

impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset.

Impairment losses,

if any, are measured as the excess of the carrying amount of the asset over its estimated fair value.

During the year ended September

30, 2021 and September 30, 2020 the Company did not record an impairment expense.

Property and equipment are stated at cost less accumulated

depreciation.

Construction in progress is the construction or development of assets that has not yet been placed in service for its intended

Depreciation for machinery and equipment, mining equipment, buildings, furniture and fixtures and leasehold improvements commences

once they are ready for its intended use.

Land is not depreciated.

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

Machinery and equipment

Mining equipment

Leasehold improvements

Shorter of estimated lease term or 5 years

Shorter of estimated lease term or 5

Furniture and fixtures

Long-lived Assets

accordance with the Financial Accounting Standards Board ("FASB") Accounts Standard Codification (ASC) ASC 360-10, "Property,

Plant and Equipment," the carrying value of intangible assets and other long-lived assets is reviewed on a regular basis for

the existence of facts or circumstances that may suggest impairment.

The Company recognizes impairment when the sum of the expected

undiscounted future cash flows is less than the carrying amount of the asset.

Impairment losses, if any, are measured as the excess

of the carrying amount of the asset over its estimated fair value.

During the year ended September 30, 2020 the Company did not

record an impairment expense and during the year ended September 30, 2019 the Company recorded an impairment expense of $ 6,915,186

related to software acquired in 2016 which the Company does not anticipate utilizing in future periods.

Intangible Assets and Goodwill

Company accounts for business combinations under the acquisition method of accounting in accordance with ASC 805, “Business

Combinations,” where the total purchase price is allocated to the tangible and identified intangible assets acquired and

liabilities assumed based on their estimated fair values.

The purchase price is allocated using the information currently available,

and may be adjusted, up to one year from acquisition date, after obtaining more information regarding, among other things, asset

valuations, liabilities assumed and revisions to preliminary estimates.

The purchase price in excess of the fair value of the

tangible and identified intangible assets acquired less liabilities assumed is recognized as goodwill.

The Company reviews its indefinite

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

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

combinations, Intangible Assets and Goodwill

Company accounts for business combinations under the acquisition method of accounting in accordance with ASC 805, Business Combi nations,

where the total purchase price is allocated to the identified assets acquired and liabilities assumed based on their estimated fair values.

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

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

The difference between the purchase price, including any contingent consideration, and the fair value of net assets acquired is recorded

Contingent consideration transferred is initially recognized at fair value.

Contingent consideration classified as a liability

or an asset is remeasured to fair value each period until settlement, with changes recognized in profit or loss.

Contingent consideration

classified as equity is not remeasured.

Acquisition-related costs are recognized separately from the acquisition and are expensed as

reviews its indefinite lived intangibles and goodwill for impairment annually or whenever events or circumstances indicate that the carrying

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

In accordance with its policies, the Company performed an assessment

of indefinite lived intangibles and goodwill and determined there was no impairment for the years ended September 30, 2020 and

of indefinite lived intangibles and goodwill as of the year end September 30, 2021.

(See Note 6 for impairment related to indefinite

lived intangibles and goodwill).

2021 Goodwill Impairment analysis

In completing the 2021 annual goodwill

impairment analysis, the Company elected to perform both qualitative and quantitative assessments for our goodwill.

The assessments

involve comparing the carrying value of the entity, including goodwill, to its estimated fair value.

In accordance with ASU 2017-04,

a goodwill impairment charge is recorded for the amount by which the carrying value unit exceeds the fair value of the reporting

In determining the fair value for which the quantitative assessment was performed, the Company obtained an independent

evaluation of goodwill.

The independent evaluation agency has utilized the income approach to test for goodwill impairment.

income approach is a valuation technique under which we estimate future cash flows using the financial forecast from the perspective

of an unrelated market participant.

Using historical trending and internal forecasting techniques, revenue is projected and applied

to fixed and variable cost experience rates to arrive at the future cash flows.

A terminal value was then applied to the projected

cash flow stream.

Future estimated cash flows were discounted to their present value to calculate the estimated fair value.

discount rate used was the value-weighted average of our estimated cost of capital derived using both known and estimated customary

market metrics.

In determining the estimated fair value, several factors were estimated, including projected operating results,

growth rates, economic conditions, anticipated future cash flows and the discount rate.

assessment indicated that impairment of goodwill was necessary.

Based on the assessment for impairment, the

Company reported an impairment expense of goodwill of $ 5,723,388 for

the year ended September 30, 2021.

There was no impairment

expense for the year ended September 30, 2020.

following table reflects segment wise goodwill activity for the years ended September 30, 2021 and 2020, respectively:

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Segment Wise Goodwill Activity (Details)

Goodwill- October 1, 2019

New Acquisitions

Goodwill- September 30, 2020

New Acquisitions

( 4,746,000 )

( 5,723,388 )

September 30, 2021

Company amortizes intangible assets with finite lives over their estimated useful lives, which range between two and twenty years as

Customer list and non-compete agreement

Design assets

Engineering trade secrets

Strategic contract

Infrastructure asset

Capitalized software

Digital currencies are included in current assets

in the consolidated balance sheets.

Digital currencies are classified as indefinite-lived intangible assets in accordance with ASC 350,

Intangibles — Goodwill and Other, and are accounted for in connection with the Company’s revenue recognition policy detailed

above and in Footnote 2 – Significant Accounting Policies.

An intangible asset with an indefinite useful life is not amortized but

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

than not that the indefinite-lived asset is impaired.

Quantitative impairment exists when the carrying amount exceeds its fair value,

which is measured using the quoted price of the digital currency at the time its fair value is being measured in accordance with ASC 820,

Fair Value Measurement.

Quoted prices are obtained from the principal market.

To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset.

Subsequent reversal of

impairment losses is not permitted as per ASC 350, Intangibles – Goodwill and Other.

Digital currencies earned by the Company through

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

digital currencies are included within investing activities in the accompanying consolidated statements of cash flows and any realized

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

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

following table presents the activities of the digital currencies for the year ended September 30, 2021:

Balance as on September 30, 2019

Additions to digital currencies

Sale of digital currencies

Balance as on September 30, 2020

Additions of digital currencies

Sale of digital currencies

( 11,443,132 )

Realized gain on sale of digital currencies

Digital currencies issued for services

Impairment loss

( 6,608,076 )

Balance as on September 30, 2021

Development Costs

The Company capitalizes software development costs under guidance

of ASC 985-20 “Costs of Software to be Sold, Leased or Marketed” for our mPulse platform and under ASC 350-40 “Internal

Use Software” for our mVSO, Canvas & Plaid products.

Software development costs include payments made to independent

software developers under development agreements, as well as direct costs incurred for internally developed products.

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

to be recoverable.

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

documentation, or the completed and

tested product design and a working

Significant management judgments and estimates are utilized in the assessment of when technological feasibility is established,

and the evaluation is performed on a product-by-product basis.

For products where proven technology exists, this may occur early

in the development cycle.

Prior to a product's release, if and when we believe capitalized

costs are not recoverable, we expense the amounts as part of "Product development."

Capitalized costs for products that are cancelled or are expected to be abandoned are charged to "Product development"

in the period of cancellation.

Amounts related to software development, such as product enhancements to existing features, which

are not capitalized are charged immediately to "Product development."

Commencing upon a product's release,

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

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

seven years for our current product offerings.

Company capitalizes software development costs under guidance of ASC 985-20 Costs of Software to be Sold, Leased or Marketed for our

mPulse, Canvas & Plaid platforms and under ASC 350-40 Internal Use Software.

Software development costs include payments made to

independent software developers under development agreements, as well as direct costs incurred for internally developed products.

development costs are capitalized once the technological feasibility of a product is established and such costs are determined to be

Technological feasibility of a product requires both technical

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

Significant management

judgments and estimates are utilized in the assessment of when technological feasibility is established, and the evaluation is performed

on a product-by-product basis.

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

product's release, if and when we believe capitalized costs are not recoverable, we

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

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

upon a product's release, capitalized software development costs are amortized to "Cost of revenues software amortization"

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

of seven years for our current product offerings.

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

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

We evaluate the future recoverability

of capitalized software development costs on a quarterly basis.

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

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

For products that are scheduled

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

the costs relate.

evaluate the future recoverability of capitalized software development costs on a quarterly basis.

For products that have been released

in prior periods, the primary evaluation criterion is the actual performance of the software platform to which the costs relate.

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

products to which the costs relate.

Criteria used to evaluate expected product performance include:

historical performance of comparable products

developed with comparable technology;

historical performance of comparable

products developed with comparable technology;

market performance of comparable software;

orders for the product prior to its release;

contracts and general market conditions.

Significant management judgments and

estimates are utilized in assessing the recoverability of capitalized costs.

In evaluating the recoverability of capitalized costs,

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

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

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

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

is inconsistent with management's expectations.

pending contracts and general market conditions.

management judgments and estimates are utilized in assessing the recoverability of capitalized costs.

In evaluating the recoverability

of capitalized costs, the assessment of expected product performance utilizes forecasted sales amounts and estimates of additional costs

to be incurred.

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

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

an impairment charge.

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

that is inconsistent with management's expectations.

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

1 unchanged sentence

accounting purposes.

Fair Value of financial instruments

and derivative asset

The carrying value of cash, accounts payable and accrued expenses, and debt (See Notes 9 &

10) approximate their fair values because of the short-term nature of these instruments.

Management believes the Company is not

exposed to significant interest or credit risks arising from these financial instruments.

The carrying amount of the Company’s

long-term convertible debt is also stated at fair value since the stated rate of interest approximates market rates.

Fair value is defined as the exchange

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

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

Valuation techniques

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

The Company utilizes

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

Quoted prices in active markets for identical assets or liabilities.

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

Quoted prices for similar assets and liabilities in active markets;

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

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

Value Measurement of financial instruments, derivative asset and contingent consideration

carrying value of cash, accounts payable and accrued expenses, and debt approximate their fair values because of the short-term nature

of these instruments.

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

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

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

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

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

unobservable.

prices in active markets for identical assets or liabilities.

These are typically obtained from real-time

quotes for transactions in active exchange markets involving identical assets.

prices for similar assets and liabilities in active markets;

quoted prices included for identical or similar assets and liabilities

that are not active;

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

in active markets.

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

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

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

The following table presents the Company’s

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

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

Derivative asset

Investment in equity security

Investment in debt security

The below table presents the change in the fair value

of the derivative asset and investment in debt security during the year ended September 30, 2020:

Balance at September 30, 2019

Fair value at issuance, net of premium

Gain on derivative asset

Balance at September 30, 2020

The Company’s

calculation of its tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in

various taxing jurisdictions.

Unobservable inputs, where there is little

or no market activity for the asset or liability.

These inputs reflect the reporting entity’s own beliefs about the assumptions

that market participants would use in pricing the asset or liability, based on the best information available in the circumstances.

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

balance sheets on a recurring basis, and their level within the fair value hierarchy as of September 30, 2021 and September 30, 2020:

in equity security

in debt security

cash consideration

in equity security

in debt security

cash consideration

Company’s calculation of its tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations

in various taxing jurisdictions.

The Company recognizes tax liabilities for uncertain tax positions based on management’s estimate

of whether it is more likely than not that additional taxes will be required.

The Company had no uncertain tax positions as of

September 30, 2020 and 2019.

Deferred income taxes are recognized

in the consolidated financial statements for the tax consequences in future years of differences between the tax basis of assets

and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates.

Temporary differences

arise from net operating losses, differences in depreciation methods of archived images, and property and equipment, stock-based

The Company had no uncertain tax positions as of September

30, 2021 and 2020.

income taxes are recognized in the consolidated financial statements for the tax consequences in future years of differences between

the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates.

differences arise from net operating losses, differences in depreciation methods of archived images, and property and equipment, stock-based

and other compensation, and other accrued expenses.

A valuation allowance is established when it is determined that it is more

likely than not that some or all of the deferred tax assets will not be realized.

The application of tax laws and regulations

is subject to legal and factual interpretation, judgment and uncertainty.

Tax laws and regulations themselves are subject to change

as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings.

Therefore, the

actual liability for U.S., or the various state jurisdictions, may be materially different from management’s estimates, which

could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities.

A valuation allowance is established when it is determined that it is more likely

than not that some or all of the deferred tax assets will not be realized.

application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty.

Tax laws and regulations

themselves are subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court

Therefore, the actual liability for U.S., or the various state jurisdictions, may be materially different from managements estimates,

which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities.

and penalties are included in tax expense.

1 unchanged sentence

for income taxes.

As of September 30, 2020, and 2019, the Company had no accrued interest or penalties related to uncertain tax

As of September 30, 2021 and 2020, the Company had no accrued interest or penalties related to uncertain tax positions.

Reclassifications

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

These reclassifications had no effect

on the reported results of operations or net assets of the Company.

Segment Reporting

segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly

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

The Company currently has two reportable segments for financial reporting purposes.

Recently issued accounting pronouncements

In June 2018, the FASB issued ASU 2018-07,

"Compensation-Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment Accounting," which modifies

the accounting for share-based payment awards issued to nonemployees to largely align it with the accounting for share-based payment

awards issued to employees.

ASU 2018-07 is effective for us for annual periods beginning October 1, 2019.

The new standard did

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

In August 2018, the FASB issued ASU

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

Customer’s Accounting for Implementation

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

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

ASU 2018-15 allows for either retrospective

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

ASU 2018-15 is effective for

fiscal years beginning after December 15, 2019.

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

on our financial position and results of operations.

In February 2016, the FASB issued guidance

within ASU 2016-02, Leases .

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

recognize the lease assets and lease liabilities arising from operating leases in the statement of financial position.

The accounting

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

The Company adopted the amendments to Topic 842

on October 1, 2019 using the modified retrospective approach.

The Company elected the transition option issued under ASU 2018-11, Leases

(Topic 842) Targeted Improvements , which allows entities to continue to apply the legacy guidance in ASC 840, Leases ,

to prior periods, including disclosure requirements.

Accordingly, prior period financial results and disclosures have not been

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

1) expired or existing contracts that may contain leases;

2) lease classification of expired or existing leases;

and 3) initial

direct costs for any existing leases.

The Company has also elected to apply the short term lease measurement and recognition exemption

to leases with an initial term of 12 months or less.

The most significant impact of the new standard on the Company’s Consolidated

Financial Statements was the recognition of a right of use asset and lease liability for operating leases for which the Company

is the lessee.

