What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-04-17 compared with 2022-04-12 · 544 added, 407 removed, 722 unchanged (57% of the section changed)

Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be

read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this report on Form 10-K.

Prior to closing the Transaction, we were a shell company with no operations.

Effective with the closing of the Transaction, we are an early-stage cryptocurrency mining.

Although Edgemode, our new wholly-owned

subsidiary, has historically mined Ethereum, we are now focused on expanding the operations by mining Bitcoin.

Prior to January 2022, we were a shell company with

no operations.

Effective with the closing of the acquisition of Edgemode, a Wyoming corporation, we are an early-stage cryptocurrency

mining company.

Although Edgemode has historically mined Ethereum, we are now focused on transitioning our operations by mining Bitcoin.

12 Months Ended December 31, 2022 (“2022 Period”) Compared

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Results of operations

We had no revenues in either of the 2021 Period

nor the 2020 Period.

Our revenues will ramp up as completed the Transaction and we continue to implement and grow our cryptocurrency business

which we acquired January 31, 2022.

We had revenues of $438,042 for the 2022 Period

compared to $1,572,906 for the 2021 Period.

The reason for the decrease was the decline in the price of Ethereum during the 2022 Period

compared to prices during the 2021 Period and we ceased Ethereum mining operations in September 2022 when Ethereum switched its consensus

protocol to proof of stake.

Also the Company experienced power outages at our data center in Rouses Point and returned equipment related

to Etherium mining.

Our cost of revenues for the 2022 Period was $812,882

compared to $1,347,337 for the 2021 Period.

The reason for the decrease was a decrease in hosting fees incurred as a result of the power

outages and seizing of Ethereum mining operations in September 2022.

Our operating expenses for the 2022 Period was

approximately $1.8 million and $4.5 million for the 2020 Period.

$31,014,864 compared to $3,531,646, for the 2021 Period.

In the 2022 Period, the Company incurred stock-based compensation expense of

$24,582,181 compared to $2,537,418 for the 2021 Period, along with increased loss on cryptocurrencies due to increased transactions and

changes in market prices.

In addition, the Company began operations in March of 2021 for initial operations versus having a full year

of operations for the 2022 Period.

Our other expenses for the 2022 Period was $856,293

compared to $252,678 for the 2021 Period.

The reason for the increase was a loss related to the termination of a prepaid hosting agreement,

offset by a decrease in interest expense from the termination of the loans.

We expect that our operating expenses will increase

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in future periods.

Other Expenses

Our Other Expenses were approximately $9.9

million of the 2021 Period compared to approximately $0.6 million for the 2020 Period.

The Other Expenses for 2021 were comprised

primarily by approximately $1.5 million of interest expense related to outstanding convertible notes and $8.1 million related to

non-cash derivative liability expenses.

Our Net Loss was approximately $11.7 million of

the 2021 Period compared to approximately $5.1 million for the 2020 Period.

Liquidity and Capital Resources

As of March 31, 2022, the Company had approximately

As of April 14, 2023, the Company had approximately

$15,000 of cash.

Our liquidity is primarily derived from selling the crypto that we mine, and debt and equity investments from accredited

To grow the business and help fund operations for the next 12 months, the Company is seeking to raise $60 million in

equity capital through private placements and is also seeking a significant debt facility.

We can provide no assurances that any such

financings will be successful nor will they be on terms

We will be required to raise a significant amount of more capital if

we want to purchase all of the bitcoin mining equipment under our $270,000,000 purchase order.

We can provide no assurance to investors

that we will have access to such a large amount of capital and if so that it will be available on terms that we would accept.

event, the Company may incur significant and/or shareholders will suffer large dilution.

Our liquidity was primarily derived from debt and equity investments from accredited investors and also from selling

the crypto that we mined through September 2022.

To grow the business and help fund operations for the next 12 months, the Company is

seeking to raise $50 million in equity capital through private placements.

We can provide no assurances that any such financings will

be successful, nor will they be on terms acceptable to the Company.

If we fail to raise sufficient additional funds,

when needed or do not have sufficient cash flows from mining, we may be required to scale back our plan of operations.

The Company has approximately $2.3 million of

debt for equipment that the Company is currently mining of which approximately $1.4 million is due in 2022 and $850,000 is due in 2023.

we will be required to significantly scale back our plan of operations.

The Company has terminated the agreements for

approximately $1.6 million of debt for equipment that the Company was using for mining and returned the equipment to the vendor to settle

the outstanding liabilities.

The Company is making no further payments against the potential balance.

No confirmation has been received

from 2CRSI and as such the balance remains outstanding on the Company’s balance sheet in the accompanying financial statements.

Additionally, we have a significant amount funds committed to the purchase of new Bitcoin miners.

We can provide no assurance that we

will have the ability to meet these payment requirements or that we will be successful raising capital to meet our working capital requirements.

We can provide no assurance

that we will have the ability to meet these payment requirements or that we will be successful raising capital to meet our working capital

requirements.

Summary of cash flows

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Net cash (used) in operating activities

$ (2,169,308 )

$ (3,125,137 )

Net cash (used) in investing activities

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Critical accounting policies

Note 2 to the December 31, 2021 financial statements included as part of this report for a discussion of our Significant Accounting Policies.

See Note 2 to the December 31, 2022 financial

statements included as part of this report for a discussion of our Significant Accounting Policies.

Recent Accounting Pronouncements

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We have a history of operating losses, have limited sources of revenue as an early-stage cryptocurrency mining company and may not be able to achieve or sustain profitability.

We recently commenced operations as a cryptocurrency mining company, and there is limited information available on which to evaluate our prospects.

We will need significant additional capital to execute our business plan, including to make the substantial purchase price payments for Bitcoin mining equipment totaling $270,000,000 which are payable in installments through September 2022, and any failure to raise such capital as and when intended or at all will materially harm our business and prospects.

As we transition our cryptocurrency mining operations from Ethereum mining to Bitcoin mining, we may be unsuccessful in obtaining and operating equipment and infrastructure four our Bitcoin mining operations in the timeframe intended, on favorable terms or at all, and there is limited information available on which to evaluate our prospects.

We will need significant additional capital to execute our business plan, including to make the substantial purchase price payments for Bitcoin mining equipment, and any failure to raise such capital as and when intended or at all will materially harm our business and prospects.

We may be unable to raise the capital needed to continue and grow our operations, and if we do raise the capital sought the securities that we issue may have a dilutive effect on our stockholders, a depressive effect on our stock price and/or a restrictive effect on our ability to execute our business plan and growth strategy.

Our auditors have expressed substantial doubt about our ability to continue as a going concern.

We will need to incur significant costs to transition to and maintain and operate Bitcoin mining equipment to replace our current equipment which is designed to mine Ethereum, including sourcing sufficient electricity on reasonable terms which we may be unable to do now or in the future.

We will need to incur significant costs to transition to, acquire and

maintain and operate Bitcoin mining equipment to replace our prior equipment which was designed to mine Ethereum, including funding

contracts to source sufficient electricity on reasonable terms which we may be unable to do now or in the future.

Our mining operating costs, including the costs to operate, maintain, repair and replace our mining equipment, have historically outpaced our mining revenues, which has and could continue to put a strain on our business or increase our losses.

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Our reliance on third party “mining pools,” which enable us to cooperate with other Bitcoin mining enterprises to receive Bitcoin with less variance in probability of reward by sharing Bitcoin earned pro rata based on contribution to a block solved, subjects us to risks of inaccurate sharing of rewards and the loss of other at-will participants in the pool.

We may become subject to an uncertain and rapidly evolving regulatory landscape and any adverse changes to, or our failure to comply with, any laws and regulations, including those imposing restrictions or bans on Bitcoin mining due to concerns about high electrical power usage, could adversely affect our business.

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

We and the industry in which we operate are subject to an uncertain and rapidly evolving regulatory landscape and any adverse changes to, or our failure to comply with, any laws and regulations, including those imposing restrictions or bans on Bitcoin mining due to concerns about high electrical power usage, or any regulatory developments concerning the status of Bitcoin as a security, could adversely affect our business.

Banks and financial institutions may not provide banking services, or may cut off services or access to capital, to businesses that engage in cryptocurrency-related activities, or may otherwise by subject to adverse developments arising from cryptocurrencies or general financial or economic conditions.

Our stock price is subject to significant volatility due to a variety of factors, many of which are beyond our control, including its status as a “penny stock,” the fact that it is not listed on a national securities exchange, and its potential connection to the price of Bitcoin or other cryptocurrencies, which could adversely affect investors.

Because we were a shell company until January 31, 2022, stockholders cannot rely on the provisions of Rule 144 for the resale of their shares until certain conditions are met.

We have not paid cash dividends to our stockholders and do not intend to do so in the foreseeable future.

