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Item 2. Management’s Discussion and Analysis

2023-11-08 compared with 2023-08-14 · 96 added, 110 removed, 75 unchanged (73% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion

and analysis should be read in conjunction with our unaudited condensed consolidated financial statements, and the notes thereto, and

other financial information appearing elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements

and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

The following discussion and

analysis should be read in conjunction with our unaudited condensed consolidated financial statements, and the notes thereto, and other

financial information appearing elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and

notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

The following discussion and analysis

compares our consolidated results of operations for the three months ended June 30, 2022 (the “2022 Quarter”) with those for

the three months ended June 30, 2023 (the “2023 Quarter”).

Additionally, the six months ending June 30, 2023 and the six months

ending June 30, 2022 are referred to as the “2023 Period” and “2022 Period” respectively.

analysis compares our consolidated results of operations for the three months ended September 30, 2022 (the “2022 Quarter”)

with those for the three months ended September 30, 2023 (the “2023 Quarter”).

Additionally, the nine months ending September

30, 2023 and the nine months ending September 30, 2022 are referred to as the “2023 Period” and “2022 Period”

respectively.

Cautionary Note Regarding Forward-Looking Statements

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Our mining platform will be operating with the primary intent of accumulating Bitcoin.

We require significant financing

to maintain our operations and commence Bitcoin mining.

We require significant financing to commence Bitcoin

During late 2022 and early 2023 we have focused on securing a debt facility.

cannot provide any assurances we will receive any capital under a debt facility.

Any debt financing will be used to finance the purchase

of BTC mining hardware and hosting contracts which, subject to financing, we anticipate will commence between October 2023 and December

We believe we have a purchase

order in place to acquire significant high quality additional machines contingent on our ability to raise the funds to acquire such machines.

Subject to receipt of financing, we have secured hosting contracts in Canada and Egypt for over 540MW of hosting capacity, which will

provide us the power supply to operate the 20 Exahash of hardware we have contracted to purchase.

We cannot provide any assurances we will receive

any capital under a debt facility.

Any debt financing will be used to finance the purchase of BTC mining hardware and hosting contracts

which, subject to financing.

We have suspended our operations subject to receiving additional funding.

There are no assurances we will

receive adequate financing.

Our management has also begun exploring possible opportunities for the Company involving mergers, acquisitions

or other business combination transactions in an effort to diversify our business.

We are not currently a party to any agreement or understandings

with any third parties, and there are no assurances even if our management locates an opportunity which it believes will be in the best

interests of our shareholders that we will ever consummate such a transaction.

Accordingly, investors should not place undue reliance

on these efforts.

Critical Accounting Policies and Estimates

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Recent Accounting Pronouncements

For information on recent accounting

pronouncements and impacts, see Note 1 to the unaudited condensed consolidated financial statements.

Three Months Ended June 30, 2023 Compared to the

Three Months Ended June 30, 2022

For information on recent

accounting pronouncements and impacts, see Note 1 to the unaudited condensed consolidated financial statements.

Three Months Ended September 30, 2023 Compared

to the Three Months Ended September 30, 2022

Results of operations

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2022 when Ethereum switched its consensus protocol to proof of stake.

We had no cost of revenues for

the 2023 Quarter compared to $382,908 for the 2022 Quarter.

We had no cost of revenues

for the 2023 Quarter compared to $6,204 for the 2022 Quarter.

The reason for the decrease was that we ceased Ethereum mining operations

in September 2022 when Ethereum switched its consensus protocol to proof of stake.

Our operating expenses for the

2023 Quarter was $422,247 compared to $3,565,885, for the 2022 Quarter, a decrease of 88%.

In the 2023 Quarter, the Company incurred stock-based

compensation expense of $0 compared to $1,878,264 for the 2022 Quarter.

The stock based compensation for the 2022 Quarter was related

to vesting of the fair value of stock options.

Our other income for the 2023

Quarter was $484,887 compared to other expense of $34,987 for the 2022 Quarter.

In the 2023 quarter we received $500,000 related to a

refund on an equipment purchase order that was impaired during a previous period.