Upon adoption of this guidance, on October 1, 2019, the Company recorded a Right of use asset and corresponding

lease liability of $85,280 and $85,280, respectively, on the Consolidated Balance Sheet.

No cumulative effect adjustment to retained

earnings resulted from adoption of this guidance.

The new standard did not have a material impact on the Company’s results

of operations or cash flows.

In August 2018, the FASB issued ASU

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

Disclosure Framework – Changes to the Disclosure Requirements for Fair Value

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

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

ASU 2018-13 is effective for for fiscal years beginning

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

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

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

inputs for Level 3 fair value measurements.

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

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

The effects of all other

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

We are currently in the process of evaluating

the impact of adoption on our Consolidated Financial Statements.

In January 2017, the FASB issued guidance

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

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

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

ASU 2017-04 is effective for fiscal years beginning after

December 15, 2019.

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

and results of operations.

In June 2016, the FASB issued guidance within

ASU 2016-13, Financial Instruments – Credit Losses.

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

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

ASU 2016-13 is effective for fiscal years

beginning after December 15, 2022.

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

position and results of operations.

The Company has evaluated all other

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

results of operations or cash flows.

ACQUISITION OF GRIDFABRIC, LLC.

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

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

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

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

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

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

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

Pursuant to the terms of the Agreement, the

Purchase Price was as follows:

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

$ 400,000 in cash was delivered to an independent third-party escrow where such cash is subject

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

26,427 restricted shares of the Company’s common stock, valued at $ 250,000 , were

issued to the Seller (the “Shares”).

The Shares are subject to certain leak-out provisions whereby the Seller may sell

an amount of Shares equal to no more than ten percent (10%) of the daily dollar trading volume of the Company’s common stock

on its principal market for the prior 30 days (the “Leak-Out Terms”);

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

be issuable to Seller if GridFabric achieves certain revenue and product release milestones related to the future performance

of GridFabric (the “Earn-out Shares”).

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

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

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

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

The Agreement contains standard representations, warranties, covenants,

indemnification and other terms customary in similar transactions.

In connection with the transaction, the Company also entered into

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

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

The Company accounted for the acquisition of GridFabric

as an acquisition of a business under ASC 805.

The Company determined the fair value of the consideration

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

Certain prior year amounts have been reclassified

for consistency with the current year presentation.

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

assets of the Company and are as follows:

Company has reclassified interest receivable on investment in debt securities from Accounts Receivable to Prepaid expense and other current

assets amounting to $ 399,863

and $ 187,562

as of September 30, 2021 and 2020, respectively.

revenue presentation is updated to remain consistent with the business segments of the Company.

In 2020, revenues were categorized into hardware and software related sales.

Company has realigned its focus and accordingly revenue is reported based upon business segments

of digital currency mining, energy and others.

development expense for the year ended September 30, 2020 has been reclassified to be included

in depreciation and amortization expense.

and contingencies

Company is subject to the possibility of various loss contingencies and loss recoveries, such as legal proceedings and claims arising

out of its business.

The Company considers the likelihood of loss or impairment of an asset, or the incurrence of a liability, as well

as the Company’s ability to reasonably estimate the amount of loss, in determining loss contingencies.

An estimated loss contingency

is accrued when it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably

The Company regularly evaluates current information available with its external and internal counsel to determine whether

an accrual is required, an accrual should be adjusted or a range of possible loss should be disclosed.

segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by

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

To better align with the Company’s strategic objectives, the Company optimized its reportable segments down to two, (1)

Digital Currency Mining Segment and (2) Energy Segment;

by eliminating the digital agency segment.

Results associated with that

component are now being reported under other revenue and eliminations.

issued accounting pronouncements

2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from

Contracts with Customers, which requires contract assets and contract liabilities acquired in a business combination to be recognized

and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers, as if it

had originated the contracts.

Under the current business combinations guidance, such assets and liabilities are recognized by the acquirer

at fair value on the acquisition date.

This new guidance is effective for the Company for its fiscal year beginning February 1, 2023 and

interim periods within that fiscal year, and early adoption is permitted.

The Company is evaluating

its potential impact but does not expect the new standard to have a material impact on the Company's results of operations or cash flows.

In March 2020, the FASB issued ASU 2020-04,

Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting and issued subsequent amendments

to the initial guidance (collectively, “Topic 848”).

Topic 848 became effective immediately and expires on December 21, 2022.

Topic 848 allows eligible contracts that are modified to be accounted for as a continuation of those contracts, permits companies to preserve

their hedging accounting during the transition period and enables companies to make a one-time election to transfer or sell held-to-maturity

debt securities that are affected by rate reform.

Topic 848 provides optional expedients and exceptions for contracts, hedging relationships

and other transactions that reference the London Inter-Bank Offered Rate (“LIBOR”) or another reference rate expected to be

discontinued because of reference rate reform if certain criteria are met.

The adoption of ASU 2020-04 is not expected to have a material

impact on the Company’s financial statements or disclosures.

The Company adopted ASU 2016-13,

Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments on October 1, 2020

(“ASU 2016-13”).

ASU 2016-13 requires entities to use a new forward-looking “expected loss” model that

reflects expected credit losses, including credit losses related to trade receivables, and requires consideration of a broader range

of reasonable and supportable information to inform credit loss estimates, which generally will result in the earlier recognition of

allowances for losses.

As the Company was a Smaller Reporting Company at the time of issuance of the ASU, the Company expects to

adopt the ASU effective October 1, 2023, including the interim periods within the fiscal year.

In August 2020, the FASB issued

ASU2020-06, “Debt - Debt with Conversion and Other Options (subtopic 470-20) and Derivatives and Hedging - Contracts in

Entity’s Own Equity (subtopic 815-40),” which reduces the number of accounting models in ASC 470-20 that require

separate accounting for embedded conversion features.

As a result, a convertible debt instrument will be accounted for as a single

liability measured at its amortized cost as long as no other features require bifurcation and recognition as derivatives.

removing those separation models, the effective interest rate of convertible debt instruments will be closer to the coupon interest

Further, the diluted net income per share calculation for convertible instruments will require the Company to use the

if-converted method.

The treasury stock method should no longer be used to calculate diluted net income per share for convertible

The amendment will be effective for the Company with annual periods beginning January 1, 2022 and early adoption is

The adoption of ASU 2020-06 is not expected to have a material impact on the Company’s financial statements or

August 2020, the FASB issued Account Standard Update (“ASU”) 2020-06, “Debt - Debt with Conversion and Other Options

(subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (subtopic 815-40),” which reduces the number

of accounting models in ASC 470-20 that require separate accounting for embedded conversion features.

As a result, a convertible debt

instrument will be accounted for as a single liability measured at its amortized cost as long as no other features require bifurcation

and recognition as derivatives.

By removing those separation models, the effective interest rate of convertible debt instruments will

be closer to the coupon interest rate.

Further, the diluted net income per share calculation for convertible instruments will require

the Company to use the if-converted method.

The treasury stock method should no longer be used to calculate diluted net income per share

for convertible instruments.

The amendment will be effective for the Company with annual periods beginning January 1, 2022 and early

adoption is permitted.

The adoption of ASU 2020-06 is not expected to have a material impact on the Company’s financial statements

or disclosures.

WATT SOLUTIONS, INC.

February 23, 2021, the Company entered into an Agreement and Plan of Merger (the “SWS Merger Agreement”) with Solar Watt

Solutions, Inc.

(“SWS”) and its owners (the “Sellers”).

The Company accounted for the acquisition of SWS as

an acquisition of a business under ASC 805 – Business Combination.

At the closing on February

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

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

shares of restricted common stock with a deemed value of $ 15,640,000 calculated based on

the five-day average price to the Sellers, of which (a) 167,685 shares with a deemed value of $ 5,490,000 would be fully earned on closing,

and (b) an additional 310,018 shares with a deemed fair value of $ 10,150,000 were issued to an escrow agent and only earned by Sellers,

subject to holdback pending Sellers’ satisfaction of certain future milestones with all such shares subject to a lock up of no

less than 180 days and a leak out of no more than 10% of average daily trading value of the prior 30 days for a period of 36 months following

the closing, and (ii) up to $3,850,000 in cash to the Sellers, minus the Sellers’ debt, minus the difference between the Actual

Amount and Expected Amount consisting of:

(A) $1,350,000 (no changes post acquisition date) in cash payable on a pro rata basis to Sellers

at closing, less payment of $500,000 (no changes post acquisition date) to settle Sellers’ debt at closing, which includes (I)

$200,000 (no changes post acquisition date) in cash was held back by the Company to satisfy potential damages from indemnification claims

and any amounts owed pursuant to post-closing adjustments, (II) an additional $100,000 (no changes post acquisition date) in cash was

held back by the Company to satisfy any amounts owed pursuant to post-closing adjustments, and (B) up to $2,500,000 (fair valued at $155,000

at acquisition date) in cash held back by the Company and only payable pro rata to Sellers upon meeting certain future milestones and

subject to satisfaction of any amounts owing rom SWS to the Company resulting from damages required to be indemnified under the SWS Merger

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

ASC 820 was as follows:

Consideration:

Contingent consideration

310,018 shares of common stock as contingent equity consideration

shares of common stock

Contingent consideration - common stock issuable upon achievement of

Total Consideration

The total purchase price of the Company’s acquisition

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

as indicated below.

Purchase Price Allocation

Allocation at Acquisition Date

to Fair Value

Allocation at Acquisition Date

Customer List

The following is the unaudited

pro forma information assuming the acquisition of GridFabric occurred on October 1, 2018:

For the Year Ended

September 30, 2020

September 30, 2019

$ ( 4,932,733 )

Other Assets and Liabilities assumed, net

The goodwill recorded as result of the acquisition

represents the strategic benefits of growing the Company’s service portfolio and the expected revenue growth from increased market

Acquired goodwill is not deductible for income tax purposes.

The total purchase price was allocated to identifiable assets

deemed acquired, and liabilities assumed, based on their estimated fair values.

In connection with the preparation of our financial statements, the Company

determined that the accounting treatment of the contingent consideration as reported in the March 31, 2021 and June 30, 2021 consolidated

financial statements needed to be revised.

Specifically, the contingent cash consideration liability recorded at acquisition date

of $ 2,500,000

should be adjusted to $ 155,000

due to probability of non-satisfaction of future milestones.

As a result, the contingent cash consideration liability recorded at acquisition

date of $ 2,500,000 was adjusted to $ 155,000 due to probability of non-satisfaction of future milestones.

The Company also estimated that

based upon the milestones, only 19,221 contingent shares will be earned out of the 310,018 total contingent shares, and as a result, the

Company adjusted the contingent stock consideration to $533,002.

The Company assessed the materiality of these adjustments and determined

that these were not material to previously issued financial statements for the quarters ended March 31, 2021 and June 30, 2021.

The immaterial

impacts of these adjustments for the quarters ended March 31, 2021 and June 30, 2021 are as follows:

Condensed Consolidated

Balance Sheet (unaudited)

March 31, 2021

June 30, 2021

As Reported ($)

As Revised ($)

As Reported ($)

As Revised ($)

( 10,408,798 )

Loss per common share - basic and diluted

Weighted average common shares outstanding - basic

The unaudited pro forma

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

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

or of future results of the consolidated entities.

The unaudited pro forma consolidated financial information does not reflect

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

All transitions that

would be considered inter-company transactions for proforma purposes have been eliminated.

ACQUISITION OF P2KLABS, INC.

On January 31, 2020, the Company,

entered into an agreement with p2k, and its sole stockholder, Amer Tadayon, whereby the Company purchased all of the issued and

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

The transaction closed

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

As a result of the transaction, p2k is now a wholly-owned

subsidiary of the Company.

( 10,408,798 )

Contingent consideration - Current

( 1,319,751 )

Total current liabilities

( 1,319,751 )

Contingent consideration - Non Current

( 2,000,000 )

Total Liabilities

( 2,153,084 )

( 2,000,855 )

Additional paid-in capital

( 8,063,798 )

Total Stockholders' equity

( 8,255,714 )

( 8,407,943 )

Total Liabilities and Stockholders' equity

( 10,408,798 )

Condensed Consolidated Statement of operations (unaudited)

For the Three Months Ended March 31, 2021

For the Three Months Ended June 30, 2021

As Reported ($)

As Revised ($)

As Reported ($)

As Revised ($)

Change in fair value of contingent consideration

Total other income (expense)

( 2,058,948 )

( 2,211,177 )

Net Income/(loss)

( 16,677,127 )

( 16,829,356 )

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

( 16,677,127 )

( 16,829,356 )

amortization period for customer list is estimated to be 1.5 years.

The Company estimated the fair value of the identified customer list

using a discounted cash flow model.

These fair value measurements were based on significant inputs not observable in the market and thus

represent a Level 3 measurement.

Key assumptions include the level and timing of expected incremental future cash flows over its remaining

useful life, and discount rates the Company believe to be consistent with the inherent risks associated with customer list, which is

The Company believes the level and timing of expected future cash flows appropriately reflects market participant assumptions.

The contingent

cash consideration was re-measured to $ 320,802

at September 30, 2021.

The company estimates the total

contingent cash consideration to be between $ 320,000 and $ 550,000 based on the range of possible outcomes.

In addition, the Company estimates

the total stock consideration to be between $ 1,100,000 and $ 1,900,000 based on the range of possible outcomes.

Net sales and net loss of this business included in the Company’s

consolidated results of operations in fiscal year 2021 were approximately $ 3,806,007 and $ 811,727 , respectively.

DATA CENTERS, LLC

December 9, 2020, the Company entered into an Agreement and Plan of Merger (the “ATL Merger”) with ATL Data Centers LLC (“ATL”)

and its members.

The Company accounted for the acquisition of ATL as an acquisition

a business under ASC 805 – Business Combination.

At the closing, ATL became a wholly owned subsidiary

of the Company.

In exchange, the Company issued 1,618,285 shares of restricted common stock to the selling members of ATL, of which:

642,309 shares were fully earned on closing, and (ii) an additional 975,976 shares were issued and held in escrow, subject to holdback

pending satisfaction of certain indemnification claims and future milestones, with all such shares subject to a lock up of no less than

180 days and a leak out of no more than 10% of the average daily trading value of the prior 30 days.

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

ASC 820 was as follows:

Consideration

Allocation at Acquisition Date

to Fair Value

Final Allocation at Acquisition Date

shares of common stock

975,976 shares of common

stock – held in escrow

Total Consideration

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

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

indemnification claims during the year ended September 30, 2021.

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

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

In connection with the return of the 68,194 shares

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

goodwill, decreased by $ 892,659 during the year ended September 30, 2021.