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lose all or part of their investment.

Risks Related to Our Cryptocurrency Mining Business

Risks Related to Our Cryptocurrency Mining Business and Financial

We will need significant additional capital

to execute our business plan, which includes purchasing, installing and operating Bitcoin mining equipment to replace our current Ethereum

to execute our business plan, which includes purchasing, installing and operating Bitcoin mining equipment to replace our prior Ethereum

mining operations, and any failure to raise such capital as and when intended or at all will materially harm our business and prospectus.

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limited access to sufficient mining facilities, is also costly.

We have executed a purchase agreement with a supplier to provide us with

Katena K10 Bitcoin miners having a combined hash rate of 10,000,000 PH/s, however the total purchase price is $270,000,000, of which we

have only paid the supplier $1,250,000.

Further, we are past due on the payment of an $8,000,000 installment of the purchase price, with

future periodic installments in increasing increments continuing to come due through September 2022.

The miners are scheduled to be delivered

in quarterly increments from September 2022 through September 2023.

Because we failed to make a payment under the agreement when due,

and will likely continue to be behind on future payments unless and until we can raise sufficient capital, the agreement allows the supplier

to terminate the agreement, with any amounts we have paid as of such termination date being non-refundable.

Further, if the agreement

is terminated by the supplier for our failure to timely make one or more payments, by the agreement’s terms the supplier will no

longer be obligated to deliver the equipment.

If we are unable to raise these amounts for any reason, any amounts paid towards the purchase

price of undelivered equipment will be lost if the purchase agreement is terminated, and we will be forced to incur additional costs to

locate and obtain miners from another source, in which case our results of operation will be harmed and our future prospects will be hindered.

Any delay or inability to raise and deploy the necessary capital in a timely manner, on favorable terms, or at all, will have the effect

of delaying or preventing us from executing our business plan and meeting our growth objectives, which could materially harm your investment

We have executed purchase orders to provide us with Bitcoin miners.

and until we can raise sufficient capital, we are unable to complete any orders.

If we are unable to raise these amounts for any reason,

any amounts paid towards the purchase price of undelivered equipment will be lost if the purchase agreement is terminated, and we will

be forced to incur additional costs to locate and obtain miners from another source, in which case our results of operation will be harmed

and our future prospects will be hindered.

Any delay or inability to raise and deploy the necessary capital in a timely manner, on favorable

terms, or at all, will have the effect of delaying or preventing us from executing our business plan and meeting our growth objectives,

which could materially harm your investment in us.

We may be unable to raise additional capital needed to grow our

We will likely continue to operate at a loss,

at least until our business strategy is implemented, or if Bitcoin or other cryptocurrency prices decline, and we expect to need to raise

additional capital to expand our operations and pursue our growth strategies, including the acquisition of new or additional miners to

commence Bitcoin mining as planned, and to respond to competitive pressures or unanticipated working capital requirements.

be able to obtain additional debt or equity financing on favorable terms, if at all, which could impair our growth and adversely affect

our existing operations.

If we raise additional equity financing, our shareholders may experience significant dilution of their ownership

interests, and the per share value of our common stock could decline.

Furthermore, if we engage in additional debt financing, the holders

of such debt would have priority over the holders of common stock on order of liquidation preference.

We may be required to accept terms

that restrict our ability to incur additional indebtedness or take other actions including terms that require us to maintain specified

liquidity or other ratios that could otherwise not be in the interests of our shareholders.

We will likely continue to operate at a

loss, at least until our business strategy is implemented, or if Bitcoin or other cryptocurrency prices decline, and we expect to

need to raise additional capital to expand our operations and pursue our growth strategies, including the acquisition of new or

additional miners to commence Bitcoin mining as planned, and to respond to competitive pressures or unanticipated working capital

requirements.

We may not be able to obtain adequate debt or equity financing on favorable terms, if at all, which could impair our

growth and adversely affect our plan of operations.

We need significant additional capital to pay for new Bitcoin miners.

raise additional equity financing, our shareholders may experience significant dilution of their ownership interests, and the per

share value of our common stock could decline.

Furthermore, with respect to the recent loan agreement and any additional debt

financing, the holders of such debt would have priority over the holders of common stock on order of liquidation preference.

be required to accept terms that restrict our ability to incur additional indebtedness or take other actions including terms that

require us to maintain specified liquidity or other ratios that could otherwise not be in the interests of our shareholders.

Even if we are able to raise sufficient capital,

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to provide us with the miners, who may require us to agree to excessive prices or fees, or may fail to deliver the purchased equipment

Additionally, we will need skilled labor to remove the Ethereum mining equipment we currently operate and replace it with

Bitcoin mining equipment.

Also, because Bitcoin mining uses a proof of work method which generally requirements more energy than the proof

of stake system employed by Ethereum’s blockchain, our hosts’ current electricity supply may be inadequate to launch our Bitcoin

mining as envisioned without added costs to us, if at all.

Any unexpected delays or heightened costs will adversely effect our results

of operation both by extending the period of time in which we are not mining cryptocurrencies at our maximum potential capacity and increasing

the costs of operating.

Further, because of the volatile nature of the cryptocurrency markets, including the prices of Bitcoin and Ethereum,

any such delay could prevent us from mining and selling Bitcoin at higher prices.

For example, in early 2022 the price of Bitcoin declined

by over $12,000 in a matter of weeks.

If we are unable to purchase, deploy and operate Bitcoin mining equipment in sufficient quantities,

at reasonable prices or on the delivery schedules that meet our business needs, or at all, it could have a material adverse effect on

our business, results of operations and future prospects.

Additionally, we will need skilled labor to install Bitcoin mining equipment.

Also, because Bitcoin mining uses a proof of

work method which requires more energy than the proof of stake system employed by Ethereum’s blockchain, our hosts’ current

electricity supply may be inadequate to launch our Bitcoin mining as envisioned without added costs to us, if at all.

Any unexpected delays

or heightened costs will adversely effect our results of operation both by extending the period of time in which we are not mining cryptocurrencies

at our maximum potential capacity and increasing the costs of operating.

Further, because of the volatile nature of the cryptocurrency

markets, including the prices of Bitcoin and Ethereum, any such delay could prevent us from mining and selling Bitcoin at higher prices.

For example, in early 2022 the price of Bitcoin declined by over $12,000 in a matter of weeks, and since the 2022 declines, the price

of Bitcoin has yet to return to its previous high.

If we are unable to purchase, deploy and operate Bitcoin mining equipment in sufficient

quantities, at reasonable prices or on the delivery schedules that meet our business needs, or at all, it could have a material adverse

effect on our business, results of operations and future prospects.

We are at an early stage of development of our cryptocurrency mining

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Until February 2021, we had no operations.

we began generating revenue in 2021 from our cryptocurrency mining activities, we are subject to the risks and uncertainties of a new

business, including the risk that we may never develop, complete development or market any of our proposed services or be able to liquidate

our cryptocurrencies.

Accordingly, we have only a limited history upon which an evaluation of our prospects and future performance can

we began generating revenue in 2021 and early 2022 from our Ethereum mining activities, we since ceased mining Ethereum and are not actively

mining any cryptocurrency or otherwise generating revenue, and will not unless and until we obtain sufficient capital and otherwise can

execute our plan to install and operate Bitcoin mining equipment and infrastructure.

Given these developments, even if we can launch a

Bitcoin mining enterprise to replace our prior Ethereum mining focus, we are subject to the risks and uncertainties of a new business,

including the risk that we may never develop, complete development or market any of our proposed services or be able to liquidate our

cryptocurrencies.

Accordingly, we have only a limited history upon which an evaluation of our prospects and future performance can be

If we are unable to increase our generation of revenue, we will not become profitable, and we may be unable to continue our operations.

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we may not be able to achieve or sustain profitability.

To date, we have mainly mined Ethereum.

forward, our primary focus is on mining Bitcoin, and those operations are expected to be located in North Carolina.

Our current strategy

will continue to expose us to the numerous risks and volatility associated within the cryptocurrency sector, including due to the high

costs of purchasing miners and sourcing power for them, while monitoring the price of Bitcoin, which has historically been volatile.

we have experienced recurring losses and negative cash flows from operations.

To date, we have relied on debt or equity financings to

fund our operations, and if the price of our cryptocurrencies are not sufficiently high to enable us to sell the cryptocurrencies we mine

at prices above our cost to mine it, then we are likely to continue to be unable to fund our operations without raising additional capital.

Further, even if prices are sufficiently high for our mining activities, we are likely to need to raise additional capital to fund the

acquisition of new miners to repair or replace our existing miners and expand our number of miners to be competitive.

We expect to incur

additional net losses over the next several years as we seek to expand operations.