Six Months Ended June 30, 2023 Compared to the

Six Months Ended June 30, 2022

Our operating expenses for

the 2023 Quarter was $647,078 compared to $1,191,003, for the 2022 Quarter, a decrease of 46%.

In the 2023 Quarter, the Company incurred

stock-based compensation expense of $0 compared to $318,000 for the 2022 Quarter.

The stock based compensation for the 2022 Quarter was

related to the issuance of 4,000,000 share of common stock for services.

Our other expense for the

2023 Quarter was $20,323 compared to other income of $13,187 for the 2022 Quarter.

Nine Months Ended September 30, 2023 Compared

to the Nine Months Ended September 30, 2022

Results of operations

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2022 when Ethereum switched its consensus protocol to proof of stake.

We had no cost of revenues for

the 2023 Period compared to $806,678 for the 2022 Period.

The reason for the decrease was that we ceased Ethereum mining operations in

September 2022 when Ethereum switched its consensus protocol to proof of stake.

Our operating expenses for the

2023 Period was $2,130,375 compared to $26,994,885, for the 2022 Period, a decrease of 92%.

In the 2023 period, the Company incurred stock-based

compensation expense of $1,236,487 compared to $24,264,181 for the 2022 Period.

The stock based compensation for the 2023 Period related

to the difference in fair value on the amendment to outstanding options while the 2022 Period was related to vesting of the fair value

of stock options.

We had no cost of revenues

for the 2023 Period compared to $812,882 for the 2022 Period.

The reason for the decrease was that we ceased Ethereum mining operations

in September 2022 when Ethereum switched its consensus protocol to proof of stake.

Our operating expenses for

the 2023 Period was $2,777,448 compared to $28,185,888, for the 2022 Period, a decrease of 90%.

In the 2023 period, the Company incurred

stock-based compensation expense of $1,236,487 compared to $24,582,181 for the 2022 Period.

The stock based compensation for the 2023

Period related to the difference in fair value on the amendment to outstanding options while the 2022 Period was related to vesting of

the fair value of stock options and the issuance of 4,000,000 shares.

Our other income for the

2023 Period was $394,676 compared to other expense of $66,640 for the 2022 Period.

In the 2023 quarter we received $500,000 related to a refund

on an equipment purchase order that was impaired during a previous period.

We expect that our operating

expenses will increase as we continue to develop our new mining operations and we devote additional resources toward our new technologies

and business opportunities, promoting that growth, most notably reflected in anticipated increases in general overhead, salaries for personnel

and technical resources, as well as increased costs associated with our SEC reporting obligations.

However, as set forth elsewhere in

this report, our ability to continue to develop our business and achieve our operational goals is dependent upon our ability to raise

significant additional working capital.

As the availability of this capital is unknown, we are unable to quantify at this time the expected

increases in operating expenses in future periods.

In the 2023 period we received $500,000 related to

a refund on an equipment purchase order that was impaired during a previous period.

Subject to receiving funding,

we expect that our operating expenses will increase as we attempt to develop our new mining operations and we devote additional resources

toward new business opportunities.

However, as set forth elsewhere in this report, our ability to develop our business and achieve our

operational goals is dependent upon our ability to raise significant additional working capital.

As the availability of this capital is

unlikely and we are unable to quantify at this time the expected increases in operating expenses in future periods.

Liquidity and Capital Resources

As of June 30, 2023 and August

14, 2023, the Company had approximately $297,000 and $170,000 of cash, respectively.

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.

See “Subsequent

Events” below.

To grow the business and help fund operations for the next 12 months, the Company is seeking to raise $75 million

in debt facility.

Because we have been in the process of seeking to complete a debt facility for over 12 months, we can provide no assurances

that any such debt financings will be successful.

If we fail to close on a debt

facility or raise sufficient additional funds from other sources, we will be required to significantly scale back our plan of operations.

As of August 14, 2023, we have

a total of $1,544,876 of debt outstanding that is due within 12 months.

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.

As of September 30, 2023

and November 08, 2023, the Company had approximately $7,600 and $350 of cash, respectively.

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 recommence

our operations and fund operations for the next 12 months, the Company is seeking to raise $75 million in debt facility.

have no available sources for capital and we can provide no assurances that any debt financings will be available in the future.