The consideration remitted in connection with the

ATL Merger is subject to adjustment based on post-closing adjustments to closing cash, indebtedness, and transaction expenses of ATL

within 90 days of closing.

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

As part of the transaction

costs, the Company issued 41,708 shares of common stock for an aggregate value of $ 545,916 to the broker which were expensed upon issuance

of the shares.

Purchase Price Allocation

Allocation at Acquisition Date

to Fair Value

Allocation at Acquisition Date

Strategic Contract

( 1,264,167 )

Other Assets and Liabilities assumed, net

( 1,077,833 )

( 1,557,697 )

Company made measurement period adjustments, primarily to strategic contract and goodwill, to better reflect the facts and circumstances

that existed at the acquisition date.

goodwill recorded as a result of the acquisition represents the strategic benefits of growing the Company’s service portfolio

and the expected revenue growth from increased mcarket penetration.

Acquired goodwill is not deductible for income tax purposes.

total purchase price was allocated to identifiable assets deemed acquired, and liabilities assumed, based on their estimated fair

The strategic contract relates to supply of a

critical input to our digital currency mining business.

The other assets and liabilities assumed include $ 5.67

million of digital currency mining equipment and $ 5.475

million of notes payable related to this equipment, which was settled by the Company during the year ended September 30, 2021.

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

option associated with the lease agreement.

The Company exercised the purchase option to buy the property in May 2021 and, as a

result, terminated the lease.

The amortization period for strategic contracts is

estimated to be 5 years .

The Company estimated the fair value of the identified strategic contract using a discounted cash flow model.

These fair value measurements were based on significant inputs not observable in the market and thus represent a Level 3 measurement.

Key assumptions include the level and timing of expected future cash flows, conditions and demands over its remaining useful life, and

discount rates the Company believe to be consistent with the inherent risks associated with strategic contract, which is 6.4 % .

believe the level and timing of expected future cash flows appropriately reflects market participant assumptions.

Net sales and net income of this business included in

CleanSpark’s consolidated results of operations in fiscal year 2021 were approximately $ 30,234,683

and $ 14,449,160 ,

respectively.

January 31, 2020, the Company, entered into an Agreement with p2k, and its sole stockholder, Amer Tadayon (the “Seller”),

whereby the Company purchased all of the issued and outstanding shares of p2k in exchange for an aggregate adjusted purchase price of

cash and equity of $ 1,688,935 .

The transaction closed simultaneously upon the execution of the Agreement by the parties on January 31,

a result of the transaction, p2k became a wholly owned subsidiary of the Company.

Pursuant to the terms of the Agreement, the purchase

price was as follows:

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

b) 31,183 restricted shares of the Company’s common stock, valued

at $ 145,000 , were issued to the Seller (the “Shares”).

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

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

common stock on its principal market for the prior 30 days (the “Leak-Out Terms”);

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

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

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

at $ 300,000 , were issued to an independent third-party escrow (the “Holdback Shares”).

The Holdback Shares will be

released to Seller once p2k achieves certain revenue milestones for the future performance of p2k.

The Holdback Shares will also

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

The Shares and Holdback Shares were deemed to

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

e) 26,950 Common Stock options which were deemed to have a fair market value of $ 88,935 on the date

of the closing of the Transaction.

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

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

The Shares are subject to certain lock-up and leakout provisions whereby the Seller may sell an amount of Shares equal to ten percent

(10%) of the daily dollar trading volume of the Company’s common stock on its principal market for the prior 30 days (the “Leak-Out

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

and indemnification purposes;

restricted shares of the Company’s common stock, valued

at $ 300,000 ,

were issued to an independent third-party escrow agent (the “Holdback Shares”) and will be released to the Seller upon achievement

of certain revenue milestones.

During the year ended September 30, 2021, 56,444 restricted shares of the Company’s common stock

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

Shares are subject to the Leak-Out Terms.

The Shares and Holdback Shares were deemed to have

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

e) 26,950 common stock options that were deemed

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

The Company accounted for the acquisition of p2k as

an acquisition of a business under ASC 805.

an acquisition of a business under ASC 805 – Business Combinations.

The Company determined the fair value of the consideration

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

Consideration:

given to the Seller in connection with the transaction in accordance with ASC 820 – Fair Value Measurement was as follows:

Cash Consideration ($):

95,699 shares of common stock

1 unchanged sentence

Total Consideration

The total purchase price of the Company’s

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

values as indicated below.

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

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

Purchase Price Allocation ($):

2 unchanged sentences

Other assets and liabilities assumed, net

$ ( 121,453 )

The following is the unaudited

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

For the Year Ended

September 30, 2020

September 30, 2019

( 23,353,924 )

sales and net loss of this business included in the Company’s consolidated results of operations in fiscal year 2021

were approximately $ 1,241,641 and $ 1,201,753 , respectively.

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

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

whereby the Company purchased all of the issued and outstanding membership units of GridFabric from the Seller (the “Transaction”)

in exchange for an aggregate purchase price of cash and stock of up to $ 1,400,000 (the “Purchase Price”).

The Transaction

closed simultaneously with execution on August 31, 2020.

As a result of the Transaction, GridFabric, became a wholly owned subsidiary

of the Company.

to the terms of the Agreement, the Purchase Price was as follows:

in cash was paid to the Seller at closing;

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

to offset for adjustments to the Purchase Price and indemnification purposes for a period

of 12 months;

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

were issued to the Seller.

The shares issued are subject to certain leak-out provisions whereby the Seller may sell an amount of shares

equal to no more than ten percent (10%) of the daily dollar trading volume of the Company’s common stock on its principal market

for the prior 30 days (the “Leak-Out Terms”);

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

Seller if GridFabric achieves certain revenue and product release milestones related to the

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

The Earn-Out Shares

are also subject to the Leak-Out Terms.

Shares were issued at a fair market value of $9.46 per share.

The Earn-Out Shares are accounted for as contingent consideration and the

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

event occurs.

Agreement contains standard representations, warranties, covenants, indemnification and other terms customary in similar transactions.

connection with the transaction, the Company also entered into employment relationships and non-compete agreements with GridFabric’s

key employees for a period of 36 months and plans to issue future equity compensation to said employees, subject to approval of the Company’s

board of directors.

Company accounted for the acquisition of GridFabric as an acquisition of a business under ASC 805 – Business Combinations.

Company determined the fair value of the consideration given to the Seller in connection with the Transaction in accordance with ASC

820 – Fair Value Measurement was as follows:

Consideration:

26,427 shares of common stock

Contingent consideration - common stock issuable

upon achievement of milestone(s)

Total Consideration

During the year ended September 30, 2021, the Company reassessed

the contingent consideration due to GridFabric to $ 500,000 .

A change in the fair value of the contingent

consideration of $ 250,000

is included in change in fair value of contingent consideration in

Consolidated Statement of Consolidated Operations and Comprehensive Loss.

The total purchase price of the Company’s acquisition

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

Purchase Price Allocation:

Customer list

Net sales and operating loss of this business included

in the Company’s consolidated results of operations in fiscal year 2021 were approximately $ 299,606 and $ 794,805 , respectively.

following is the unaudited pro forma information assuming the acquisition of GridFabric, p2k Labs, ATL, and SWS occurred on October 1,

Net income (loss)

( 47,333,110 )

Loss per common share - basic and diluted

Weighted average common shares outstanding - basic

The unaudited pro forma consolidated

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

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

results of the consolidated entities.

Net profit / (loss) per common share – basic and diluted

average common shares outstanding – basic and

unaudited pro forma consolidated financial results have been prepared for illustrative purposes only and do not purport to be indicative

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

or of future results of the consolidated entities.

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

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

All transitions that would be considered

All transactions that would be considered

inter-company transactions for proforma purposes have been eliminated.

INVESTMENT IN INTERNATION AL

LAND ALLIANCE

International Land Alliance, Inc.

On November 5, 2019, the Company entered

into a binding Memorandum of Understanding (the “MOU”) with International Land Alliance, Inc., a Wyoming

corporation (“ILAL”), in order to lay a foundational framework where the Company will deploy its energy solutions

products and services to ILAL, its energy projects, and its customers.

In connection with the MOU, and in order to

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

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

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

1,000 shares of Series B Preferred Stock (the “Preferred Stock”) for an aggregate purchase price of US $ 500,000 (the

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

The Company also received 350,000 shares (“commitment shares”)

of ILAL’s common stock.

The Series B Preferred Stock will accrue cumulative in-kind accruals at a rate of 12% per annum and

may increase upon the occurrence of certain events.

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

as calculated under the agreement terms.

The commitment shares are recorded at fair value as of September

30, 2020 of $ 210,000 .

The Preferred Stock is recorded as an AFS debt

security and is reported at its estimated fair value as of September 30, 2020.

As of September 30, 2020, the Company has identified

a derivative instrument in accordance with ASC Topic No.

815 due to the variable conversion feature.

815 requires the

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

gain or loss.

The Black-Scholes model utilized the following

inputs to value the derivative asset at the date in which the derivative asset was determined through September 30, 2020.

Fair value assumptions:

September 30, 2020

Risk free interest rate

Expected term (months)

Expected volatility

Expected dividends

CAPITALIZED SOFTWARE

Capitalized software consists of the

following as of September 30, 2020 and September 30, 2019:

September 30, 2020

September 30, 2019

mVSO software

MPulse software

accumulated amortization

Capitalized Software, net

The Company capitalized $ 84,924 in

enhancements to its mVSO software during the year ended September 30, 2020.

Capitalized software amortization recorded

as product development expense for the years ended September 30, 2020 and 2019 was $ 163,918 and $ 1,453,635 , respectively.

During the year ended September 30,

2019, the Company recorded an impairment of $ 6,915,186 related directly to components of our original software that was replaced.

of September 30, 2021 and September 30, 2020, the Company had total investments of $ 5,661,036 and $ 3,075,269 that

comprise of the following:

International

Land Alliance, Inc.

On November 5, 2019, the Company entered in a

binding Memorandum of Understanding (the “MOU”) with International Land Alliance, Inc.

(“ILAL”), a Wyoming corporation,

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

and its customers.

In connection with the MOU, and to support the power

and energy needs of ILALs development and construction of certain projects, the Company entered into a Securities Purchase Agreement (“SPA”),

dated as of November 6, 2019, with ILAL.

in Debt Securities (Preferred Stock) and related Embedded Derivative Asset

to the terms of the SPA with ILAL, the Company purchased 1,000 shares

of Series B Preferred Stock of ILAL (the “Preferred Stock”) an aggregate purchase price of $ 500,000

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

Series B Preferred Stock accrue cumulative in-kind accruals at a rate of 12% per annum and were redeemable on August 6, 2020.

The Preferred Stock can be converted into common stock at a variable

rate (refer the discussion on embedded derivative assets below).

This variable conversion ratio will increase by 10% with the occurrence

of certain events.

Since the investments were not redeemed on August 6, 2020, they are now redeemable at the Company`s option in cash

or into common stock, based on the conversion ratio.

The Preferred Stock is recorded as an AFS debt security and is reported at its estimated

fair value as of September 30, 2021.

Any change in the fair values of AFS debt securities are reported net of income tax as an element

of Other Comprehensive income.

accrued interest on our available-for-sale debt securities totaling $ 399,863 and $ 187,562 ,

as of September 30, 2021 and 2020, respectively, presented as prepaid expense and other current assets on

the Consolidated Balance Sheets .

The fair value of investment in Debt Securities is $ 494,608 and $ 500,000 as

of September 30, 2021 and 2020.

The Company has presented loss on fair value of preferred stock amounting to $ 5,392 for

the year ended September 30, 2021 as part of other comprehensive loss in the Consolidated Statement of Operations and Comprehensive

There was an immaterial loss or gain on the fair value of preferred stock for the year ended September 30, 2020.

The Company has deemed this variable conversion feature

of ILAL preferred stock as an embedded derivative instrument in accordance with ASC Topic No.

This topic requires the Company to

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

gain or loss on fair valuation of this embedded feature is recognized as an income in Consolidated statements of Operations and Comprehensive

Total fair value

of investment in Derivative assets as of September 30, 2021 and 2020 is $ 4,905,656 and $ 2,115,269 .

The Company fair values the debt security as a straight debt instrument based on liquidation value and accrued interest to date.

fair value of the derivative asset is based on the difference in the fair value of the debt security determined as a straight debt

instrument and the fair value of the debt security if converted as of the reporting date.

shares - Common stock of ILAL

to the terms of the SPA with ILAL, the Company also received 350,000 shares

(commitment shares) of ILALs common stock.

The commitment shares were fully earned at the time of execution of the agreement.

During the year ended September 30, 2021, out of 350,000 commitment

shares, the Company sold 334,611 shares

at various prices and fair valued the remaining 15,389 shares

at the closing stock price of ILAL as of September 30, 2021.

Realized gain on sale of shares and the unrealized loss on fair value

of the remaining shares amounted to $ 179,046

and $ 5,153 ,

Total fair value of investment in equity securities as on September

30, 2021 and 2020 is $ 10,772

and $ 210,000 ,

respectively.

in Equity Securities- LawClerk

February 2020, the Company made a $ 250,000

strategic relationship investment in LawClerk for 200,000 Series

A Preferred Shares of LawClerk.

This investment is recorded on a cost basis and adjusted for observable transactions for same or similar

investments of the issuer (referred to as the measurement alternative) or impairment.

The Company annually performs impairment analysis

on this investment and there were no

impairments required for the years ended September 30, 2021

Total value of this investment as of September 30, 2021 and 2020

is $ 250,000 ,

respectively.

the table below for a reconciliation of carrying value of all investments for the year ended September 30 , 2021 and 2020:

Debt Securities

Derivative asset

Equity Securities

Clerk Equity Securities

as of October 1, 2019

during the year

gain on fair value recognized in income

Balance as of September 30, 2020

sold during the year

gain on fair value recognized income

gain (loss) recognized in net income

loss on fair value recognized in other comprehensive loss

Balance as of September 30, 2021

INTANGIBLE ASSETS

The Company amortizes intangible assets

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

assets consist of the following as of September 30, 2021 and September 30, 2020:

September 30, 2021

Customer list and non-compete agreement

1 unchanged sentence

Engineering trade secrets

Intangible assets consist of the following

as of September 30, 2020 and September 30, 2019:

September 30, 2020

Strategic Contract

Infrastructure asset

mPulse software

September 30, 2020

2 unchanged sentences

Engineering trade secrets

Intangible assets:

accumulated amortization

( 5,353,792 )

( 2,758,733 )

Intangible assets, net

Amortization expense for the years

ended September 30, 2020 and 2019 was $ 2,603,427 and $ 1,858,559 , respectively.