The amount of future losses and when, if ever, we will

achieve profitability are uncertain.

If we are unsuccessful at executing on our business plan, our business, prospects, and results of

operations may be materially adversely affected.

To date, we have mainly mined Ethereum, which

mining ceased in September 2022.

Moving forward, and subject to certain contingencies described elsewhere in these Risk Factors and certain

other sections of this Report, our primary focus is on mining Bitcoin, and those operations are expected to be located outside of the

United States.

Our current strategy will continue to expose us to the numerous risks and volatility associated within the cryptocurrency

sector, including due to the high costs of purchasing miners and sourcing power for them, while monitoring the price of Bitcoin, which

has historically been volatile.

Further, we have experienced recurring losses and negative cash flows from operations.

To date, we have

relied on debt or equity financings to fund our operations, and if the price of our cryptocurrencies are not sufficiently high to enable

us to sell the cryptocurrencies we mine at prices above our cost to mine it, then we are likely to continue to be unable to fund our operations

without raising additional capital.

Further, even if prices are sufficiently high for our mining activities, we are likely to need to

raise additional capital to fund the acquisition of new miners to repair or replace our existing miners and expand our number of miners

to be competitive.

We expect to incur additional net losses over the next several years as we seek to expand operations.

The amount of

future losses and when, if ever, we will achieve profitability are uncertain.

If we are unsuccessful at executing on our business plan,

our business, prospects, and results of operations may be materially adversely affected.

Our auditors have issued a “going concern”

audit opinion.

Our independent auditors have indicated in

their report on our December 31, 2021 financial statements that there is substantial doubt about our ability to continue as a going

A “going concern” opinion indicates that the financial statements have been prepared assuming that we will

continue as a going concern for one year from the date the financial statements are issued and do not include any adjustments to

reflect the possible future effects on the recoverability and classification of assets, or the amounts and classification of

liabilities that may result if we do not continue as a going concern.

Therefore, you should not rely on our balance sheet as an

indication of the amount of proceeds that would be available to satisfy claims of creditors, and potentially be available for

distribution to shareholders, in the event of liquidation.

Our independent auditors have indicated in their

report on our December 31, 2022 financial statements that there is substantial doubt about our ability to continue as a going concern.

A “going concern” opinion indicates that the financial statements have been prepared assuming that we will continue as a going

concern for one year from the date the financial statements are issued and do not include any adjustments to reflect the possible future

effects on the recoverability and classification of assets, or the amounts and classification of liabilities that may result if we do

not continue as a going concern.

Therefore, you should not rely on our balance sheet as an indication of the amount of proceeds that would

be available to satisfy claims of creditors, and potentially be available for distribution to shareholders, in the event of liquidation.

Our mining operating costs have historically

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Our mining operations can only be successful and

ultimately profitable if the costs, including hardware and electricity costs, associated with mining Bitcoin, Ethereum and other cryptocurrencies

are lower than the price for which we mine when we sell them.

Our miners are subject to ordinary wear and tear from operation and may

also face more significant malfunctions caused by factors which may be beyond our control.

For example, approximately 10% of our miners

have experienced glitches and defects and as a result have seen either limitations on mining capabilities or outright inability to mine,

such that they had to be or will have to be replaced or repaired.

The result of this development has not only been increased costs to

us, but also a reduced ability to generate revenue while these miners were not operating, whether because they were under repair and/or

failing to operate at their optimal hash rate.

Circumstances such as these, or a general need to replace outdated miners in the future,

ultimately profitable if the costs, including hardware and electricity costs, associated with mining Bitcoin are lower than the price

for which we mine when we sell them.

Our miners are subject to ordinary wear and tear from operation and may also face more significant

malfunctions caused by factors which may be beyond our control.

For example, approximately 10% of our Ethereum miners experienced glitches

and defects and as a result demonstrated either limitations on mining capabilities or outright inability to mine, such that they had to

be replaced or repaired, or otherwise operated at the lower production levels.

The result of this development was not only increased costs

to us, but also a reduced ability to generate revenue while these miners were not operating.

Circumstances such as these, or a general

need to replace outdated miners in the future, which may arise if and when we launch Bitcoin mining operations which rely on similar equipment,

are highly cost intensive and can be a serious hindrance on our mining operations and ability to generate revenue or obtain profitability.

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strategy and/or the cryptocurrency industry evolves, we may need to acquire newer models of miners to remain competitive in the market.

For example, as discussed above we will need to obtain new miners in order to mine Bitcoin as planned.

We intend to purchase and install

Katena K10 miners, although we have encountered and expect to continue to face challenges in paying purchase price installments for these

miners under our purchase agreement.

Certain models of Bitcoin miners such as the Bitmain S17 model have been subject to defects diminishing

our even eliminating their mining efficacy.

Further, over time, we may replace those miners which are no longer functional or efficient

or powerful enough with new miners purchased from third-party manufacturers, the cost of which may be higher than what we spent on prior

models and/or such that we will need to raise more capital to do so.

For instance, the price of Bitcoin miners has historically been somewhat

correlated to the price of Bitcoin, which has appreciated in recent years.

Depending on the price of new miners and our operational needs

at the time we decide to replace miners in the future, we may have to do so at higher costs than we could have previously, which would

add to our losses.

Alternatively, even absent defects or reductions in computing power, mining machine models are upgraded frequently,

and we are and will continue to be subject to either higher competitive pressure as a result, or will be forced to expend large amounts

of capital to remain competitive and maintain optimal hash rates.

For example, as discussed above we will need to obtain new miners in order to mine Bitcoin as planned, although we have encountered and

expect to continue to face challenges in paying purchase price installments for these miners under our purchase orders.

Certain models

of Bitcoin miners have been subject to defects diminishing our even eliminating their mining efficacy.

Further, over time, we may replace

those miners which are no longer functional or efficient or powerful enough with new miners purchased from third-party manufacturers,

the cost of which may be higher than what we spent on prior models and/or such that we will need to raise more capital to do so.

For instance,

the price of Bitcoin miners has historically been somewhat correlated to the price of Bitcoin, which has appreciated in recent years.

Depending on the price of new miners and our operational needs at the time we decide to replace miners in the future, we may have to do

so at higher costs than we could have previously, which would add to our losses.

Alternatively, even absent defects or reductions in computing

power, mining machine models are upgraded frequently, and we are and will continue to be subject to either higher competitive pressure

as a result, or will be forced to expend large amounts of capital to remain competitive and maintain optimal hash rates.

Inevitably, our older models will need to be repaired

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We will need new mining equipment to further our

operations, both to implement our short-term business plan of shifting to Bitcoin mining and to address potential issues such as ordinary

wear and tear and defects which may arise in the future.

Many of the competitors in our industry have also been purchasing mining equipment

at scale, which has caused a world-wide shortage of mining equipment and components used to produce them, as well as delayed delivery

schedules for new miner purchases.

There can be no assurances the mining equipment manufacturers on which we will rely will be able to

keep pace with the surge in demand for mining equipment when we obtain, upgrade and/or expand upon our current miners.

The supply chain

disruptions we are facing may adversely affect us including the shortages of transformers needed to power our miners.

Additionally, the

supply of the materials used to produce miners, such as the application-specific integrated circuit (“ASIC”) computer

chips that are the primary feature in their computing power, may become subject to shortages, which could also either increase the cost

beyond what we can reasonably afford or reduce their availability without unreasonable delay or at all.

It is uncertain how manufacturers

will respond to these trends and whether they can deliver on the schedules promised to any or all of their customers in the future.

the event manufacturers of mining equipment or component parts or materials are not able to keep pace with demand or avoid supply shortages,

we may not be able to purchase such products in sufficient quantities, at reasonable prices or on the delivery schedules that meet our

business needs, which could have a material adverse effect on our business and results of operations.

operations, both to implement business plan of shifting to Bitcoin mining and to address potential issues such as ordinary wear and tear

and defects which may arise in the future.

Many of the competitors in our industry have also been purchasing mining equipment at scale,

which has caused a world-wide shortage of mining equipment and components used to produce them, as well as delayed delivery schedules

for new miner purchases.

There can be no assurances the mining equipment manufacturers on which we will rely will be able to keep pace

with the surge in demand for mining equipment when we obtain, upgrade and/or expand upon our current miners.

Supply chain disruptions

may adversely affect us, including shortages of transformers needed to power our miners.

Additionally, the supply of the materials used

to produce miners, such as the application-specific integrated circuit (“ASIC”) computer chips that are the primary feature

in their computing power, may become subject to shortages, which could also either increase the cost beyond what we can reasonably afford

or reduce their availability without unreasonable delay or at all.

It is uncertain how manufacturers will respond to these trends and

whether they can deliver on the schedules promised to any or all of their customers in the future.

