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Item 2. Management’s Discussion and Analysis

2024-08-09 compared with 2024-05-21 · 88 added, 78 removed, 63 unchanged (72% 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, 2023.

The following discussion and

analysis compares our consolidated results of operations for the three months ended March 31, 2024 (the “2024 Quarter”) with

those for the three months ended March 31, 2023 (the “2023 Quarter”).

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, 2023.

The following discussion and analysis compares our consolidated

results of operations for the three months ended June 30, 2024 (the “2024 Quarter”) with those for the six months ended June

30, 2023 (the “2023 Quarter”) and our consolidated results of operations for the six months ended June 30, 2024 (the “2024

Period”) with those for the six months ended June 30, 2023 (the “2023 Period”).

Cautionary Note Regarding Forward-Looking Statements

This report contains “forward-looking

These statements include, among other things, statements regarding expanding our business and our liquidity as well

as other statements regarding our future operations, financial condition and prospects, and business strategies.

Forward-looking statements

generally can be identified by words such as “anticipates,” “believes,” “estimates,” “expects,”

“intends,” “plans,” “predicts,” “projects,” “will be,” “will continue,” “will

likely result,” and similar expressions.

These forward-looking statements are based on current expectations and assumptions that

are subject to risks and uncertainties, which could cause our actual results to differ materially and adversely from those reflected in

the forward-looking statements.

Factors that could cause or contribute to such differences include, but are not limited to, our ability

to raise capital to buy crypto mining machines we have commitments to purchase, regulatory issues which affect our business model, and

those discussed under the caption "Risk Factors" in our Form 10-K for the year ended December 31, 2023 and those discussed in

other documents we file with the SEC.

We undertake no obligation to revise or publicly release the results of any revision to these forward-looking

statements, except as required by law.

Given these risks and uncertainties, readers are cautioned not to place undue reliance on such

forward-looking statements.

This report contains “forward-looking statements”.

These statements include, among other things, statements regarding expanding our business and our liquidity as well as other statements

regarding our future operations, financial condition and prospects, and business strategies.

Forward-looking statements generally can

be identified by words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,”

“plans,” “predicts,” “projects,” “will be,” “will continue,” “will likely

result,” and similar expressions.

These forward-looking statements are based on current expectations and assumptions that are subject

to risks and uncertainties, which could cause our actual results to differ materially and adversely from those reflected in the forward-looking

Factors that could cause or contribute to such differences include, but are not limited to, our ability to raise capital to

buy crypto mining machines we have commitments to purchase, regulatory issues which affect our business model, and those discussed under

the caption "Risk Factors" in our Form 10-K for the year ended December 31, 2023 and those discussed in other documents we file

with the SEC.

We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements,

except as required by law.

Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking

Business Overview

Since our incorporation, the Company has attempted

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Critical Accounting Policies and Estimates

We discuss the material accounting

policies that are critical in making the estimates and judgments in our Annual Report on Form 10-K for the fiscal year ended December

31, 2023, under the caption “Management’s Discussion and Analysis—Critical Accounting Policies and Estimates”.

There has been no material change in critical accounting policies or estimates during the period covered by this report.

We discuss the material accounting policies that

are critical in making the estimates and judgments in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, under

the caption “Management’s Discussion and Analysis—Critical Accounting Policies and Estimates”.

There has been

no material change in critical accounting policies or estimates during the period covered by this report.

Recent Accounting Pronouncements

For information on recent

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

Three Months Ended March 31, 2024 Compared

to the Three Months Ended March 31, 2023

For information on recent accounting pronouncements

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

Three Months Ended June 30, 2024 Compared to

the Three Months Ended June 30, 2023

Results of operations

Our operating expenses for

the three months ended March 31, 2024 (the “2024 Quarter”) was $336,599 compared to $1,705,525, for the three months ended

March 31, 2023 (the “2023 Quarter”), a decrease of 80%.

Our operating expenses for the 2024 Quarter was

$385,419 compared to $422,247, for the 2023 Quarter, a decrease of 9%.

The 2024 Quarter had lower expenses as the Company continues to

reduce cost compared to the 2023 Quarter.

Our other income for the 2024 Quarter was $69,941

compared to other income of $484,887 for the 2023 Quarter.

Other income in the 2024 quarter was comprised of $18,132 in interest expense

and $61,867 for the loss on the change in fair value of derivative liabilities offset by income of $150,000 on the refund of an equipment

Other income for the 2023 quarter was comprised of $15,113 in interest expense, offset by income of $500,000 in deposits from

equipment refunds.