The Company expects to record amortization

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

Fixed assets consist of the following as of September 30,

2020 and September 30, 2019:

mVSO software

mPulse software

expense for the years ended September 30, 2021 and 2020 was $ 4,848,179

and $2,767,345,

respectively.

the year ended September 30, 2021, the Company recorded an impairment of $ 554,322

related to write-off of software.

impairment during the year ended September 30, 2020.

strategic contract relates to supply of a critical input to our digital currency mining business at significantly low prices compared

During the year September 30, 2021, the initial allocation of $ 7,457,970

was adjusted by $ 2,342,000 .

The strategic contract is now carried at $ 9,799,970

net of accumulated amortization of $ 1,577,098 .

Company expects to record amortization expense of intangible assets over the next 5 years and thereafter as follows:

the year ended September 30, 2021, the Company has incurred the following impairment loss on goodwill, digital currency and software.

The Company did not incur any impairment loss for the year ended September 30, 2020.

Impairment of digital currency

Impairment of goodwill

Impairment of software

Total impairment loss

impairment relating to digital currency and goodwill, refer to Digital Currency and Business combinations, Intangible Assets and Goodwill.

AND EQUIPMENT

and equipment consist of the following as of September 30, 2021 and September 30, 2020:

Mining equipment

$ 123,147,843

Land and building

Machinery and equipment

Leasehold improvements

Furniture and fixtures

Construction in progress

accumulated depreciation

Depreciation expense for the years

ended September 30, 2020 and 2019 was $ 68,904 and $ 44,422 , respectively.

During the year ended September 30, 2020, the Company

disposed of $ 48,898 of fixed assets resulting in a loss on disposal of $ 5,218 .

September 30, 2020

September 30, 2019

Long-term loans payable consist of the following:

Promissory notes

September 30, 2020

September 30, 2019

Current loans payable consist of the following:

Promissory notes

Insurance financing loans

Current loans payable

Unamortized debt discount

Total, net of unamortized discount

( 7,657,982 )

Property and equipment, net

$ 137,592,871

expense for the years ended September 30, 2021 and 2020 was $ 7,396,189

and $ 68,904 ,

respectively.

During the year ended September 30, 2020, the Company disposed of $ 48,898

of property and equipment resulting in a loss on disposal of

There was no disposal

made during the year ended September 30, 2021.

Company has purchased mining equipment for approximately $ 123.15

million during the year ended September 30, 2021.

This primarily

consisted of miners of $ 120.4

million with the remaining consisting of ancillary mining equipment.

Park Data Center:

On May 19, 2021, the Company exercised its purchase option on the ATL lease agreement to purchase property for $ 4.4

million in College Park, Georgia.

The property contains

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

ATL utilizes, and intends

to continue utilizing, this space for cryptocurrency mining activities.

The Company is expanding its facility in Atlanta, a build out adjacent to the ATL data center mentioned

Norcross Data Center :

On August 6, 2021, CSRE

Properties Norcross, LLC, the Company’s wholly owned subsidiary, purchased certain real property located in Norcross, Georgia for

$ 6,550,000 plus transaction and settlement costs.

The property consists of approximately seven acres of land and includes an approximately

87,000 square foot office building.

The Company intends to utilize this office space to conduct certain of its cryptocurrency mining

Company has purchase commitments for approximately $ 144.04

million related to purchase of miners as of September 30, 2021,

and the Company has paid $ 85.11

million towards these commitments as of the end of this period.

As of September 30, 2021, the remaining commitment for future payments was $ 58.93

of September 30, 2021, the Company has outstanding deposits worth $ 87.9 million to premier suppliers and manufacturers for securing our

purchases of mining equipment.

Long-term loans as of September 30, 2021

and 2020 consist of the following:

Promissory notes

On September 5, 2017, the Company executed

a 9 % secured promissory note with a face value of $ 150,000 with an investor.

Under the terms of the promissory note, the Company

received $ 150,000 and agreed to make monthly interest payments and repay the note principal 24 months from the date of issuance.

On September 5, 2019, the investor extended the maturity date to September 5, 2021 and the modification was not deemed substantial.

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

As of September 30, 2020, the Company owed $ 0 in principal and $ 0 in accrued interest under the terms of the agreement

and recorded interest expense of $ 12,426 and $ 10,096 during the years ended September 30, 2020 and 2019, respectively.

On December 5, 2017, the Company executed

a 9 % secured promissory note with a face value of $ 50,000 with an investor.

Under the terms of the promissory note the Company

received $50,000 and agreed to make monthly interest payments and repay the note principal 24 months from the date of issuance.

The note was secured by 5,000 shares which would be issued to the note holder only in the case of an uncured default.

repaid all principal and outstanding interest on December 5, 2019 and the 5,000 shares of common stock held as collateral were

returned to treasury and cancelled on January 13, 2020.

The Company recorded interest expense of $ 802 and $ 3,367 for the years

ended September 30, 2020 and 2019, respectively.

On May 7, 2020, the Company

applied for a loan from Celtic Bank Corporation, as lender, pursuant to the Paycheck Protection Program of the Coronavirus

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

Small Business

Administration (the "SBA").

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

loan in the amount of $ 531,169 (the “PPP Loan”).

The PPP Loan took the form of a promissory note issued by the

Company that matures on May 7, 2022 and bears interest at a rate of 1.0 % per annum.

Monthly principal and interest payments,

less the amount of any potential forgiveness (discussed below), will commence on December 7, 2020.

The PPP Loan provides for

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

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

The PPP Loan is non-recourse

against any individual shareholder, except to the extent that such party uses the loan proceeds for an unauthorized

All or a portion of the PPP Loan may

be forgiven by the SBA and lender upon application by the Company and upon documentation of expenditures in accordance with the

SBA requirements.

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

and covered utilities during the applicable period beginning on the date of loan approval.

For purposes of the CARES Act, payroll

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

Not more than 25% of the forgiven

amount may be for non-payroll costs.

Forgiveness is reduced if full-time headcount declines, or if salaries and wages for employees

with salaries of $100,000 or less annually are reduced by more than 25% .

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

forgiven pursuant to the PPP, the amount forgiven is applied to outstanding principal.

The Company recorded interest expense of

$ 2,125 and $ 0 for the years ended September 30, 2020 and 2019, respectively.

Insurance financing loans

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

institutional to finance its insurance policies.

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

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

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

principal remained outstanding.

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

CONVERTIBLE NOTES

Purchase Agreement – December 31, 2018

On December 31, 2018, the Company entered

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

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

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

The note is secured by all assets of the Company.

Debenture has a maturity date of two years from the issuance date and the Company has agreed to pay compounded interest on the

unpaid principal balance of the Debenture at the rate equal 7.5 % per annum.

Interest is payable on the date the applicable principal

is converted or on maturity.

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

The transactions described above closed

on December 31, 2018.

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

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

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

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

with respect to 33,333 Warrant Shares.

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

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

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

Pursuant to the terms of the SPA, the

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

Prior to the maturity date, provided

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

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

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

The Investor may convert the Debenture

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

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

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

In the event certain equity conditions exist,

the Company may require that the Investor convert the Debenture.

In no event shall the Debenture be allowed to affect a conversion

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

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

While the note is outstanding if Triggering

Events occur the conversion rate may be decreased by 10% and the interest rate increased by 10% for each Triggering Event which

may result in the issuance of additional shares.

On March 4, March 13, and May 1, 2020

the Company entered into amendments (the “Amendments”) with the Investor.

The Amendments amended the SPA and

Debenture, as follows:

1) A Floor Price of $ 1.50 per share of Common Stock was placed on conversions

by the Investor under the Debenture, with the Floor Price on the First Debenture not applying in the occurrence of an event of

2) Lowered the closing price of the Common Stock which may trigger an

event of default from $ 5.00 per share to $ 1.75 per share for 5 consecutive trading days provided that any event of default will

not be triggered, if at all, until after September 29, 2020;

3) Deleted the requirement that the Investor convert the Debenture at

maturity and;

4) Allowed the Company, to not reserve or issue to the Investor more

shares of Common Stock than were reserved for the Investor prior to the amendment date until September 29, 2020.

January 7, 2019, the Investor converted $ 2,500,000 in principal and $ 875,000 in

interest as a conversion premium, for 178,473 shares of the Company common stock at an effective conversion price of $ 18.90 , due

to a trigger event for the Company not filing its annual report on Form 10-K for the fiscal year ended September 30, 2018 on or

before December 31, 2018.

On March 6, 2019, the Investor converted

$ 1,000,000 in principal and $ 350,000 in interest as a conversion premium, for 71,389 shares of the Company common stock at an effective

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

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

On July 9, 2019, in accordance

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

price resulting in an effective conversion price of $ 15.06 .

On July 16, 2019, in accordance

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

price resulting in an effective conversion price of $15.06.

On July 19, 2019, the Investor converted

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

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

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

On August 23, 2019, in accordance

with the terms of the agreement the Investor was issued an additional 43,721 shares of common stock due to the decrease in stock

price resulting in an effective conversion price of $ 7.60 .

On September 16, 2019, in accordance

with the terms of the agreement the Investor was issued an additional 61,500 shares of common stock due to the decrease in stock

price resulting in an effective conversion price of $ 7.30 .

On October 17, 2019, in accordance

with the terms of the agreement the Investor was issued an additional 90,000 shares of common stock due to the decrease in stock

price resulting in an effective conversion price of $ 3.74 .

On December 5, 2019, in accordance

with the terms of the agreement the Investor was issued an additional 97,100 shares of common stock due to the decrease in stock

price resulting in an effective conversion price of $ 3.15 .

On February 10, 2020, in accordance

with the terms of the agreement the Investor was issued an additional 100,000 shares of common stock due to the decrease in stock

price resulting in an effective conversion price of $ 3.15 .

On February 21, 2020, in accordance

with the terms of the agreement the Investor was issued an additional 108,770 shares of common stock due to the decrease in stock

price resulting in an effective conversion price of 2.69 .

On March 2, 2020, in accordance

with the terms of the agreement the Investor was issued an additional 167,100 shares of common stock due to the decrease in stock

price resulting in an effective conversion price of $ 1.87 .

On March 5, 2020, in accordance

with the terms of the agreement the Investor was issued an additional 154,835 shares of common stock due to the decrease in stock

price resulting in an effective conversion price of $ 1.83 .

On March 13, 2020, in accordance

with the terms of the agreement the Investor was issued an additional 116,000 shares of common stock due to the decrease in stock

price resulting in an effective conversion price of $ 1.50 .

On March 20, 2020, in accordance with

the terms of the agreement the Investor was issued an additional 163,800 shares of common stock due to the decrease in stock price

resulting in an effective conversion price of $ 1.50 .

On April 7, 2020, in accordance with

the terms of the agreement the Investor was issued an additional 172,400 shares of common stock due to the decrease in stock price

resulting in an effective conversion price of $ 1.50 .

On April 9, 2020, in accordance with

the terms of the agreement the Investor was issued an additional 794,308 shares of common stock due to the decrease in stock price

resulting in an effective conversion price of $ 1.50 .

On April 15, 2020, the Investor

converted $ 1,250,000 in principal and $ 437,500 in interest, for 1,125,000 shares of the Company common stock at an effective conversion

price of $ 1.50 due to a trigger event for the Company not filing its annual report on Form 10-K for the fiscal year ended September

30, 2018 on or before December 31, 2018.

As of September 30, 2020, the Debenture was fully converted into shares of the Company’s

common stock.

The aggregate debt discount

has been accreted and charged to interest expenses as a financing expense in the amount of $ 783,474 and $ 4,466,526 during the year

ended September 30, 2020 and 2019, respectively.

Securities Purchase Agreement –

April 17, 2019

On April 17, 2019, the Company entered

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

(the “Investor”), pursuant to which the Company agreed to issue to the Investor a $ 10,750,000 face value Senior Secured

Redeemable Convertible Promissory Note (the “Note”) with a 7.5 % original issue discount, 215 shares of our Series

B Preferred Stock with a 7.5 % original issue discount, a Common Stock Purchase Warrant (the “Warrant”) on a cash-only

basis to acquire up to 230,000 shares (the “Warrant Shares”) of our common stock and 125,000 shares of our Common Stock.

The aggregate purchase price for the Note, the Series B Preferred Stock the Warrant and the Common Stock is $ 20,000,000 .

Notes 13 and 14 for additional details.) The Note was secured by all assets of the Company.

Pursuant to the first closing of

the Agreement, which occurred on April 18, 2019, the Investor agreed to tender to the Company the sum of $ 10,000,000 ,

for the Note, the Common Stock and the Warrant.

No additional closings to sell the preferred stock have occurred and the

Series B preferred stock was removed under the amendments to the Agreement discussed below.

The Note has a maturity date of two

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

the Note at the rate equal 7.5 %

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

The interest must be paid in

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

Prior to the maturity date, provided

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

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

amount equal to 145% of the of the portion of the Note being redeemed.

The Investor may convert the Note

into shares of the Company’s common stock at a conversion price equal to 90% of the mathematical average of the 5 lowest

individual daily volume weighted average prices of the common stock, less $0.75 per share, during the period beginning on the issuance

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

In the event certain equity conditions exist,

the Company may require that the Investor convert the Note.

In no event shall the Note be allowed to effect a conversion

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

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

While the Note is outstanding if Triggering

Events occur the conversion rate may be decreased by 10% and the interest rate increased by 10% for each Triggering Event which

may result in the issuance of additional shares.

On March 4, March 13, and May 1, 2020

the Company entered into amendments (the “Amendments”) with the Investor.

The Amendments amended the Agreement and Note, as

1) A Floor Price of $ 1.50 per share of Common Stock was placed on conversions

by the Investor under the Note, not applying in the occurrence of an event of default;

2) Lowered the closing price of the Common Stock which may trigger an

event of default from $ 5.00 per share to $ 1.75 per share for 5 consecutive trading days provided that any event of default will

not be triggered, if at all, until after September 29, 2020;

3) Deleted the requirement that the Investor convert the Note at maturity and

4) Allowed the Company, to not reserve or issue to the Investor more shares of Common Stock than

were reserved for the Investor prior to the amendment date until September 29, 2020.