In the event manufacturers of mining

equipment or component parts or materials are not able to keep pace with demand or avoid supply shortages, we may not be able to purchase

such products in sufficient quantities, at reasonable prices or on the delivery schedules that meet our business needs, which could have

a material adverse effect on our business and results of operations.

To the extent that the profit margins of Bitcoin

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until mining operations with higher operating costs become unprofitable forcing them to reduce mining power or cease mining operations

Because the new miners we plan to obtain will

be designed specifically to mine Bitcoin, our future success will depend in large part upon the value of Bitcoin, and any sustained decline

in its value could adversely affect our business and results of operations.

Our operating results will depend in large part

upon the value of Bitcoin because it is the primary cryptocurrency we intend to mine moving forward, assuming we can raise the necessary

capital to obtain and install the Bitcoin mining equipment.

Specifically, our revenues from our Bitcoin mining operations will be based

upon two factors:

Because of our focus on Bitcoin mining and

the cryptocurrency industry in general, our future success will depend upon the value of Bitcoin and on the cryptocurrency markets, and

any sustained decline in its value could adversely affect our business and results of operations.

Our operating results will depend upon the value

of Bitcoin because it is the primary cryptocurrency we intend to mine moving forward, assuming we can raise the necessary capital to obtain

and install the Bitcoin mining equipment.

Specifically, our revenues from our Bitcoin mining operations will be based upon two factors:

(1) the number of Bitcoin rewards we successfully mine and (2) the value and liquidity of Bitcoin.

This means that our

operating results will be subject to swings based upon increases or decreases in the value of Bitcoin.

Furthermore, our business strategy

focuses solely on producing Bitcoin (as opposed to other cryptocurrencies).

Previously, we focused solely on mining Ethereum as that was

the only mining equipment available to us.

If other cryptocurrencies overtake Bitcoin in terms of acceptance, the value of Bitcoin could

Further, if Bitcoin were to switch its proof of work algorithm from SHA-256 to another algorithm for which our miners (which

we have contracts to acquire) would not be suited or if the value of Bitcoin were to decline for other reasons, particularly if such decline

were significant or over an extended period of time, we would likely incur very significant costs in retooling or replacing our existing

miners with miners better suited for this new protocols and our operating results could be adversely affected.

This could result in a

material adverse effect on our ability to continue as a going concern or to pursue our business strategy at all, which could have a material

adverse effect on our business, prospects or operations, and thus harm investors.

This means that our operating results

will be subject to swings based upon increases or decreases in the value of Bitcoin.

Furthermore, our business strategy focuses solely

on producing Bitcoin (as opposed to other cryptocurrencies).

Previously, we focused solely on mining Ethereum as that was the only mining

equipment available to us.

If other cryptocurrencies overtake Bitcoin in terms of acceptance, the value of Bitcoin could decline.

The cryptocurrency industry is characterized by

a high level of volatility, and the collapse in the prices of most popular cryptocurrencies such as Bitcoin and Ethereum has cast doubt

on the future of cryptocurrency-focused businesses such as ours.

This trend was further impacted by the recent controversy and failure

surrounding FTX, a cryptocurrency exchange that collapsed after its Chief Executive Officer was accused of fraud and misappropriation

of corporate funds in a manner that has been compared to both Enron and Madoff.

Since then certain other cryptocurrency-focused companies

have filed for bankruptcy, and more recently in March 2023 two major U.S.

banks with involvement in cryptocurrencies collapsed.

thus far has been a decline in the cryptocurrencies markets and in the public’s perception of the industry.

In addition, following

the FTX controversy, regulators began reviewing cryptocurrency-focused companies and their operations with greater scrutiny, and have

brought enforcement actions seeking to restrict or cease such activities.

If we are unable to separate ourselves from the

recent adverse developments in the cryptocurrency space, or otherwise develop and execute on our business plan in a manner that enables

us to establish and maintain material revenue sources, our business and financial condition could be materially adversely affected.

a perceived lack of stability in the cryptocurrency markets and the closure or suspension shutdown of cryptocurrency exchanges and networks

due to business failure, hackers or malware, government-mandated regulation, or fraud, may reduce confidence in cryptocurrency networks

and result in greater volatility in cryptocurrency values, including Bitcoin, and on our results of operations.

Further, our focus on

cryptocurrency, and the above-described past and/or any future adverse developments with respect to our operations or industry, could

result in declines or volatility in our stock price, difficulty or inability to obtain adequate financing as needed, on favorable terms

or at all, the risk of increased losses or asset impairments, and the potential for legal proceedings and reputational harm which could

arise from any of the foregoing.

Such external developments have the potential to affect us even if we believe our financial condition,

operations and infrastructure our secure.

These potential consequences could materially adversely affect an investment in us.

Bitcoin is subject to halving, meaning that

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our ability to operate.

Since August 1, 2017, Bitcoin’s blockchain was forked multiple times creating alternative versions

of the cryptocurrency such as Bitcoin Cash, Bitcoin Gold and Bitcoin SV.

The forks resulted in a new blockchain being created with

a shared history, and a new path forward.

The value of the newly created versions including Bitcoin Cash, Bitcoin Gold and Bitcoin SV

may or may not have value in the long run and may affect the price of Bitcoin if interest is shifted away from Bitcoin to the newly created

cryptocurrencies.

The value of Bitcoin after the creation of a fork is subject to many factors including the value of the fork product,

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

As such, the value of Bitcoin could be

materially reduced if existing and future forks have a negative effect on Bitcoin’s value.

Bitcoin’s blockchain was forked multiple times creating alternative versions of the cryptocurrency such

as Bitcoin Cash, Bitcoin Gold and Bitcoin SV.

The forks resulted in a new blockchain being created with a shared history, and a new

path forward.

The value of the newly created versions including Bitcoin Cash, Bitcoin Gold and Bitcoin SV may or may not have value in

the long run and may affect the price of Bitcoin if interest is shifted away from Bitcoin to the newly created cryptocurrencies.

of Bitcoin after the creation of a fork is subject to many factors including the value of the fork product, market reaction to the creation

of the fork product, and the occurrence of forks in the future.

As such, the value of Bitcoin could be materially reduced if existing

and future forks have a negative effect on Bitcoin’s value.

Our reliance primarily on a single model of miner may subject our

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and our technology is critical to our operations.

Because we currently plan on using Katena, Bitmain and Whatsminer models for mining

Bitcoin models for mining Bitcoin, if there are issues with those machines, such as a design flaw in the ASIC chips they employ, our entire

system could be affected.

This would result in both lost revenue from inhibited mining operations and increased costs to repair and replace

our mining infrastructure.

Therefore, any disruption in our ability to continue mining, even with a portion of our total miners, could

result in a material reduction to Bitcoin reward yields which would harm our business.

Any weakness, flaw, or error which arises with

our miners such similar to or more severe and widespread than the problems we experienced with our miners may affect all or a large portion

of our miners;

therefore, if a defect or other flaw exists, our entire mine could go offline simultaneously.

Any such interruption, delay

or inability to continue operations could result in financial losses, a decrease in the trading price of our common stock and reputational

harm, in which case you could lose some or all of your investment.

We currently plan on using Katena and MicroBT Whatsminer models for mining Bitcoin.

If there are issues with those machines, such as a design flaw in the ASIC chips they employ, our entire system could be affected.

would result in both lost revenue from inhibited mining operations and increased costs to repair and replace our mining infrastructure.

Therefore, any disruption in our ability to continue mining, even with a portion of our total miners, could result in a material reduction

to Bitcoin reward yields which would harm our business.

Any weakness, flaw, or error which arises with our miners such similar to or more

severe and widespread than the problems we experienced with our miners may affect all or a large portion of our miners;

therefore, if

a defect or other flaw exists, our entire mine could go offline simultaneously.

Any such interruption, delay or inability to continue

operations could result in financial losses, a decrease in the trading price of our common stock and reputational harm, in which case

you could lose some or all of your investment.

Because of the reliance on third-party mining

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adversely affect our business and the value of our stock.

As previously mentioned, we are winding down our

Ethereum mining operations and solely focusing on Bitcoin.

There is a high possibility of Ethereum mining algorithms transitioning to

proof of stake validation in the near future.

Proof of stake is an alternative method in validating cryptocurrency transactions that is

less dependent on the consumption of electricity.

Should the algorithm, whether it relates to Bitcoin or Ethereum, or other cryptocurrencies

we mine shift from a proof of work validation method to a proof of stake method, mining would likely require less energy, which may render

any company that maintains advantages in the current climate (for example, from lower priced electricity, processing, real estate, or

hosting) less competitive.

We, as a result of our efforts to optimize and improve the efficiency of our mining operations, may be exposed

to the risk in the future of losing the relative competitive advantage we may have over some of our competitors as a result, and may be

negatively impacted if a switch to proof of stake validation were to occur.