We have suspended our operations.

If we fail to close on a debt facility or raise sufficient additional funds from other sources, we will be required to abandon our plan

of operations.

As of November 08 ,

2023, we have a total of $1,616,690 of debt outstanding that is due within 12 months.

See “Subsequent Events” below.

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.

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has been received from 2CRSI and as such the balance remains outstanding on the Company’s balance sheet in the accompanying financial

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.

Subsequent Events

On August 4, 2023, the Company

entered into a securities purchase agreement with 1800 Diagonal Lending, LLC, an accredited investor, pursuant to which the Company sold

the investor an unsecured original issue discount promissory note in the principal amount of $71,450 (the “August Promissory Note”).

The Company received net proceeds of $60,000 in consideration of issuance of the August Promissory Note.

The August Promissory Note bears

interest at a rate of 13% and has a maturity date of May 15, 2024.

The August Promissory Note is convertible into common shares of

the Company at any time following an event of default.

The conversion price shall be 71% of the lowest trading price of the Company’s

common stock during the 20 trading days prior to the conversion date.

The outstanding principal and accrued interest shall be paid in

nine monthly payments of $8,971.

The August Promissory Note provides for standard and customary events of default such as failing to timely

make payments under the August Promissory Note when due, the failure of the Company to timely comply with the Securities Exchange Act

of 1934 reporting requirements and the failure to maintain a listing on the OTC Markets.

The August Promissory Note also contains customary

At no time may the August Promissory Note be converted into shares of the Company’s common stock if such conversion would

result in the investor, or its affiliates owning an aggregate of more than 4.99% of the then outstanding shares of the Company’s

common stock.

As disclosed above under Note 10 to the financial

statements included in this report, on October 20, 2023 the Company received notice from the holder of the April Promissory Note, Convertible

Note and August Promissory Note (collectively, the “1800 Notes”) that such notes were in default.

The holder has made demand

for the immediate payment of the 1800 Notes of a sum representing 150% of the remaining outstanding principal balances of the 1800 Notes

in the aggregate of $250,008.99, together with accrued interest and default interest as provided for in the 1800 Notes.

We do not have

the ability to satisfy any of the amounts due under the 1800 Notes.

Summary of cash flows

June 30, 2023

June 30, 2022

September 30, 2023

September 30, 2022

Net cash provided by (used in) operating activities

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Investing Activities

Cash provided by investing activities

in the 2023 Period of $20,000 resulted from the sale of cryptocurrency assets.

Cash provided by investing activities

in the 2022 Period of $943,423 resulted from the $743,513 cash acquired from the reverse merger acquisition and the proceeds of $510,886

from sale of cryptocurrency assets, offset by the purchase of equipment of $370,976.

Cash provided by investing

activities in the 2023 Period of $31,999 resulted from the sale of cryptocurrency assets.

Cash provided by investing

activities in the 2022 Period of $942,534 resulted from the $743,513 cash acquired from the reverse merger acquisition and the proceeds

of $509,997 from sale of cryptocurrency assets and proceeds of $60,000 from the sale of equipment, offset by the purchase of equipment

Financing Activities

In the 2023 Period, cash used

in financing activities of $124,051 consisted of the repayment of Series B preferred shares, offset by proceeds from convertible notes

payable of $160,000.

In the 2022 Period, cash provided

by financing activities of $860,712 consisted of $688,864 in net proceeds from the issuance of common shares, $380,000 in proceeds from

the issuance of notes payable, offset by payments on equipment notes payable of $208,152.

In the 2023 Period, cash

used in financing activities of $76,109 consisted of the repayment of Series B preferred shares of $270,549 and payments on convertible

notes of $41,560, offset by proceeds from convertible notes payable of $220,000 and proceeds from related party advances of $16,000.

In the 2022 Period, cash

provided by financing activities of $1,097,963 consisted of $724,865 in net proceeds from the issuance of common shares, $201,250 in net

proceeds from the sale of Series B preferred shares and $380,000 in proceeds from the issuance of notes payable, offset by payments on

equipment notes payable of $208,152.

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-Q

Item 2. Management’s Discussion and Analysis