5) The Company and the Investor also agreed to remove

the Second Closing and Company Option to sell an aggregate of an additional $10,000,000 in securities under the Note.

result of these changes, the Company was authorized to terminate any and all documentation related to the 100,000 shares of Series

B Preferred Stock that the Company's Board of Directors had previously voted to designate back on April 16, 2019.

During the year ended September

30, 2020, the Investor converted $ 10,750,000 in principal and $ 1,612,500 in interest, for 8,241,665 shares of the Company common

stock at an effective conversion price of $ 1.50 .

As of September 30, 2020, the Note was fully converted

into shares of the Company’s common stock.

The aggregate debt discount

has been accreted and charged to interest expenses as a financing expense in the amount of $ 8,320,205 and $ 2,429,795 during the

year ended September 30, 2020 and 2019, respectively.

On October 1, 2019, the Company adopted

the amendments to ASC 842, Leases, which requires lessees to recognize lease assets and liabilities arising from operating leases

on the balance sheet.

The Company adopted the new lease guidance using the modified retrospective approach and elected the transition

option issued under ASU 2018-11, Leases (Topic 842) Targeted Improvements, allowing entities to continue to apply the legacy guidance

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

Accordingly, prior period financial results and disclosures

have not been adjusted.

The Company has operating leases under

which it leases its branch offices and corporate headquarters, one of which is with a related party.

Upon adoption of the new lease

guidance, on October 1, 2019, the Company recorded a right of use asset and corresponding lease liability of $ 85,280 and $ 85,280 ,

respectively, on the consolidated balance sheet.

As of September 30, 2020, the Company's operating lease right of use asset and

operating lease liability totaled $ 40,711 and $ 41,294 , respectively.

A weighted average discount rate of 10 % was used in the measurement

of the right of use asset and lease liability as of October 1, 2019.

As the rate implicit in the lease is not readily determinable,

the Company's incremental collateralized borrowing rate is used to determine the present value of lease payments.

This rate gives

consideration to the applicable Company collateralized borrowing rates and is based on the information available at the commencement

The Company has elected to apply the short-term lease measurement and recognition exemption to leases with an initial term

of 12 months or less;

therefore, these leases are not recorded on the Company’s Consolidated Balance Sheet, but rather, lease

expense is recognized over the lease term on a straight-line basis.

The Company's leases have remaining

lease terms between one year to two years , with a weighted average lease term of 0.4 years at September 30, 2020.

Some leases include

multiple year renewal options.

The Company’s decision to exercise these renewal options is based on an assessment of its

current business needs and market factors at the time of the renewal.

Currently, the Company has no leases for which the option

to renew is reasonably certain and therefore, options to renew were not factored into the calculation of its right of use asset

and lease liability as of October 1, 2019.

The following is a schedule of the

Company's operating lease liabilities by contractual maturity as of September 30, 2020:

Fiscal year ending September 30, 2021

Total Lease Payments

imputed interest

Total present value of lease liabilities

Total operating lease costs of $ 117,223

and $ 76,220 the years ended September 30, 2020 and 2019, respectively, were included as part of administrative expense.

RELATED PARTY TRANSACTIONS

Zachary Bradford – Chief

Executive Officer, Director and Former Chief Financial Officer

Fiscal year ending September 30, 2019

Agreement - During the year ended September 30, 2019, the Company had a consulting agreement with ZRB Holdings, Inc., an entity

wholly owned by Zachary Bradford, our Chief Executive Officer and director, for management services.

In accordance with this agreement,

as amended, Mr.

Bradford earned $ 430,437 during the year ended September 30, 2019.

The agreement was terminated in at the end of

the fiscal year ending September 30, 2019 when Mr.

Bradford took the position of CEO and accepted the associated employment agreement.

During the year ended September 30, 2020, the Company paid Blue

Chip Accounting, LLC (“Blue Chip”) $ 131,248 for accounting, tax, administrative services and reimbursement for office

Blue Chip is 50 % beneficially owned by Mr.

None of the services were associated with work performed by Mr.

The services consisted of preparing and filing tax returns, bookkeeping, accounting and administrative support assistance.

The Company also sub-leases office space from Blue Chip (see note 11 for additional details).

During the year ended September 30,

2020, $ 14,725 was paid to Blue Chip for rent.

Bryan Huber – Former Officer and Director

On August 28, 2018, the Company executed an agreement with Zero

Positive, LLC an entity controlled by Mr.

In accordance with the agreement with Zero Positive, LLC, Mr.

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

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

Small Business Administration

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

(the “PPP Loan”).

The Company applied for and received

loan forgiveness from the SBA on March 23, 2021.

The entire principal balance and interest charges were forgiven.

The gain on loan forgiveness

is included in other income in the consolidated statements

of operations and comprehensive loss for the year ended September 30,

October 1, 2019, the Company adopted the amendments to ASC 842, Leases, which requires lessees to recognize lease assets and liabilities

arising from operating leases on the balance sheet.

The Company adopted the new lease guidance using the modified retrospective approach

and elected the transition option issued under ASU 2018-11, Leases (Topic 842) Targeted Improvements, allowing entities to continue to

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

Company’s operating leases are office spaces and finance leases primarily in relation to the equipment used at its data center.

The Company's lease costs recognized in the Consolidated Statements

of Income and Comprehensive Loss consist of the following:

Operating lease cost (1)

Finance lease cost:

Amortization of right-of-use assets

Interest on lease obligations

Included in general and administrative expenses

lease information is as follows:

Fiscal Years Ended September

Cash paid for amounts included in measurement of lease

Operating cash flows from operating leases

Financing cash flows from finance leases

Operating cash flows from finance leases is $ 42,992

for the year ended September 30, 2021.

Weighted-average remaining lease term -operating leases

Weighted-average remaining lease term - finance leases

Weighted-average discount rate -

operating leases

Weighted-average discount

rate - finance leases

following is a schedule of the Company's lease liabilities by contractual maturity as of September 30, 2021:

Operating Leases

Finance Leases

Total undiscounted lease obligations

Less imputed interest

Total presnet value of lease liabilities

Current portion of lease obligations

Total lease obligations, net of current portion

PARTY TRANSACTIONS

Bradford Chief Executive Officer, Director and Former Chief Financial Officer

the years ended September 30, 2021 and 2020, the Company paid Blue Chip Accounting, LLC (“Blue Chip”) $ 183,075

and $ 131,248 ,

respectively, for accounting, tax, administrative services and reimbursement for office supplies.

Blue Chip is 50 %

beneficially owned by Mr.

None of the services were

associated with work performed by Mr.

The services consisted of preparing and filing tax returns, bookkeeping, accounting and

administrative support assistance.

The Company also sub-leases office space from Blue Chip.

During the years ended September 30, 2021

and 2020, $ 18,300

and $ 14,725 ,

respectively, was paid to Blue Chip for rent.

Huber – Former Officer and Director

August 28, 2018, the Company executed an agreement with Zero Positive, LLC an entity controlled by Mr.

In accordance with the

agreement with Zero Positive, LLC, Mr.

Huber earned $ 125,154

and $ 171,202 , during the year ended September 30, 2020 and 2019.

On March 12, 2020, the Agreement was terminated upon the execution

of a separation agreement.

All amounts owed from all agreements totaling $ 90,000 were paid in full.

On September 28, 2018, in

connection with the consulting agreement executed with Zero Positive, LLC, the Company issued warrants to purchase 90,000

during the year ended September 30, 2020.

March 12, 2020, the Agreement was terminated upon the execution of a separation agreement.

All amounts owed from all agreements totaling,

were paid in full.

September 28, 2018, in connection with the consulting agreement executed with Zero Positive, LLC, the Company issued warrants to purchase

shares of common stock at an exercise price of $ 8.00

1 unchanged sentence

The warrants were valued at $ 2,607,096

using the Black Scholes option pricing model based upon the following assumptions:

using the Black Scholes option pricing model based upon the

following assumptions:

years , risk free interest rate of 3.05 % ,

2 unchanged sentences

warrants vest as follows:

30,000 vested immediately, the balance vest evenly on the last day of each month over forty-two

months beginning August 31, 2018 .

30,000 vested immediately, the balance vest evenly on the last day of each month over forty-two months beginning

August 31, 2018.

As of September 30, 2020, 62,857

warrants had vested, and the Company recorded an expense of

during the year ended September 30, 2020 and 2019, respectively.

Matthew Schultz- Executive Chairman of the Board

and Former Chief Executive Officer

The Company had a consulting agreement

with Matthew Schultz, our former Chief Executive Officer, for management services.

In accordance with this agreement, as amended,

Schultz earned $ 0 and $ 445,437 , respectively during years ended September 30, 2020 and 2019.

The agreement was terminated on

October 7, 2019 when Mr.

Schultz stepped down as the CEO and took the position of Chairman of the Board.

during the year ended September 30, 2020.

were no transactions during the year ended September 30, 2021.

Schultz- Executive Chairman of the Board and Former Chief Executive Officer

Company had a consulting agreement with Matthew Schultz, for management services.

Schultz, for management services.

Schultz received

as compensation for his services as chairman of the board during the year ended September 30, 2020.

The Company additionally entered

into an agreement on November 15, 2019 with an organization to provide general investor relations and consulting services that

as compensation for his services as chairman of the board during

the year ended September 30, 2020.

The agreement was terminated at the conclusion of fiscal year ending September 30, 2020 when Mr.

Schultz’s position was changed from Chairman to Executive Chairman and he accepted the associated employment agreement.

Company additionally entered into an agreement on November 15, 2019 with an organization to provide general investor relations and consulting

services that Mr.

Schultz is affiliated with.

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

year ended September 30, 2020.

The Company paid the organization $ 49,500

in fees plus $ 176,000

in expense reimbursements for the year ended September 30,

The agreement was terminated in March 2020.

STOCKHOLDERS’

The Company’s authorized capital stock consists of 35,000,000

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

As of September 30, 2020, there were

17,390,979 shares of common stock issued and outstanding and 100,000 shares of preferred stock issued and outstanding.

Amendment(s) to Articles of Incorporation

On August 9, 2019, the Company filed

a Certificate of Amendment to its Articles of Incorporation to increase its authorized shares of common stock from 100,000,000

to 200,000,000 .

The amendment was previously approved by written consent of the Company’s Board and more than a majority

of the voting power of its stockholders and delivered to stockholders of record as of the close of business July 2, 2019 pursuant

to a Definitive Information Statement on Schedule 14C.

As a result of the reverse split mentioned above, the effect of the filed

amendment reduced the authorized shares to 20,000,000 .

On October 4, 2019, pursuant to Article

IV of our Articles of Incorporation, our Board of Directors voted to increase the number of shares of preferred stock designated

as Series A Preferred Stock from one million ( 1,000,000 ) shares to two million ( 2,000,000 ) shares, par value $ 0.001 .

Under the Certificate of Designation,

holders of Series A Preferred Stock will be entitled to quarterly dividends on 2% of our earnings before interest, taxes and amortization.

The dividends are payable in cash or common stock.

The holders will also have a liquidation preference on the state value of $0.02

per share plus any accumulated but unpaid dividends.

The holders are further entitled to have us redeem their Series A Preferred

Stock for three shares of common stock in the event of a change of control and they are entitled to vote together with the holders

of our common stock on all matters submitted to shareholders at a rate of forty-five (45) votes for each share held.

The rights of the holders of

Series A Preferred Stock are defined in the relevant Amendment to the Certificate of Designation filed with the Nevada Secretary

of State on October 9, 2019.

On October 2, 2020, the Company filed a Certificate of Amendment

to its Articles of Incorporation with the Nevada Secretary of State to increase its authorized shares of common stock to 35,000,000 .

Certificate of Preferred Stock Designation

On April 16, 2019, pursuant to Article

IV of our Articles of Incorporation, the Company’s Board of Directors voted to designate a class of preferred stock entitled

Series B Preferred Stock, consisting of up to one hundred thousand ( 100,000 ) shares, par value $ 0.001 .

Shares of the Series B Preferred

Stock were never issued and on March 6, 2020, the Company withdrew the Certificate of Designation for the Series B Preferred Stock.

At the time of withdrawal, no shares of Series B Preferred Stock were issued and outstanding.

Stock issuances during the year ended September 30, 2020

The Company issued 1,964,313 shares

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

for additional details.)

The Company issued 22,000 shares of common stock for

services rendered to independent consultants at a fair value of $ 54,000 .

The Company issued 793 shares of common

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

The Company issued 95,699 shares of

common stock in relation to the acquisition of p2k (See Note 5 for additional details.)

In relation to the Securities Purchase

Agreement dated December 31, 2018, the Company issued 1,125,000 shares of common stock for the conversion of $ 1,250,000 in principal

and $ 437,500 in interest at an effective conversion price of $ 1.50 .

(See Note 10 for additional details)

In relation to the Securities Purchase Agreement dated

April 17, 2019, the Company issued 8,241,665 shares of common stock for the conversion of $ 10,750,000 in principal and $ 1,612,500

in interest as a conversion premium at an effective conversion price of $ 1.50 .

Company’s authorized capital stock consists of 100,000,000 shares of common stock and 10,000,000 shares of preferred stock, par

value $ 0.001 per share.

As of September 30, 2021, there were 37,395,945 shares of common stock issued and outstanding and 1,750,000 shares

of preferred stock issued and outstanding.

As of September 30, 2020, there were 17,390,979 shares of common stock issued and outstanding

and 1,750,000 shares of preferred stock issued and outstanding.

December 5, 2019, the Board of Directors approved a reverse stock split of the Company’s common stock, par value $ 0.001 per share.

On December 10, 2019, Financial Industry Regulatory Authority (“FINRA”) approved the 1:10 reverse stock split of the Company’s

common stock.

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

Unless otherwise noted, impacted amounts and share information

in the consolidated financial statements and notes thereto as of and for the fiscal year ended September 30, 2020, have been adjusted

for the stock split as if such stock split occurred on the first day of the first period presented.

There is no impact of this transaction

in the year ended September 30, 2021.

to Articles of Incorporation

October 4, 2019, pursuant to Article IV of our Articles of Incorporation, our Board of Directors voted to increase the number of

shares of preferred stock designated as Series A Preferred Stock from one million ( 1,000,000 )

shares to two million ( 2,000,000 )

shares, par value $ 0.001

the Certificate of Designation for the Series A Preferred Stock, holders of shares of Series A Preferred Stock are

entitled to quarterly dividends on 2% of our earnings before interest, taxes and amortization.

The dividends are payable in cash or common

The company paid $177,502 in preferred stock dividends during the year ended September 30, 2021.

The holders will also have a

liquidation preference on the stated value of $0.02 per share plus any accumulated but unpaid dividends.