This is because we are investing heavily in equipment based

on the mining algorithms method of validation.

Such events could have a material adverse effect on our ability to continue as a going

concern, which could have a material adverse effect on our business, prospects or results of operations, the value of Bitcoin, Ethereum

or other cryptocurrencies we mine or otherwise acquire and your investment in us.

As previously mentioned, we ceased our Ethereum

mining operations and now focus solely on Bitcoin.

There is a possibility of Bitcoin mining algorithms transitioning to proof of stake

validation in the future.

Proof of stake is an alternative method in validating cryptocurrency transactions that is less dependent on

the consumption of electricity.

Should the algorithm, whether it relates to Bitcoin or Ethereum, or other cryptocurrencies we mine shift

from a proof of work validation method to a proof of stake method, mining would likely require less energy, which may render any company

that maintains advantages in the current climate (for example, from lower priced electricity, processing, real estate, or hosting) less

We, as a result of our efforts to optimize and improve the efficiency of our mining operations, may be exposed to the risk

in the future of losing the relative competitive advantage we may have over some of our competitors as a result, and may be negatively

impacted if a switch to proof of stake validation were to occur.

This is because we are investing heavily in equipment based on the mining

algorithms method of validation.

Such events could have a material adverse effect on our ability to continue as a going concern, which

could have a material adverse effect on our business, prospects or results of operations, the value of Bitcoin, Ethereum or other cryptocurrencies

we mine or otherwise acquire and your investment in us.

We may be accused of infringing intellectual

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property we do not own in providing ecommerce services to other businesses and individuals under commercial agreements.

Risks Related to Our Dependence on Bitcoin

Risks Related to Our Reliance on Bitcoin and

the Cryptocurrency Industry

Because of our focus on Bitcoin mining, the

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price, making their market prices more volatile or creating “bubble” type risks for the trading price of Bitcoin.

During the year ended December 31, 2020,

the trading price of Bitcoin appreciated significantly, from a low closing value of approximately $5,000 per Bitcoin in March 2020, to

a high closing value of approximately $29,400 per Bitcoin in December 2020.

During 2021 the trading price of Bitcoin has been volatile

with a high of approximately $66,999 on October 19, 2021 and lows of $33,077 on July 12, 2021 and $35,513 on February 2,

On November 19, 2021 the price was as low as $55,936, down from as high as $66,125 earlier in the week before recovering slightly.

This volatility was reflected on September 24, 2021, when at 1:30 pm Eastern Time, the price of Bitcoin was approximately $41,151,

down almost $4,000 from earlier in the day following news of China’s blanket ban on cryptocurrencies and again in late 2021

and early 2022 when it declined from $66,938 on November 9, 2021 to as low as $33,113.50 on January 24, 2022.

In 2017, the trading price

of Bitcoin increased to nearly $20,000 per Bitcoin (then an all-time high), only to decline significantly and sharply to a low of

approximately $3,400 per Bitcoin in December 2018.

There can be no assurances that similar fluctuations in the trading price of Bitcoin

will not occur in the future.

Accordingly, since our revenue will depend on the price of Bitcoin, and the trading price of our securities

may therefore at times be connected to the trading price of Bitcoin, if the trading price of Bitcoin again experiences a significant decline,

we could experience a similar decline in revenue and/or in the trading price for shares of our common stock.

If this occurs, you may lose

some or all of your investment.

The markets for Bitcoin, Ethereum and other

cryptocurrencies we mine and the existing markets may be under regulated and, as a result, the market price of our cryptocurrency may

be subject to significant volatility or manipulation, which could decrease consumer confidence in cryptocurrencies and have a materially

adverse effect on our business and results of operations.

During Calendar year 2020, the trading price of

Bitcoin appreciated significantly, from a low closing value of approximately $5,000 per Bitcoin in March 2020, to a high closing value

of approximately $29,400 per Bitcoin in December 2020.

From 2021 to present the trading price of Bitcoin was volatile with a high

of approximately $68,789 in November 2021 and a low of approximately $15,460 in November 2022.

There can be no assurances that similar

fluctuations in the trading price of Bitcoin will not occur in the future.

Accordingly, since our revenue will depend on the price of

Bitcoin, and the trading price of our securities may therefore at times be connected to the trading price of Bitcoin, if the trading price

of Bitcoin again experiences a significant decline, we could experience a similar decline in revenue and/or in the trading price for shares

of our common stock.

If this occurs, you may lose some or all of your investment.

Recent events have increased the likelihood

the US federal and state legislatures and regulatory agencies will enact laws and regulations to regulate cryptocurrencies and intermediaries,

and could have other adverse consequences.

The collapse of Terra USD and Luna and the bankruptcy

filings of FTX and its subsidiaries, Three Arrows Capital, Celsius Network, Voyager Digital, Genesis Global and BlockFi have resulted

in calls for heightened scrutiny and regulation of the cryptocurrency industry, with a specific focus on cryptocurrency exchanges, platforms,

and custodians.

Federal and state legislatures and regulatory agencies are expected to introduce and enact new laws and regulations to

regulate cryptocurrency intermediaries, such as cryptocurrency exchanges and custodians.

The March 2023 collapses of Silicon Valley Bank

and Signature Bank may amplify and/or accelerate these trends.

regulatory regime - namely the Federal Reserve Board, U.S.

and certain U.S.

agencies (e.g., the SEC, the CFTC, FinCEN, the Office of the Comptroller of the Currency, the Federal Deposit Insurance

Corporation, and the Federal Bureau of Investigation) as well as the White House have issued reports and releases concerning cryptocurrencies,

including Bitcoin and cryptocurrency markets.

Further, in 2023 the House of Representatives formed two new subcommittees:

Assets, Financial Technology and Inclusion Subcommittee and the Commodity Markets, Digital Assets, and Rural Development Subcommittee,

each of which were formed in part to analyze issues concerning cryptocurrencies and demonstrate a legislative intent to develop and consider

the adoption of federal legislation designed to address the perceived need for regulation of and concerns surrounding the cryptocurrency

However, the extent and content of any forthcoming laws and regulations are not yet ascertainable with certainty, and it may

not be ascertainable in the near future.

A divided Congress makes any prediction difficult.

Further the SEC seems to have changed tactics

and in early 2023 it sued multiple cryptocurrency companies for selling unregistered securities.

We cannot predict how these and other

related events will affect us.

We cannot assure you that future legislation or regulation will not have an adverse effect upon us.

is possible that new laws and increased regulation and regulatory scrutiny may require the Company to comply with certain regulatory regimes,

which could result in new costs for the Company.

The Company may have to devote increased time and attention to regulatory matters, which

could increase costs to the Company.

New laws, regulations, and regulatory actions could significantly restrict or eliminate the market

for, or uses of, cryptocurrencies including Bitcoin, which could have a negative effect on the value of Bitcoin, which in turn would have

a negative effect on the value of the Company’s shares.

These events are continuing to develop and it

is not possible to predict, at this time, every risk that they may pose to us, our service providers, or the cryptocurrency industry as

A perceived lack of stability in the cryptocurrency market and the closure or temporary shutdown of cryptocurrency exchanges

and other cryptocurrency-focused enterprises due to business failure, hackers or malware, government-mandated regulation, or fraud, may

reduce confidence in cryptocurrency networks and result in greater volatility in cryptocurrency values.

Further, these adverse developments

and public controversies could result in diminished public perception of our industry, and in turn of us, rendering it more difficult

to raise capital or otherwise further our or our investors’ interests.

Any of these potential consequences could materially adversely

affect us and/or an investment in us.

The markets for Bitcoin may be under-regulated

and, as a result, the market price of our cryptocurrency may be subject to significant volatility or manipulation, which could decrease

consumer confidence in cryptocurrencies and have a materially adverse effect on our business and results of operations.

Cryptocurrencies that are represented and trade

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operations and potentially the value of any Bitcoin or other cryptocurrencies we mine or otherwise acquire.

If we undertake to mine digital assets other

than Bitcoin and Ethereum, such digital assets may be deemed to be securities by regulators, notwithstanding any assessment by us and/or

our advisors to the contrary.

While we plan to mine only Bitcoin and, to a much

lesser extent, Ethereum for the foreseeable future, we may choose to mine other cryptocurrencies.

We intend to only mine cryptocurrencies

that are not securities, and to consult counsel prior to attempting to mine any cryptocurrency other than Bitcoin and Ethereum in order

to avoid inadvertently dealing in a cryptocurrency which may be deemed a security.

However, the processes employed for determining whether

particular digital assets are securities within the meaning of U.S.

federal securities laws involve complex legal questions, are risk

based assessments and are not a legal standard or binding on the SEC or other regulators.