Six Months Ended June 30, 2024 Compared to

the Six Months Ended June 30, 2023

Results of operations

Our operating expenses for the 2024 Period was

$722,018 compared to $2,130,370, for the 2023 Period, a decrease of 66%.

In the 2024 Quarter, the Company incurred stock-based compensation

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of options to the officers of the Company.

Our other expense for the 2024 Quarter was $114,605

compared to other expense of $72,486 for the 2023 Quarter.

Our other expense for the 2024 Period was $44,664

compared to other income of $414,999 for the 2023 Period.

Other expense in the 2024 quarter was comprised of $45,552 in interest expense

and $90,185 for the loss on the change in fair value of derivative liabilities.

Other expense for the 2023 quarter was comprised of $7,274

in interest expense, $51,859 in a prepayment penalty on the redemption of our Series B Preferred shares, $9,975 from a loss on settlement

and $3,378 in other expenses.

and $152,052 for the loss on the change in fair value of derivative liabilities offset by income of $150,000 on the refund of an equipment

Other income for the 2023 quarter was comprised of $22,387 in interest expense, $51,859 in prepayment penalties on the preferred

B shares, loss on legal settlement of $9,975, offset by income of $500,000 in deposits from equipment refunds.

Liquidity and Capital Resources

As of March 31, 2024 and May 21, 2024, the Company

had approximately $0 of cash on hand.

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 crypto operations and fund operations for the next

12 months, the Company is seeking to raise $75 million in debt facility.

We currently have no available sources of capital and we can

provide no assurances that any debt financings will be available in the future.

Additionally, the Company is (i) in default under the

1800 Notes in the sum of 150% of the remaining outstanding principal balances of the 1800 Notes in the aggregate of approximately $235,000,

plus accrued interest and default interest as defined under such notes, (ii) in default under two other notes in the aggregate principal

amount of approximately $120,000 and (iii) owes a significant amount of money to its executive officers.

As of June 30, 2024 and the date of the filing

of this report, Company had approximately $400 and $64,000 of cash on hand.

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.

On July 5, 2024, subsequent to the period

covered by this report, the Company received an additional refund of $275,000 related to prior advances made for the purchase of equipment.

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

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

Additionally, the Company is (i) in default under the 1800 Notes in the sum of 150% of the remaining outstanding principal balances of

the 1800 Notes in the aggregate of approximately $226,000, plus accrued interest and default interest as defined under such notes, (ii)

in default under two other notes in the aggregate principal amount of approximately $120,000 and (iii) owes a significant amount of money

to its executive officers for accrued salary.

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.

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.

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

The Company has terminated 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

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

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.

Summary of cash flows

March 31, 2024

March 31, 2023

June 30, 2024

June 30, 2023

Net cash provided by (used in) operating activities

Net cash provided by investing activities

Net cash provided by (used in) investing activities

Net cash provided by (used in) financing activities

During the 2024 Quarter and

the 2023 Quarter, our sources and uses of cash were as follows:

During the 2024 Quarter and the 2023 Quarter,

our sources and uses of cash were as follows:

Operating Activities

During the 2024 Quarter, cash used in operating

During the 2024 Period, cash used in operating

activities of $2,047 primarily resulted from the net loss of $766,682 offset by change in fair value of derivative liabilities of $152,052,

increases in accounts payable and accrued expenses of $45,725 and increases in accrued payroll of $532,137.

During the 2023 Quarter,

cash provided by operating activities of $281,586 primarily resulted from the refund of prepaid hosting services, offset by the net loss

of $1,788,011 and stock-based compensation of $1,236,487.

During the 2023 Period, cash provided by operating

activities of $400,994 primarily resulted from the refund of prepaid hosting services, offset by the net loss of $1,715,371 and stock-based

compensation of $1,236,487.

Investing Activities

The Company had no investing

activities during the 2024 Quarter.

Cash provided by investing

activities in the 2023 Quarter of $2,598 resulted from the sale of cryptocurrency assets.

Cash used in investing activities in the 2024

Period of $4,600 resulted from the purchase of cryptocurrency assets.

Cash provided by investing activities in the 2023

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

Financing Activities

The Company had no financing

activities during the 2024 Quarter.

In the 2023 Quarter, cash

used in financing activities of $270,549 consisted of the redemption of our outstanding Series B preferred shares.

In the 2024 Period, cash provided by financing

activities of $6,725 consisted of $10,000 for the repayment of convertible notes payable, offset by proceeds from related party advances

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.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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What changed 10-Q

Item 2. Management’s Discussion and Analysis