The holders are further entitled

to have us redeem their Series A Preferred Stock for three shares of common stock in the event of a change of control and they are entitled

to vote together with the holders of our common stock on all matters submitted to shareholders at a rate of forty-five (45) votes for

each share held.

rights of the holders of Series A Preferred Stock are defined in the relevant Amendment to the Certificate of Designation filed with

the Nevada Secretary of State on October 9, 2019.

On October 2, 2020, the Company filed a Certificate

of Amendment to its Articles of Incorporation with the Nevada Secretary of State to increase its authorized shares of common stock to

March 16, 2021, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Nevada Secretary of State to increase

its authorized shares of common stock to 50,000,000 .

On September 17, 2021, the Company filed

its First Amended and Restated Articles of Incorporation (the “Amended and Restated Articles”) with the Secretary of State

of the State of Nevada, which Amended and Restated Articles became effective upon filing.

The Amended and Restated Articles were previously

approved by the Company’s Board, subject to stockholder approval, on July 16, 2021, and were approved by the Company’s stockholders

at the Company’s Annual Meeting and, among other things, increased the Company’s authorized shares of common stock to 100,000,000 .

Stock issuances for the year ended September 30, 2021

Company issued 4,444,445 shares of the Company’s common stock in connection with its underwritten equity offering at a price of

$ 9.00 per share for net proceeds of approximately $ 37.05 million.

Company issued 9,090,910 shares of the Company’s common stock in connection with its underwritten public equity offering at a price

of $ 22.00 per share for net proceeds of approximately $ 187.2 million.

Company issued 236,000 shares of common stock as settlement of accrued bonus compensation related to the year ended September 30, 2020.

The fair value of these shares was approximately $ 1.9 million and was fully expensed for in the prior year.

The Company issued 327,725

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

The fair value of these shares is approximately $ 3.07 million.

Company issued 1,618,285

shares of common stock in relation to the acquisition of ATL, which includes

809,142 shares held in escrow.

The Company issued 477,703

shares of common stock in relation to the acquisition of SWS ,

which includes 310,000 shares held in escrow.

(See Note 3 for additional details)

The Company issued 28,381 shares of common stock as board

and executive compensation at a fair value of $ 71,600 .

The Company issued 1,230,770 shares of common stock as a result

of a registered direct offering resulting in total consideration of $ 4,000,000 .

The Company issued 6,913 shares of common stock as a

result of a cashless exercise of 15,000 common stock warrants.

The Company issued 26,427 shares of

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

Common stock returned during the year ended September

As a result of a note payoff on December 5, 2019, 5,000

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

As a result of the cancellation of an investor relations

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

Series A Preferred Stock issuances during the year

ended September 30, 2020

On October 4, 2019, the Company

authorized the issuance of a total of seven hundred and fifty thousand ( 750,000 ) shares of its designated Series A Preferred Stock

to members of its board of directors for services rendered.

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

fees of $ 15,000 was recorded as a result of the stock issued.

Common Stock issuances during the

year ended September 30, 2019

During the period commencing October

1, 2018 through December 31, 2018, the Company received $ 361,800 from 14 investors pursuant to private placement agreements with

the investors to purchase 45,225 shares of the Company’s $ 0.001 par value common stock at a purchase price equal to $ 8.00

for each share of common stock.

On September 11, 2018, the Company

entered into an agreement with Regal Consulting, LLC for investor relations services.

Under this agreement the Company agreed to

issue 3,000 shares of the Company’s common stock per month as compensation for services plus additional cash compensation.

During the year ended September 30, 2019, the Company issued a total of 36,000 shares of its common stock in accordance with the

Stock compensation of $ 897,870 was recorded as a result of the stock issued under the agreement.

On October 15, 2018, the Company

entered into an agreement with a consultant for services.

Under this agreement the Company agreed to issue 3,000

shares of the Company’s common stock which vest evenly over a six month period from the agreement date.

During the year

ended September 30, 2019, the Company recorded stock compensation of $ 68,818 was recorded as a result of the stock issued

under the agreement.

On October 2, 2018, an investor exercised

warrants to purchase 300 shares of the Company’s $ 0.001 par value common stock at a purchase price equal to $ 3.63 for each

share of Common stock.

The Company receive $ 1,088 as a result of this exercise.

The Company issued 10,000 shares in

relation to a Securities purchase agreement executed on December 31, 2018.

Company issued 57,045 shares of common stock for services rendered for a total fair value of approximately $ 815,000 which has been fully

expensed during the year ended September 30, 2021.

Company issued 389,745 shares of common stock in relation to the exercise of stock options and warrants.

(See Notes 12 and 13 for additional

Company issued 15,577 restricted stock units to certain SWS employees as part of the transaction to incentivize the employees

for retention purposes.

These restricted stock units vest over a period of one year .

As of September 30, 2021, 4,582 of the restricted

stock units had been forfeited.

(See Note 13 for additional details)

On December 31, 2018, the Company

settled $ 25,000 of a promissory note through the issuance of 2,500 shares of the Company’s common stock.

The shares were

valued at $ 51,225 and a $ 26,225 loss on settlement of debt was recorded as a result of the issuance.

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

Wainwright & Co., LLC, to

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

an aggregate gross offering price of up to $ 500,000,000 to or through H.C.

Wainwright & Co., LLC.

During the year ended September

2019, the Company issued 217,896 shares of common stock to three investors in connection with the cashless exercise of 225,000

common stock warrants at an exercise price of $ 0.83 .

On January 7, 2019, an investor converted

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

effective conversion price of $ 18.90 .

January 22, 2019, in accordance with a merger agreement the Company issued 175,000 shares of the Company’s common stock.

March 6, 2019, an investor converted $ 1,000,000 in principal and $ 350,000 in interest as a conversion premium, for 71,389 shares

of the Company common stock at an effective conversion price of $ 18.90 .

(See Note 10 for additional details.)

April 9, 2019, an investor exercised warrants to purchase 900 shares of the Company’s $ 0.001 par value common stock at a

purchase price equal to $ 3.63 for each share of Common stock.

The Company received $ 3,268 as a result of this exercise.

Company issued 125,000 shares in relation to a Securities purchase agreement executed on April 17, 2019.

(See Note 10 for additional

June 12, 2019, the Company entered into an agreement with SylvaCap Media for investor relations services.

Under this agreement

the Company agreed to issue 25,000 shares of the Company’s common stock as compensation for services for a six month period

plus additional cash compensation.

The 25,000 shares vest upon issuance but if the agreement is terminated within 90 days of execution

the shares are to be returned and cancelled.

On September 10, 2019, the Company terminated the agreement and as a result the shares

are required to be returned and cancelled.

No stock compensation expense has been recognized as the shares did not vest as a result

of the termination.

As of September 30, 2019, the shares had not yet been returned.

July 9, 2019, in accordance with the terms of the agreement the investor was issued an additional 45,614 shares of common stock

due to the decrease in stock price resulting in an effective conversion price of $ 15.06 .

(See Note 10 for additional details.)

July 16, 2019, in accordance with the terms of the agreement the investor was issued an additional 18,246 shares of common stock

due to the decrease in stock price resulting in an effective conversion price of $ 15.06 .

(See Note 10 for additional details.)

July 19, 2019, an investor converted $ 500,000 in principal and $ 175,000 in interest as a conversion premium, for 45,109 shares

of the Company common stock at an effective conversion price of $ 14.96 .

(See Note 10 for additional details.)

August 23, 2019, in accordance with the terms of the agreement the investor was issued an additional 43,721 shares of common stock

due to the decrease in stock price resulting in an effective conversion price of $ 7.60 .

30, 2021, the Company issued 3,443,379 shares of the Company’s common stock under the ATM for net proceeds of $ 46.4 million.

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

stock returned during the year ended September 30, 2021

a result of an adjustment of holdback shares to actual milestones earned in relation to the p2k acquisition, 8,072 shares were returned

and cancelled.

(See Note 3 for additional details)

September 16, 2019, in accordance with the terms of the agreement the investor was issued an additional 61,500 shares of common

stock due to the decrease in stock price resulting in an effective conversion price of $ 7.30 .

a result of an adjustment of holdback shares pursuant to Article II and Schedule A of that certain Agreement and Plan of ATL Merger in

connection with the acquisition of ATL, 68,194 shares were returned and cancelled.

(See Note 3 for additional details)

15,000 shares,

held in escrow as collateral, were returned from a lender on September 30, 2021.

Stock issuances during the year ended September 30, 2020

Company issued 1,964,313 shares of common stock in accordance with the terms of the convertible debt agreement due to the decrease in

Company issued 22,000 shares of common stock for services rendered to independent consultants at a fair value of $ 54,000 .

Company issued 793 shares of common stock as a result of rounding related to the reverse stock split.

Company issued 95,699 shares of common stock in relation to the acquisition of p2k.

relation to the Securities Purchase Agreement dated December 31, 2018, the Company issued 1,125,000

shares of common stock for the conversion of $ 1,250,000

in principal and $ 437,500

in interest at an effective conversion price of $ 1.50

relation to the Securities Purchase Agreement dated April 17, 2019, the Company issued 8,241,665

shares of common stock for the conversion of $ 10,750,000

in principal and $ 1,612,500

in interest as a conversion premium at an effective conversion price of $ 1.50

Company issued 28,381 shares of common stock as board and executive compensation at a fair value of $ 71,600 .

Company issued 1,230,770 shares of common stock as a result of a registered direct offering resulting in total consideration of $ 4,000,000 .

Company issued 6,913 shares of common stock as a result of a cashless exercise of 15,000 common stock warrants.

Company issued 26,427 shares of common stock in relation to the acquisition of GridFabric

stock returned during the year ended September 30, 2020

a result of a conversion of a note on September 21, 2018, 13,750 shares common stock which were previously issued as a commitment

fee were returned to treasury and cancelled on December 21, 2018.

a result of note payoffs, 23,750 shares of common stock which were previously issued as a commitment fee returned to treasury

and cancelled.

The following is a summary of stock

warrant activity during the years ended September 30, 2020 and September 30, 2019.

Number of Warrant Shares

Weighted Average Exercise Price

a result of a note payoff on December 5, 2019, 5,000 shares common stock were returned to treasury and cancelled on January 13, 2020.

a result of the cancellation of an investor relations services contract, 25,000 shares were returned to treasury and cancelled on February

A Preferred Stock issuances during the year ended September 30, 2020

October 4, 2019, the Company authorized the issuance of a total of seven hundred and fifty thousand ( 750,000 ) shares of its designated

Series A Preferred Stock to members of its board of directors for services rendered.

A fair value of $ 0.02 per share was determined by

Director fees of $ 15,000 was recorded as a result of the stock issued.

following is a summary of stock warrant activity during the years ended September 30, 2021 and September 30, 2020.

of Warrant Shares

Average Exercise Price ($)

Balance, September 30, 2019

9 unchanged sentences

Balance, September 30, 2021

As of September 30, 2020, the outstanding

warrants have a weighted average remaining term of was 1.96 years and an intrinsic value of $ 1,702,464 .

September 30, 2020, there are warrants exercisable to purchase 1,276,208 shares of common

stock in the Company and 22,857 unvested

of September 30, 2021, the outstanding warrants have a weighted average remaining term of 0.71 years and an intrinsic value of $ 389,243 .

the year ended September 30, 2021, a total of 173,990 shares of the Company’s common stock were issued in connection with the exercise

of common stock warrants at exercise prices ranging from $ 3.36 and $ 20.00 , for total consideration of $ 2,883,623 .

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

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

of September 30, 2021, there are warrants exercisable to purchase 609,840 shares

of common stock in the Company and 5,714 unvested

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

the warrants require a cash investment to exercise as follows:

5,000 required a cash investment of $ 8.00 per share, 449,865 require a cash investment of $ 15.00 per share, 125,000 require a cash

investment of $ 20.00 per share, 103,000 require a cash investment of $ 25.00 per share, 200,000 require an investment of $ 35.00

per share, 10,000 require an investment of $ 40.00 per share, 60,000 require an investment of $ 50.00 per share, 38,333 require a

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

302,867 of the outstanding warrants

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

During the year ended September

30, 2020, the Company recognized $ 1,158,709 in stock-based compensation for the outstanding warrants.

As of September 30, 2020, there was

no remaining unamortized stock-based compensation related to outstanding warrants.

Warrant activity for the year ended September 30, 2020

On September 25, 2020, a total of 6,913

shares of the Company’s common stock were issued in connection with the cashless exercise of 15,000 common stock warrants

at an exercise price of $ 8.00 .

Warrant activity for the year ended September 30, 2019

On October 15, 2018, the Company entered

into an agreement with a consultant for services.

Under this agreement the Company agreed to issue 3,000 warrants to purchase shares

of the Company’s common stock at an exercise price of $ 25.00 for a period of five years which vest evenly over a six-month

period from the agreement date.

During the year ended September 30, 2019, the Company recorded stock compensation of $ 68,643 as

a result of the stock issued under the agreement.

The warrants were valued using the Black-Scholes valuation model.

On December 31, 2018, in connection

with a Securities purchase agreement (see Note 10 for additional details) the Company issued Common Stock Purchase Warrants to

acquire up to 308,333 shares of common stock for a term of three years on a cash-only basis at an exercise price of $ 20.00 per

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

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

On August 28, 2018, in connection with

the Consulting agreement executed with Zero Positive, LLC the Company issued warrants to purchase 90,000 shares of common stock

at an exercise price of $ 8.00 per share to Zero Positive.

The warrants were valued at $ 2,607,096 using the Black Scholes option

pricing model.

The warrants vest as follows:

30,000 warrants vested immediately, the balance vest evenly on the last day of each

month over the forty-two months beginning August 31, 2018 .

As of September 30, 2019, 50,000 warrants had vested, and the Company

recorded an expense of $ 496,590 during the year ended September 30, 2019.

On January 22, 2019, in

accordance with a merger agreement, CleanSpark issued;

year warrant to purchase 50,000

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

per share, and a five year warrant to purchase 50,000 shares of CleanSpark common stock at an exercise price of $ 20.00 per

The warrants were valued at $ 1,102,417 and $ 1,102,107 , respectively.

On April 18, 2019, in connection with

a Securities purchase agreement (see Note 10 for additional details) the Company issued Common Stock Purchase Warrants to acquire

up to 230,000 shares of common stock for a term of three years on a cash-only basis at an exercise price of $ 35.00 per share with

respect to 200,000 Warrant Shares, $ 40.00 with respect to 10,000 Warrant Shares, $ 50.00 with respect to 10,000 Warrant Shares,

$ 75.00 with respect to 5,000 Warrant Shares and $ 100.00 with respect to 5,000 Warrant Shares.