Because of these and other characteristics,

the analysis of whether a digital asset is a security is subject to substantial uncertainty.

Therefore, if we begin mining digital assets

other than Bitcoin or Ethereum in the future and, notwithstanding advice form securities counsel to the contrary, those digital assets

are found by regulators to be securities, we could face significant legal costs in defending our position and any enforcement or civil

claims which may result.

Additionally, if our assessment with respect to the digital asset in question is incorrect, we could be found

to have acted in violation of federal or state securities laws, and could as a result become subject to fines, sanctions, civil damages,

or criminal penalties, any of which may have a material adverse effect on our business, financial condition and results of operations.

A particular cryptocurrency’s status as

a “security” in any relevant jurisdiction is subject to a high degree of uncertainty, with a growing number of regulators

taking the position that certain cryptocurrencies are securities and bringing enforcement actions accordingly, and if we are unable to

properly characterize a cryptocurrency or comply with the applicable regulatory requirements, we may be subject to regulatory scrutiny,

investigations, fines, and other penalties, which may adversely affect our business, operating results, and financial condition.

While in February 2023 the SEC Chairman reiterated

his position that Bitcoin is not a security, the SEC and its staff have taken the position that every other cryptocurrency falls within

the definition of a “security” under the U.S.

federal securities laws.

Further, while we focus on Bitcoin, the SEC’s

views or policies with respect to Bitcoin and the agency’s regulatory authority over it could change over time, and we could in

the future expand our operations to mining or conducting other forms of business with cryptocurrencies other than Bitcoin, particularly

given the early stages of our operational development.

The legal test for determining whether any given

cryptocurrency is a security is a highly complex, fact-driven analysis that evolves over time, and the outcome is difficult to predict.

The SEC generally does not provide advance guidance or confirmation on the status of any particular cryptocurrency as a security.

the SEC’s views in this area have evolved over time, and the SEC’s Enforcement Division have recently demonstrated a willingness

and intention to bring actions against businesses with a cryptocurrency focus, including for failure to register transactions involving

cryptocurrencies under the federal securities laws by deeming such cryptocurrencies to be securities.

For example, in February 2023 the

SEC charged Kraken with failing to register the offer and sale of its staking-as-a-service program, whereby investors transfer cryptocurrencies

to Kraken for staking in exchange for advertised annual investment returns.

Kraken settled this action by agreeing to cease its staking

business and to pay $30 million in disgorgement, prejudgment interest and civil penalties.

Similarly, in March 2023 the New York Attorney

General became the first U.S.

regulator to claim in court that Ethereum, the cryptocurrency we used to mine, is a security in its lawsuit

against KuCoin, a cryptocurrency exchange.

While we maintain that Bitcoin is not a security, if we become subject to regulatory scrutiny

or enforcement actions by securities regulators, based on mining or otherwise dealing in Bitcoin or in other cryptocurrencies, it could

result in a similar adverse outcome to us as was experienced by Kraken, including expensive litigation and penalties and cessation of

the allegedly noncompliant operations, which would materially adversely harm us.

These or additional developments that may arise underscore

the risks in our business, particularly its reliance on cryptocurrencies such as Bitcoin.

Further, as disclosed elsewhere in this Report,

we are in the research and development stage of exploring treasury management alternatives to increase earnings of the cryptocurrency

we mine and hold, and regulatory developments may hinder our ability to proceed with what management believes to be a viable pursuit,

or if we pursue such an undertaking we could be exposed to the regulatory risks discussed in this Risk Factor.

Further, certain cryptocurrencies may be deemed

to be a “security” under the laws of some jurisdictions but not others.

Various foreign jurisdictions may, in the future,

adopt additional laws, regulations, or directives that affect the characterization of cryptocurrencies as “securities.” As

a result of the foregoing recent and potential developments, we may be forced to, or voluntarily elect to, limit, suspend or cease our

staking services operations or certain aspects thereof in order to comply with applicable laws and regulations and avoid the regulatory

scrutiny and adverse consequences that could result.

Further, because of how recent these government actions are and the high probability

that further action is forthcoming, we anticipate higher compliance costs and diversion of management’s limited time and attention

towards these events until a more definitive regulatory regime is established to govern the cryptocurrency industry in which we operate.

If any cryptocurrency is deemed to be a security

under any U.S.

federal, state, or foreign jurisdiction, or in a proceeding in a court of law or otherwise, it may have adverse consequences

for such cryptocurrency.

For instance, the networks on which such cryptocurrency is utilized may be required to be regulated as securities

intermediaries, and subject to applicable rules, which could effectively render the network impracticable for its existing purposes.

it could draw negative publicity and a decline in the general acceptance of the cryptocurrency.

Also, such a development may make it difficult

for such supported cryptocurrency to be traded, cleared, and custodied as compared to other cryptocurrencies that are not considered to

be securities.

These events could, among things, result in a decline in the market prices for the cryptocurrencies on which our operations

rely, and thereby reduce the demand for our solutions and the revenue generated therefrom.

The development and acceptance of cryptographic

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the progress of worldwide growth in the adoption and use of Bitcoin and other cryptocurrencies as a medium of exchange;

governmental and organizational regulation of

Bitcoin and other cryptocurrencies and their use, or restrictions on or

regulation of access to and operation of the network

or similar cryptocurrency systems;

changes in consumer demographics and public tastes

and preferences, including as may result from coverage of Bitcoin

or other cryptocurrencies by journalists and other

sources of information and media;

governmental and organizational regulation of Bitcoin and other cryptocurrencies and their use, or restrictions on or regulation of access to and operation of the network or similar cryptocurrency systems;

changes in consumer demographics and public tastes and preferences, including as may result from coverage of Bitcoin or other cryptocurrencies by journalists and other sources of information and media;

the maintenance and development of the open-source software protocol of the network;

the increased consolidation of contributors to

the Bitcoin blockchain through mining pools and scaling of mining

equipment by well-capitalized market participants;

the availability and popularity of other forms

or methods of buying and selling goods and services, including new

means of using fiat currencies;

the use of the networks supporting Bitcoin or

other cryptocurrencies for developing smart contracts and distributed

applications;

the increased consolidation of contributors to the Bitcoin blockchain through mining pools and scaling of mining equipment by well-capitalized market participants;

the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies;

the use of the networks supporting Bitcoin or other cryptocurrencies for developing smart contracts and distributed applications;

general economic conditions and the regulatory environment relating to Bitcoin and other cryptocurrencies;

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Banks and financial institutions may not provide

banking services, or may cut off services, to businesses that engage in cryptocurrency-related activities.

A number of companies that engage in Bitcoin and/or

other cryptocurrency-related activities have been unable to find banks or financial institutions that are willing to provide them

with bank accounts and other services.

Similarly, a number of companies and individuals or businesses associated with cryptocurrencies

may have had and may continue to have their existing bank accounts closed or services discontinued with financial institutions in response

to government action, particularly in China, where regulatory response to cryptocurrencies has been to initially exclude their use for

ordinary consumer transactions within China and later to deem all cryptocurrency-related transactions illegal in September 2021.

The difficulty that many businesses that provide Bitcoin and/or derivatives on other cryptocurrency-related activities have and may

continue to have in finding banks and financial institutions willing to provide them services may be decreasing the usefulness of cryptocurrencies

as a payment system and harming public perception of cryptocurrencies, and could decrease their usefulness and harm their public perception

in the future.

banking services, or may cut off services, to businesses that engage in cryptocurrency-related activities, and turmoil among financial

institutions arising from or relating to cryptocurrencies or in general can materially adversely affect us and our industry.

A number of companies that engage in Bitcoin

and/or other cryptocurrency-related activities have been unable to find banks or financial institutions that are willing to

provide them with bank accounts and other services.

Similarly, a number of companies and individuals or businesses associated with

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

institutions in response to government action, particularly in China, where regulatory response to cryptocurrencies has been to

initially exclude their use for ordinary consumer transactions within China and later to deem all cryptocurrency-related

transactions illegal in September 2021.

The difficulty that many businesses that provide Bitcoin and/or derivatives on other

cryptocurrency-related activities have and may continue to have in finding banks and financial institutions willing to provide

them services may be decreasing the usefulness of cryptocurrencies as a payment system and harming public perception of

cryptocurrencies, and could decrease their usefulness and harm their public perception in the future.

Further, in March 2023 two of the largest financial

institutions in the U.S., Silicon Valley Bank and Signature Bank, which had involvement in cryptocurrencies, collapsed as continued negative

economic prospects and failures to obtain payment from borrowers, together with a large number of withdrawals, caused these banks to encounter

substantial financial difficulty leading up to these failures.