The Black-Scholes model utilized the

following inputs to value the warrants granted during the year ended September 30, 2019:

Fair value assumptions – Warrants:

September 30, 2019

Risk free interest rate

2.36 % - 3.01 %

Expected term (years)

Expected volatility

254 % - 268 %

Expected dividends

During the year ended September 30,

2019, the Company issued 217,896 shares of common stock in connection with the cashless exercise of 225,000 common stock warrants

at an exercise price of $ 0.83 .

STOCK OPTIONS

The Company adopted a stock-based incentive

compensation plan known as the 2017 Incentive Plan (the “Plan”), which was established by the Board of Directors of

the Company on June 19, 2017.

A total of 300,000 shares were initially reserved for issuance under the Plan.

As of September 30,

2020, there were 22,052 shares available for issuance under the plan.

to 2017 Incentive Plan

October 7, 2020, the Company executed that certain first amendment to the 2017 Equity Incentive Plan to increase its option pool

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

(See Note 20 for additional details)

The Plan allows the Company to grant

incentive stock options, non-qualified stock options, stock appreciation right, or restricted stock.

The incentive stock options

are exercisable for up to ten years, at an option price per share not less than the fair market value on the date the option is

The incentive stock options are limited to persons who are regular full-time

employees of the Company at the date of the grant of the option.

Non-qualified options may be granted to any person, including,

but not limited to, employees, independent agents, consultants and attorneys, who the

2,500 required

a cash investment of $ 8.00 per

103,000 require

a cash investment of $ 25.00 per

share, 200,000 require

a cash investment of $ 35.00 per

share, 10,000 require

a cash investment of $ 40.00 per

share, 60,000 require

a cash investment of $ 50.00 per

share, 38,334 require

a cash investment of $ 75.00 per

share and 5,000 require

a cash investment of $ 100.00 per

the outstanding warrants contain provisions allowing a cashless exercise at their respective

exercise prices.

activity for the year ended September 30, 2020

September 25, 2020, a total of 6,913 shares of the Company’s common stock were issued in connection with the cashless exercise

of 15,000 common stock warrants at an exercise price of $ 8.00 .

Company sponsors a stock-based incentive compensation plan known as the 2017 Incentive Plan (the “Plan”), which was established

by the Board of Directors of the Company on June 19, 2017.

On October 7, 2020, the Company executed a first amendment to the Plan to

increase its share pool from 300,000 to 1,500,000 shares of common stock.

September 15, 2021, the shareholders approved and the Company executed a second amendment to (i) increase the number of shares of common

stock authorized for issuance under the Plan by an additional 2,000,000 shares, resulting in an aggregate of 3,500,000 shares of common

stock authorized for issuance under the Plan, and (ii) revise Section 19 of the Plan to more closely align with the provisions of Section

422 of the Internal Revenue Code of 1986, as amended, and Section 17.2 of the Plan.

of September 30, 2021, there were 1,225,351 shares available for issuance under the Plan.

Plan allows the Company to grant incentive stock options, non-qualified stock options, stock appreciation rights, or restricted stock

The incentive stock options are exercisable for up to ten years, at an option price per share not less than the fair market value

on the date the option is granted.

The incentive stock options are limited to persons who are full-time employees of the Company at the

date of the grant of the option.

The option vesting schedule for options granted is determined by the Board of Directors at the time

of the grant.

The Plan provides for accelerated vesting of unvested options if there is a change in control, as defined in the Plan.

Non-qualified

options may be granted to any person, including, but not limited to, employees, independent agents, consultants and attorneys, who the

Company’s Board believes have contributed, or will contribute, to the success of the Company.

Non-qualified options may be

issued at option prices of less than fair market value on the date of grant and may be exercisable for up to ten years from date

The option vesting schedule for options granted is determined by the Board of Directors at the time of the grant.

Plan provides for accelerated vesting of unvested options if there is a change in control, as defined in the Plan.

The following is a summary of stock

option activity during the years ended September 30, 2020 and year ended September 30, 2019.

Number of Option Shares

Weighted Average Exercise Price

Non-qualified options may be issued

at option prices of less than fair market value on the date of grant and may be exercisable for up to ten years from date of grant.

of September 30, 2021, no non-qualified options were granted to any person.

Company recognized $ 3,868,927 and $ 3,608,885 for the years ended September 30, 2021 and September 30, 2020, respectively, in stock-based

compensation under the stock-based incentive compensation plan.

following is a summary of stock option activity during the year ended September 30, 2021:

of Option Shares

Average Exercise Price ($)

Balance, September 30, 2019

9 unchanged sentences

Balance, September 30, 2021

As of September 30, 2020, there are

options exercisable to purchase 225,451 shares of common stock in the Company and 52,497 unvested options outstanding that cannot

be exercised until vesting conditions are met.

As of September 30, 2020, the outstanding options have a weighted average remaining

term of 2.37 years and an intrinsic value of $ 1,808,181 .

During the year ended September 30,

2020, the Company recognized $ 753,923 in stock-based compensation for the outstanding stock options.

Option activity for the year ended September 30, 2020

During the year ended September

30, 2020, the Company issued 233,233 options to purchase shares of common stock to employees, the shares were granted at quoted

market prices ranging from $ 4.50 to $ 8.50 .

The options were valued at issuance using the Black Scholes model and stock compensation

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

The Black-Scholes model utilized the

following inputs to value the options granted during year ended September 30, 2020:

of September 30, 2021, there are options exercisable to purchase 525,646 shares of common stock in the Company and 1,028,383 unvested

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

As of September 30, 2021, the outstanding options have

a weighted average remaining term of 4.03 years and an intrinsic value of $ 1,579,336 .

activity for the year ended September 30, 2021

the year ended September 30, 2021, a total of 141,318

shares of the Company’s common stock were issued in connection with the exercise of 141,318

common stock options at exercise prices ranging from $ 4.65 to

$ 24.40 , for a total consideration of $ 867,308 .

the year ended September 30, 2021, the Company granted 1,469,250

options with a total fair value of $ 21,582,485

to purchase shares of common stock to employees.

offset $ 953,125

of stock compensation expense against bonuses accrued during

the prior year and recognized $7,731,606 during the year.

The shares were granted at quoted market prices ranging from $ 7.55

and were valued at issuance using the Black Scholes model.

Black-Scholes model utilized the following inputs to value the options granted during year ended September 30, 2021:

Fair value assumptions Options:

September 30, 2020

Risk free interest rate

2 unchanged sentences

Expected volatility

124 % - 209 %

Expected dividends

As of September 30, 2020, the Company expects to recognize

$ 180,334 of stock-based compensation for the non- vested outstanding options over a weighted-average period of 2.37 years.

Option activity for the year ended

September 30, 2019

During the year ended September 30,

2019, the Company issued 49,321 options to purchase shares of common stock to employees, the shares were granted at quoted market

prices ranging from $ 8.50 to $ 59.00 .

The options were valued at issuance using the Black Scholes model and stock compensation expense

of $ 326,100 was recorded as a result of the issuances.

The Black-Scholes model utilized the

following inputs to value the options granted during the year ended September 30, 2019:

September 30, 2021, the Company expects to recognize $ 16,434,789 of

stock-based compensation for the non-vested outstanding options over a weighted-average period of 2.47 years.

activity for the year ended September 30, 2020

the year ended September 30, 2020, the Company issued 233,233 options to purchase shares of common stock to employees, the options were granted with exercise prices equal to the then current

quoted market prices ranging from $ 4.50 to $ 8.50 .

The options were valued at issuance using the Black Scholes model and stock

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

Black-Scholes model utilized the following inputs to value the options granted during year ended September 30, 2020:

Fair value assumptions Options:

September 30, 2019

Risk free interest rate

1.56 % - 2.91 %

Expected term (years)

Expected volatility

145 % - 271 %

Expected dividends

The Company provides for income taxes

under FASB ASC 740, Accounting for Income Taxes.

FASB ASC 740 requires the use of an asset and liability approach in accounting

for income taxes.

Deferred tax assets and liabilities are recorded based on the differences between the financial statement and

tax bases of assets and liabilities and the tax rates in effect currently.

FASB ASC 740 requires the reduction

of deferred tax assets by a valuation allowance, if, based on the weight of available evidence, it is more likely than not that

some or all of the deferred tax assets will not be realized.

In the Company’s opinion, it is uncertain whether they will

generate sufficient taxable income in the future to fully utilize the net deferred tax asset.

The Company grants RSUs that contain either

a) service conditions, or b) performance conditions, or c) market performance conditions.

RSUs containing service conditions vest monthly

RSUs containing performance conditions generally vest over 1 year, and the number of shares earned depends on the achievement

of predetermined Company metrics.

the criteria for vesting is met, the Company recognizes the expense equal to the total fair value of the common stock price on the grant

All of the RSUs issued prior to September 30, 2021 were either vested or forfeited and cancelled.

The following table summarizes the performance-based

restricted stock units at the maximum award amounts based upon the respective performance share agreements.

Actual shares that will vest

depend on the attainment of the performance-based criteria.

Number of Shares

Outstanding at September 30, 2020

Outstanding at September 30, 2021

of September 30, 2021, the Company had $ 123,216

unrecognized compensation cost related to restricted stock unit awards that will be recognized over a weighted average period of 0.4

Company recognized stock-based compensation expenses related to restricted stock units, of $ 3,862,679

for fiscal 2021.

The Company recognized $ 1,904,520

in stock-based compensation expense for restricted stock units issued in 2021 related to 2020 bonuses.

Company provides for income taxes under FASB ASC 740, Accounting for Income Taxes.

FASB ASC 740 requires the use of an asset and liability

approach in accounting for income taxes.

Deferred tax assets and liabilities are recorded based on the differences between the financial

statement and tax bases of assets and liabilities and the tax rates in effect currently.

requires the reduction of deferred tax assets by a valuation allowance, if, based on the weight of available evidence, it is more likely

than not that some or all of the deferred tax assets will not be realized.

In the Company’s opinion, it is uncertain whether they

will generate sufficient taxable income in the future to fully utilize the net deferred tax asset.

Accordingly, a valuation allowance

1 unchanged sentence

The total deferred tax asset is approximately $ 38.8 million as of September 30, 2021

30, 2020 which is calculated by multiplying a 21 % estimated tax rate by the cumulative net operating loss (NOL) of approximately

$ 52.5 million.

Due to the enactment of the Tax Reform

Act of 2017, we have calculated our deferred tax assets using an estimated corporate tax rate of 21 % .

US Tax codes and laws may

be subject to further reform or adjustment which may have a material impact to the Company’s deferred tax assets and liabilities.

The significant components of the

Company's deferred tax assets and liabilities as of September 30, 2020 and 2019 are as follows:

which is calculated by multiplying a 21 % estimated tax rate by the cumulative net operating loss (“NOL”) of approximately $ 184.6 million.

to the enactment of the Tax Reform Act of 2017, we have calculated our deferred tax assets using an estimated corporate tax rate of 21 % .

Tax codes and laws may be subject to further reform or adjustment which may have a material impact to the Company’s deferred

tax assets and liabilities.

significant components of the Company's deferred tax assets and liabilities as of September 30, 2021 and 2020 are as follows:

As of September 30,

5 unchanged sentences

Income tax expense

As of September 30, 2020, and 2019,

the Company had gross federal net operating loss carryforwards of approximately $ 52.5 million and $ 42.3 million, respectively.

The Company plans to file its U.S.

As of September

30, 2021, and 2020, the Company had gross federal net operating loss carryforwards of approximately $ 184.6 million and $ 52.5 million,

respectively.

Company plans to file its U.S.

federal return for the year ended September 30, 2021 upon the issuance of this filing.

Upon filing of the tax return for the year

ended September 30, 2020 the actual deferred tax asset and associated valuation allowance available to the Company may differ

from management’s estimates.

The tax years 2015-2019 remained open to examination for federal income tax purposes by the

major tax jurisdictions to which the Company is subject.

Upon filing of

the tax return for the year ended September 30, 2021 the actual deferred tax asset and associated valuation allowance available to the

Company may differ from managements estimates.

The tax years 2015-2019 remained open to examination for federal income tax purposes by

the major tax jurisdictions to which the Company is subject.

No tax returns are currently under examination by any tax authorities.

AND CONTINGENCIES

Utah Corporate Office

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

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

lease term is on an annual basis beginning on March 1, 2020.

May 15, 2018, the Company executed a 37 month lease agreement, which commenced on July 1, 2018 at 4360 Viewridge Avenue,

Suite C, San Diego, California.

The agreement calls for the Company to make payments of $ 4,057 in base rent per month through

July 31, 2021 subject to an annual 3 % rent escalation.

Future minimum lease payments under the operating leases for the

facilities as of September 30, 2020, are as follows:

year ending September 30, 2021 $ 43,170

Vegas Offices

January 2, 2020, the Company entered into a sublease agreement for office space at 8475 S.

Eastern Ave., Suite 200, Las Vegas,

The agreement cal ls for the Company to make monthly payments of $ 1,575 in base rent through January 1, 2021.

The lease term is on an annual basis beginning January 2, 2020.

The Company assumed p2k’s lease

agreement entered into on October 17, 2017 at 7955 W.

Badura Ave., Suite 1040, Las Vegas, NV 89113.

The agreement calls for $ 1,801

in base rent through October 31, 2020.

The lease expired on October 31, 2020.

The Company did not renew this lease.

Contractual contingencies

On April 6, 2020, the Company entered

into a joint venture agreement with a third party to procure, distribute, and supply Personal Protective Equipment (PPE) for hospitals

and frontline medical personnel.

The agreement is effective until December 31, 2020.

The Company contributed capital in

the amount of $ 660,000 to assist with the procurement of these products.

The agreement resulted in income of $ 20,000 for the year

ended September 30, 2020 and the return of all capital contributed.

The income is reported as other income, net of all other costs.

Contingent consideration

On August 31, 2020, the Company

acquired GridFabric, LLC.

Pursuant to the terms of the purchase agreement, additional shares of the Company’s common

stock valued at up to $ 750,000

will be issuable if GridFabric achieves certain revenue and product release milestones.

(See note 3 for additional

Legal contingencies

From time to time we may be subject

to litigation.

Risks associated with legal liability are difficult to assess and quantify, and their existence and magnitude can

remain unknown for significant periods of time.

We have acquired liability insurance to reduce such risk exposure to the Company.