In response to these events, the Federal Deposit Insurance Corporation

(“FDIC”) transferred all the deposits, both insured and uninsured, of these banks to corresponding “bridge banks”

operated by the FDIC as it markets the institution to potential bidders.

While the impact of these developments on the Company and on

the cryptocurrency industry and the economy in general remain unclear, it is possible that these events underscore a broader financial

crisis facing the country, in which cryptocurrencies may have played and/or have yet to play a role.

In the wake of these collapses, the

capital markets and the prices of equity securities and cryptocurrencies have faced significant volatility as investors continue

to evaluate these events and how they may interact with other ongoing issues with the U.S.

economy, including inflation and Federal Reserve

interest rate increases.

Regulators have also taken action that calls the

future role of cryptocurrencies in the U.S.

financial system into question.

For example, in January 2023, the Federal Reserve, Office

of the Comptroller of the Currency, and Federal Deposit Insurance Corporation issued a joint statement on the liquidity risks that cryptocurrencies

pose and urging financial institutions to engage in transactions involving cryptocurrencies and cryptocurrency-focused clients with caution,

which could potentially create challenges regarding access to financial services.

Moreover, in January 2023, the White House issued a

statement cautioning deepening ties between cryptocurrencies and the broader financial system.

Meanwhile, the SEC has taken several actions

aimed at curtailing activities it deems sales of unregistered securities.

However, also during January of 2023, the U.S.

House of Representatives

announced its first ever Financial Services Subcommittee on Digital Assets and the intention to develop a regulatory framework for the

use and trade of digital assets and related financial services products in the United States.

Bipartisan leadership of the Senate Banking

Committee announced a similar objective.

The usefulness of cryptocurrencies as a payment

system and the public perception of cryptocurrencies could be damaged if banks or financial institutions were to close the accounts of

businesses engaging in Bitcoin and/or other cryptocurrency-related activities.

This could occur as a result of compliance risk, cost,

government regulation or public pressure.

The risk applies to securities firms, clearance and settlement firms, national stock and derivatives

on commodities exchanges, the over-the-counter market, and the Depository Trust Company, which, if any of such entities adopts or

implements similar policies, rules or regulations, could negatively affect our relationships with financial institutions and impede our

ability to convert cryptocurrencies to fiat currencies.

Such factors could have a material adverse effect on our ability to continue as

a going concern or to monetize our mining efforts, which could have a material adverse effect on our business, prospects or operations

and harm investors.

businesses engaging in Bitcoin and/or other cryptocurrency-related activities, which contingencies may become more likely in the

future if and to the extent cryptocurrencies are considered a significant factor in the recent financial collapses experienced by the

major banks as described above.

This could occur as a result of compliance risk, cost, government regulation or public pressure.

applies to securities firms, clearance and settlement firms, national stock and derivatives on commodities exchanges, the over-the-counter market,

and the Depository Trust Company, which, if any of such entities adopts or implements similar policies, rules or regulations, could negatively

affect our relationships with financial institutions and impede our ability to convert cryptocurrencies to fiat currencies.

could have a material adverse effect on our ability to continue as a going concern or to monetize our mining efforts, which could have

a material adverse effect on our business, prospects or operations and harm investors.

Political or economic crises may motivate large-scale sales of cryptocurrencies,

which could result in a reduction in values of cryptocurrencies such as Bitcoin and Ethereum adversely affect an investment in us.

Geopolitical crises may motivate large-scale sales

of cryptocurrencies, which could rapidly decrease the price of cryptocurrencies such as Bitcoin and Ethereum.

Alternatively, as an emerging

asset class with limited acceptance as a payment system or commodity, global crises and general economic downturn may discourage investment

in cryptocurrencies as investors focus their investment on less volatile asset classes as a means of hedging their investment risk.

which could result in a reduction in values of cryptocurrencies such as Bitcoin adversely affect an investment in us.

Geopolitical or economic crises may motivate large-scale

sales of cryptocurrencies, which could rapidly decrease the price of cryptocurrencies.

For example, market analysts have indicated that

in some cases, such as during large scale adverse economic events, trading and market prices of cryptocurrencies such as Bitcoin have

correlated to some extent with the movement of equity markets, regardless of the stock or asset class.

For example, in March 2020, as

global shutdowns ramped up in response to the COVID-19 pandemic, the price of Bitcoin plummeted together with stock prices globally.

in 2022 as the Federal Reserve raised interests rates to combat inflation, cryptocurrency prices declined with stock prices in the U.S.

These trends are contrary to a formerly commonly held conception that buying and holding cryptocurrencies can be used as a “hedge”

to investing in the more conventional equity markets, and may eventually result in diminished popularity of cryptocurrencies in general

by the public.

Alternatively, as an emerging asset class with limited acceptance as a payment system or commodity, global crises and general

economic downturn may discourage investment in cryptocurrencies as investors focus their investment on less volatile asset classes as

a means of hedging their investment risk.

As an alternative to fiat currencies that are

backed by central governments, cryptocurrencies which are relatively new, are subject to supply and demand forces based upon the desirability

of an alternative, decentralized means of buying and selling goods and services, and it is unclear how such supply and demand will be

impacted by geopolitical events.

Nevertheless, political or economic crises may motivate large-scale acquisitions or sales of cryptocurrencies

either globally or locally.

Large-scale sales of cryptocurrencies would result in a reduction in digital asset values and could adversely

affect an investment in us.

backed by central governments, cryptocurrencies, such as Bitcoin, which are relatively new, are subject to supply and demand forces based

upon the desirability of an alternative, decentralized means of buying and selling goods and services, and it is unclear how such supply

and demand will be impacted by geopolitical events.

Nevertheless, political or economic crises may motivate large-scale acquisitions or

sales of cryptocurrencies either globally or locally.

Large-scale sales of cryptocurrencies would result in a reduction in cryptocurrency

values and could adversely affect an investment in us.

The decentralized nature of cryptocurrency

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risks which could adversely impact our business.

We currently use a BlockFi digital wallet to store

the Bitcoin we mine, although we may change to another digital wallet provider or use multiple providers at any time.

In order to own,

transfer and use Bitcoin on the blockchain network, we must have a private and public key pair associated with a network address, commonly

referred to as a “wallet”.

Each wallet is associated with a unique “public key” and “private key”

pair, each of which is a string of alphanumerical characters.

To deposit Bitcoin into our digital wallet, we must “sign” a

transaction that consists of the private key of the wallet from where the Bitcoin is being transferred, the public key of a wallet that

BlockFi or its custodian controls and provides to us, and broadcast the deposit transaction onto the underlying blockchain network.

to withdraw Bitcoin from our account, we must provide BlockFi or its custodian with the public key of the wallet that the Bitcoin are

to be transferred to, and BlockFi or its custodian then “signs” a transaction authorizing the transfer.

In addition, some

cryptocurrency networks require additional information to be provided in connection with any transfer of cryptocurrency such as Bitcoin.

A number of errors or other adverse events can occur in the process of depositing, storing or withdrawing Bitcoin into or from BlockFi,

such as typos, mistakes, or the failure to include the information required by the blockchain network.

For instance, a user may incorrectly

enter our wallet’s public key or the desired recipient’s public key when depositing and withdrawing Bitcoin.

Additionally,

our reliance on third parties such as BlockFi and the maintenance of keys to access and utilize our digital wallet will expose us to enhanced

cybersecurity risks from unauthorized third parties deploying illicit activities such as hacking, phishing and social engineering, notwithstanding

the security systems and safeguards employed by us and others.

Cyberattacks upon systems across a variety of industries, including the

cryptocurrency industry, are increasing in frequency, persistence, and sophistication, and, in many cases, are being conducted by sophisticated,

well-funded, and organized groups and individuals.

For example, attacks may be designed to deceive employees and service providers into

releasing control of the systems on which we depend to a hacker, while others may aim to introduce computer viruses or malware into such

systems with a view to stealing confidential or proprietary data.

These attacks may occur on our digital wallet or the systems of our

third-party service providers or partners, which could result in asset losses and other adverse consequences.

Alternatively, we may inadvertently

transfer Bitcoin to a wallet address that we do not own, control or hold the private keys to.

In addition, a Bitcoin wallet address can

only be used to send and receive Bitcoin, and if the Bitcoin is inadvertently sent to an Ethereum or other cryptocurrency wallet address,

or if any of the foregoing errors occur, all of the Bitcoin will be permanently and irretrievably lost with no means of recovery.

incidents could result in asset loss or disputes, any of which could materially adversely affect our business.

We will use a Copper.Co digital wallet to store

the Bitcoin we mine.

Copper.Co provide an institutional grade custody service to secure the Bitcoin that we hold.

Although we may change

to another digital wallet provider or use multiple providers at any time.

In order to own, transfer and use Bitcoin on the blockchain

network, we must have a private and public key pair associated with a network address, commonly referred to as a “wallet”.