Despite the measures taken, such policies may not cover future litigation, or the damages claimed may exceed our coverage which

could result in contingent liabilities.

For a description of our material pending legal proceedings, please

see Part I, Item III of this Annual Report on Form 10-K.

The Company has purchase commitments

that are cancellable of approximately $ 144.04

million related to purchase of miners as of September 30, 2021, and the Company has paid $ 85.11 million

towards these commitments as of the end of this period.

As of September 30, 2021, the remaining commitment for future payments was $ 58.93

Company has purchase commitments for infrastructure assets and other mining equipment of approximately $ 6,512,000

as of September 30, 2021 and the Company has paid $ 4,576,000

towards these commitments as of end of this period.

following table sets forth certain information concerning our obligations to make contractual future payments towards our agreements

as of September 30, 2021:

contractual obligations:

lease obligations

Lease obligations

Infrastructure

consideration

On August 31, 2020, the Company acquired GridFabric, LLC.

Pursuant to the terms of the purchase agreement, additional shares of the Company’s

common stock valued at up to $ 750,000 were issuable if GridFabric achieves certain revenue and product release milestones.

30, 2021, the contingent consideration was re-measured to $ 500,000 .

to September 30, 2021, the Company settled all contingent consideration due to GridFabric resulting in a payment of 8,404 shares of common

stock valued at $ 150,000 .

Watt Solutions:

On February 24, 2021, the Company acquired Solar Watt Solutions, Inc.

Pursuant to the terms of the purchase agreement,

additional cash consideration of up to $ 2,500,000 (fair valued at $ 155,000 at acquisition date) in cash held back by the Company and

only payable pro rata to Sellers upon meeting certain future milestones and subject to satisfaction of any amounts owing from SWS to

the Company resulting from damages required to be indemnified under the SWS Merger Agreement.

The contingent cash consideration was re-measured

to $ 320,802 at September 30, 2021.

contingencies

time to time we may be subject to litigation.

Risks associated with legal liability are difficult to assess and quantify, and their existence

and magnitude can remain unknown for significant periods of time.

We have acquired liability insurance to reduce such risk exposure to

Despite the measures taken, such policies may not cover future litigation, or the damages claimed may exceed our coverage

which could result in contingent liabilities.

CleanSpark, Inc.

January 20, 2021, Scott Bishins (“Bishins”), individually, and on behalf of all others similarly situated (together, the

“Class”), filed a class action complaint (the “Class Complaint”) in the United States District Court for the

Southern District of New York against the Company, its Chief Executive Officer, Zachary Bradford (“Bradford”), and its Chief

Financial Officer, Lori Love (“Love”) (the “Class Action”).

The Class Complaint alleges that, between December

31, 2020 and January 14, 2021, the Company, Bradford, and Love “failed to disclose to investors:

(1) that the Company had overstated

its customer and contract figures;

(2) that several of the Company’s recent acquisitions involved undisclosed related party transactions;

and (3) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and

prospects were materially misleading and/or lacked a reasonable basis.” (the “Class Allegations”).

The Class Complaint

(a) certification of the Class, (b) an award of compensatory damages to the Class, and (c) an award of reasonable costs and expenses

incurred by the Class in the litigation.

To date, no class has been certified in the Class Action.

Currently, there is a pending motion

to appoint lead class plaintiff, at which point dispositive motions may be filed.

the ultimate outcome of the Class Action cannot be determined with certainty, the Company stands behind all of its prior statements and

disclosures and believes that the claims raised in the Class Complaint are entirely without merit.

The Company intends to both defend

itself vigorously against these claims and to vigorously prosecute any counterclaims.

Notwithstanding

the Class Allegations’ lack of merit, however, the Class Action may distract the Company and cost the Company’s management

time, effort and expense to defend against the claims made in the Class Complaint.

Notwithstanding the Company’s belief that the

Company and its management have complied with all of their obligations under applicable securities regulations, no assurance can be given

as to the outcome of the Class Action, and in the event the Company does not prevail in such action, the Company, its business, financial

condition and results of operations would be materially and adversely affected.

derivatively on behalf of CleanSpark, Inc., v.

Bradford, Love, Schultz, Beynon, McNeill, and Wood (consolidated with Perna, derivatively

on behalf of CleanSpark, Inc., v.

Bradford, Love, Schultz, Beynon, McNeill, and Wood)

On May 26, 2021, Andrea

Ciceri (“Ciceri”), derivatively on behalf of CleanSpark, Inc., filed a verified shareholder derivative action (the “Ciceri

Derivative Action”) in the United States District Court in the District of Nevada against Chief Executive Officer, Zachary Bradford

(“Bradford”), Chief Financial Officer, Lori Love (“Love”) and Directors Matthew Schultz, Roger Beynon, Larry

McNeill and Tom Wood (Bradford, Love and Directors collectively referred to as “Defendants.”) On June 22, 2021, Mark Perna

(“Perna”) filed a verified shareholder derivative action (the “Perna Derivative Action”) in the same Court against

the same Defendants making substantially similar allegations.

On June 29, 2021, the court consolidated the Ciceri Derivative Action with

the Perna Derivative Action in accordance with a stipulation among the parties (the consolidated case referred to as the “Derivative

The Derivative Action alleges that Defendants:

(1) made materially false and misleading public statements about the Company’s

business and prospects;

(2) did not maintain adequate internal controls;

and (3) did not disclose several related party transactions

benefitting insiders, questionable uses of corporate assets, and excessive compensation.

The claims asserted

against all Defendants include breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate

A claim for contribution under Sections 10(b) and 21D of the Securities and Exchange Act is asserted against only Bradford and

The Derivative Action seeks declaratory relief, monetary damages, and imposition of adequate corporate governance and internal

Plaintiffs were given the opportunity to submit an Amended Complaint by November 25, 2021, but elected not to.

Motion to Dismiss will be due by January 20, 2022.

the ultimate outcome of the Derivative Action cannot be determined with certainty, the Company stands behind all of its prior statements

and disclosures, and believes that the claims raised in that case are entirely without merit.

The Company intends to both defend itself

vigorously against these claims and to vigorously prosecute any counterclaims.

Notwithstanding

the Derivative Action’s lack of merit, however, it may distract the Company and cost the Company’s management time, effort

and expense to defend against the claims.

Notwithstanding the Company’s belief that the Company and its management have complied

with all of their obligations under applicable securities regulations, no assurance can be given as to the outcome of the Derivative

Action, and in the event the Company does not prevail in such action, the Company, its business, financial condition and results of operations

would be materially and adversely affected.

MAJOR CUSTOMERS AND VENDORS

For the years ended September 30, 2020

and 2019, the Company had the following customers that represented more than 10% of sales.

September 30, 2020

Currency Mining Segment

the year ended September 30, 2021, the digital currency mining business had the following customers that represented more than 10% of

For these purposes customers are defined as the Company’s mining pool operators.

Mining Pool Operator A

Mining Pool Operator B

the year ended September 30, 2021, the Company had the following significant suppliers of mining equipment.

the years ended September 30, 2021 and September 2020, the energy business had the following customers that represented more than 10%

the years ended September 30, 2021 and 2020, the Company had the following suppliers that represented more than 10% of direct

material costs.

September 30, 2020

For the years ended September 30, 2020

and 2019, the Company had the following suppliers that represented more than 10% of direct material costs.

We disclose segment information that is consistent

with the way in which management operates and views the business.

Our operating structure contains two reportable segments:

Digital Currency

The Company measures the results of its segments using, among other measures, each segment's sales and operating income, which

includes certain corporate overhead allocations.

Digital Currency.

consists of operation related to Bitcoin mining.

The Company provides computing power through ATL Data Centers LLC and CleanBlok Inc.

to the mining pools.

This segment also includes operation related to maintenance of real property holdings for company purposes through

CSRE properties Norcross LLC and CSRE properties LLC.

This segment revenue represents fractional share of the fixed cryptocurrency award

received from the mining pool operator in exchange of computing power.

This segment provides services,

equipment, and software to the energy industry.

This segment includes revenue from providing engineering and construction services, selling

equipment such as residential battery, residential solar, commercial solar and non-customized equipment and providing access to its energy

software offerings and software license sales and support services.

Corporate and Other.

This includes

revenue from providing design, software development, and other technology-based consulting services through p2k Labs and data center

services through ATL Data Center.

We allocate expenses related to corporate

activities to the segments, and corporate overhead to CleanSpark Inc.

Corporate Items and eliminations consist of corporate overhead and

other items not allocated to any of the Company's segments as in the table below.

Intersegment transactions, which were at market price,

are included in the “Other revenue and eliminations” and “Corporate items and eliminations” in the table below.

SEGMENT REPORTING - Segment Information

Digital Currency Mining

Total segment revenues

Other revenue and eliminations

Consolidated Revenues

( 8,111,138 )

( 13,554,515 )

Digital Currency Mining

Total segment profit/(loss)

( 13,554,515 )

Corporate items and eliminations (including depreciation and amortization)

( 36,899,142 )

( 9,791,628 )

$ ( 21,812,010 )

$ ( 23,346,143 )

details on major customers of Digital currency and Energy segment, see Note 16.

summary of segment assets is as follows:

Digital Currency Mining

$ 270,995,942

Other and Corporate assets

$ 317,473,121

Company has its geographic operations only in United States.

additions in long-lived assets during the years ended September 30, 2021 and 2020:

September 30,2021

September 30,2020

SEGMENT REPORTING

We disclose segment information that is consistent with

the way in which management operates and views the business.

Our operating structure contains the following reportable segments:

Energy Segment – Consisting of our CleanSpark,

LLC., CleanSpark Critical Power Systems, Inc.

and GridFabric, LLC lines of business, this segment provides services, equipment

and software to the energy industry.

Digital Agency Segment – p2kLabs, Inc.

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

SEGMENT REPORTING - Segmnent Reporting Assets

For the Year Ended September 30,

Inter-segment

$ ( 119,555 )

Cost of revenues

Operating expenses

Segment Income/(loss) from operations

Digital Currency

Property Plant and Equipment

$ 144,743,498

Capitalized software

$ 154,625,336

Capital expenditures

Depreciation and amortization

As of September 30, 2020

Accounts Receivable

SUBSEQUENT EVENTS

On October 2, 2020, the Company filed a Certificate

of Amendment to its Articles of Incorporation with the Nevada Secretary of State to increase its authorized shares of common stock

to 35,000,000 .

On October 7, 2020, the Company executed a first amendment

to its 2017 Equity Incentive Plan to increase its option pool from 300,000 to 1,500,000 shares of common stock.

On November 9,

2020, we filed a registration statement on Form S-8 to register the additional shares under the first amendment to the 2017 Equity

Incentive Plan.

On October 6, 2020, the Company, issued 4,444,445 shares

of the Company’s common stock in connection with a firm commitment underwritten public offering at a price to the public

of $ 9.00 per share.

The Company received net proceeds from the sale of the shares, after deducting underwriting discounts and commissions

and other offering expenses payable by the Company, of $ 37.2 million.

The offering closed on October 9, 2020.

October 26, 2020, the Company issued 236,000 shares

to employees, officers and directors with a fair value of $ 1,904,520 and 142,500 fully

vested options with a fair value of $ 987,675 for

performance during the 2020 fiscal year.

The options have exercise prices ranging from $ 8.07 to $ 9.00 and

In addition, the

Company granted 222,250 shares and 84,000 options to purchase common stock to officers which are subject to future vesting

conditions in accordance with Company goals and milestones.

On December 9, 2020, the Company, entered into an

Agreement and Plan of Merger with ATL Data Centers LLC, (“ATL”), CLSK Merger Sub, LLC, a wholly-owned subsidiary

of the Company (“Merger Sub”), and Sellers.

The Merger closed on December 10, 2020.

At the closing, Merger Sub

merged with and into ATL, and ATL survived the Merger, continuing its existence as a wholly-owned subsidiary of the Company.

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

of restricted common stock of the Company valued at $ 19.4

million based on the

average closing price of the common stock for the five trading days including and immediately preceding the closing date of

$11.988 per share, to the Sellers, of which:

(i) 642,309 Shares valued at $7.7 million would be fully earned on closing, and

(ii) an additional 975,976 Shares valued at $11.7 million being issued to escrow and subject to holdback pending satisfaction

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

than 10% of average daily trading value of the prior 30 days.

The Company also assumed approximately $6.9 million in existing

debt of ATL at closing.

In connection with the acquisition, the Company issued 41,708 shares to the broker of the

transaction and has agreed to issue an additional 10,427 shares upon achievement of certain revenue milestones.

Changes in and Disagreements

With Accountants on Accounting and Financial Disclosure

have evaluated events occurring between the end of the most recent fiscal year and the date the financial statements were issued through

December 14, 2021.

There were no material subsequent events except as disclosed below:

Power Agreement

October 1, 2021, the Company entered into certain agreements with Georgia Power Company (“Georgia Power”), for electrical

services to the Company’s facilities in Norcross, Georgia.

The agreements have an initial term of five years, during which time

the power utilized by the Company will be billed under the Georgia Power Real Time Pricing (“RTP”) rate, where a portion

of the usage is priced hourly and another portion is billed at a conventional rate.

In addition, the Company agreed to pay Georgia

Power a one-time fee of approximately $2.0 million to install additional power equipment on the property.

Mining Equipment Purchase Agreements

October 6 and October 14, 2021, the Company entered into agreements that are cancellable with a mining equipment supplier to purchase

an aggregate of 6,750 mining servers.

As compensation for the mining equipment, the Company agreed to pay the supplier up to an aggregate

amount of approximately $49.5 million, of

which, approximately $28.6 was

paid upon execution of the agreements, with the remainder to be paid in monthly installments through June 2022.

The Company currently

expects to receive the mining equipment in nine equal monthly shipments from November 2021 through July 2022 and plans to use the mining

equipment to expand its digital currency mining activities through its wholly owned subsidiaries.

November 2021, the Company entered into a new purchase agreement that is cancellable for a total of 2,597 mining machines with an aggregate

purchase price of approximately $26.5 million.

Immersion Cooling System Purchase

On December 1, 2021, the Company entered into

an agreement to purchase an immersion cooling system and related equipment with a purchase price of approximately $9.6 million.

Company issued 4,017,652 shares under its At the Market financing instrument resulting in proceeds of approximately $68 million.

The Company issued 25,775 shares as a result

of stock option exercises resulting in proceeds of $189,677.

November 23, 2021, the

Company settled all contingent consideration due to GridFabric resulting in the issuance of 8,404 shares of Company common stock valued

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data