Each wallet is associated with a unique “public key” and “private key” pair, each of which is a string of alphanumerical

To deposit Bitcoin into our digital wallet, we must “sign” a transaction that consists of the private key of the

wallet from where the Bitcoin is being transferred, the public key of a wallet that Copper.Co or its custodian controls and provides to

us, and broadcast the deposit transaction onto the underlying blockchain network.

Similarly, to withdraw Bitcoin from our account, we

must provide Copper.Co or its custodian with the public key of the wallet that the Bitcoin are to be transferred to, and Copper.Co or

its custodian then “signs” a transaction authorizing the transfer.

In addition, some cryptocurrency networks require additional

information to be provided in connection with any transfer of cryptocurrency such as Bitcoin.

A number of errors or other adverse events

can occur in the process of depositing, storing or withdrawing Bitcoin into or from Copper.Co, such as typos, mistakes, or the failure

to include the information required by the blockchain network.

For instance, a user may incorrectly enter our wallet’s public key

or the desired recipient’s public key when depositing and withdrawing Bitcoin.

Additionally, our reliance on third parties such

as Copper.Co and the maintenance of keys to access and utilize our digital wallet will expose us to enhanced cybersecurity risks from

unauthorized third parties deploying illicit activities such as hacking, phishing and social engineering, notwithstanding the security

systems and safeguards employed by us and others.

Cyberattacks upon systems across a variety of industries, including the cryptocurrency

industry, are increasing in frequency, persistence, and sophistication, and, in many cases, are being conducted by sophisticated, well-funded,

and organized groups and individuals.

For example, attacks may be designed to deceive employees and service providers into releasing control

of the systems on which we depend to a hacker, while others may aim to introduce computer viruses or malware into such systems with a

view to stealing confidential or proprietary data.

These attacks may occur on our digital wallet or the systems of our third-party service

providers or partners, which could result in asset losses and other adverse consequences.

Alternatively, we may inadvertently transfer

Bitcoin to a wallet address that we do not own, control or hold the private keys to.

In addition, a Bitcoin wallet address can only be

used to send and receive Bitcoin, and if the Bitcoin is inadvertently sent to an Ethereum or other cryptocurrency wallet address, or if

any of the foregoing errors occur, all of the Bitcoin will be permanently and irretrievably lost with no means of recovery.

Such incidents

could result in asset loss or disputes, any of which could materially adversely affect our business.

Security threats to us could result in a loss of Company’s

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are subject to extensive, and in some cases overlapping, unclear and evolving regulatory requirements.

Further, additional laws, regulations

and rules from are expected to arise in the future from legislative bodies, agencies and self-regulatory organizations, some of which

may adversely affect us, either directly by impacting our operations or those of third parties on which we rely or indirectly by affecting

the cryptocurrency market generally or otherwise.

Ongoing and future regulatory actions could have a material adverse effect on our business,

prospects or operations.

As concern over cryptocurrencies’

role in the broader economy and society as a whole grows, regulatory authorities have demonstrated an increased interest in enforcement

actions, legislative initiatives and other forms of restriction and oversight in an effort to protect the general public from the perceived

risks and uncertainties, as described in certain of the preceding Risk Factors.

Further, additional laws, regulations and rules from are

expected to arise in the future from legislative bodies, agencies and self-regulatory organizations, some of which may adversely affect

us, either directly by impacting our operations or those of third parties on which we rely or indirectly by affecting the cryptocurrency

market generally or otherwise.

Ongoing and future regulatory actions could have a material adverse effect on our business, prospects or

Current interpretations require the regulation

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and Bitcoin mining may have a materially adverse effect on the industry, and could affect us if widely adopted.

We could become subject to regulations aimed at

preventing what are perceived as some of the negative attributes of Bitcoin and Bitcoin mining.

For example, China has already made transacting

in cryptocurrencies illegal for Chinese citizens in mainland China, and additional restrictions may follow.

Further, on March 2, 2021,

governmental authorities of the Chinese province of Inner Mongolia, began to take action to impose an outright ban on Bitcoin mining in

the province due to the industry’s high electrical consumption demands and negative environmental impacts.

This could demonstrate

the beginning of a regulatory trend in response to concerns of overconsumption as it relates to environmental impact and energy conservation,

and similar action in a jurisdiction in which we operate could have devastating effects to our operations.

If further regulation follows,

it is possible that our industry may not be able to adjust to a sudden and dramatic overhaul to our ability to deploy energy towards the

operation of mining equipment.

In addition to regulatory actions affecting cryptocurrencies

in general or particular stakeholders within the industry, we could become subject to regulations aimed at preventing what are perceived

as some of the negative attributes of Bitcoin and Bitcoin mining.

For example, China has already made transacting in cryptocurrencies

illegal for Chinese citizens in mainland China, and additional restrictions may follow.

Further, on March 2, 2021, governmental authorities

of the Chinese province of Inner Mongolia, began to take action to impose an outright ban on Bitcoin mining in the province due to the

industry’s high electrical consumption demands and negative environmental impacts.

certain states and local jurisdictions

have also taken action aimed at curtailing cryptocurrency mining.

This could demonstrate the beginning of a regulatory trend in response

to concerns of overconsumption as it relates to environmental impact and energy conservation, and similar action in a jurisdiction in

which we operate could have devastating effects to our operations.

If further regulation follows, it is possible that our industry may

not be able to adjust to a sudden and dramatic overhaul to our ability to deploy energy towards the operation of mining equipment.

no longer have any mining operations in the U.S.

and anticipate substantially all of our mining operation will now be in Egypt and the

balance in Canada.

Because we are unable to influence or predict

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a national securities exchange, the prices of our common stock may be more volatile and lower than if we were listed.

Our common stock trades on the OTCQB operated

Our common stock trades on the OTC Pink operated

by OTC Markets Group Inc.

This market is not a national securities exchange.

While our common stock trading has been relatively active,

generally the OTCQB does not have the same level of activity as a national securities exchange like Nasdaq.

Most institutions will not

purchase a security unless it is on a national securities exchange.

In addition, they do not purchase stocks that trade below $5.00 per

We may, in the future, take certain steps, including utilizing investor awareness campaigns, press releases, road shows and conferences

to increase awareness of our business and any steps that we might take to bring us to the awareness of investors may require we compensate

consultants with cash and/or stock.

There can be no assurance that there will be any awareness generated or the results of any efforts

will result in any impact on our trading volume.

Consequently, investors may not be able to liquidate their investment or liquidate it

at a price that reflects the value of the business and trading may be at an inflated price relative to the performance of our company

due to, among other things, availability of sellers of our shares.

Generally the OTC Pink does not have the same level of activity

as a national securities exchange like Nasdaq.

Most institutions will not purchase a security unless it is on a national securities exchange.

In addition, they do not purchase stocks that trade below $5.00 per share.

We may, in the future, take certain steps, including utilizing

investor awareness campaigns, press releases, road shows and conferences to increase awareness of our business and any steps that we might

take to bring us to the awareness of investors may require we compensate consultants with cash and/or stock.

There can be no assurance

that there will be any awareness generated or the results of any efforts will result in any impact on our trading volume.

Consequently,

investors may not be able to liquidate their investment or liquidate it at a price that reflects the value of the business and trading

may be at an inflated price relative to the performance of our company due to, among other things, availability of sellers of our shares.

Our common stock is deemed a “penny stock,” which makes

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Until January 31, 2022, we were a shell company

and as such shareholders cannot rely on the provisions of Rule 144 for the resale of their shares until certain conditions are met.

and as such shareholders can only rely on the provisions of Rule 144 for the resale of their shares when certain conditions are met.

We have been a shell company as defined under

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As securities issued by a former shell company, the securities

issued by us can only be resold pursuant to an effective registration statement and not by utilizing the provisions of Rule 144 until

certain conditions are met, including that:

(i) we are subject to the reporting requirements of Section 13 or 15(d) of the Exchange

Act, (ii) we have filed all required reports under the Exchange Act of the preceding 12 months and (iii) one year has elapsed

since we filed “Form 10” information (e.g.

audited financial statements, management information and compensation, shareholder

information, etc.).

Thus, a shareholder of ours will not be able

to sell its shares until such time as a registration statement for those shares is filed or we become a reporting company, we have remained

current on our Exchange Act filings for 12 months and we have filed the information as would be required by a “Form 10” filing.

issued by us can only be resold under Rule 144 when certain conditions are met, including that:

(i) we are subject to the reporting

requirements of Section 13 or 15(d) of the Exchange Act and (ii) we have filed all required reports under the Exchange Act of

the preceding 12 months.

Quantitative and Qualitative Disclosures About Market Risk.

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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 7. Management’s Discussion and Analysis