What changed in this filing

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Item 9A. Controls and Procedures

2021-06-30 compared with 2020-03-30 · 692 added, 622 removed, 377 unchanged (78% of the section changed)

79 unchanged sentences

Other Information.

Directors, Executive

Officers and Corporate Governance.

Directors, Executive Officers and Corporate Governance.

and Executive Officers

March 28, 2020, our directors and executive officers, their ages and their positions held with our company were as follows:

May 31, 2021, our directors and executive officers, their ages and their positions held with our company were as follows:

Held with the Company

Michael Campbell

Chairman of the Board and Chief Executive Officer

President and Board Member

Chief Financial Officer

of the Board and Chief Executive Officer

Financial Officer

are no arrangements between our directors and any other person pursuant to which our directors were nominated or elected for their

7 unchanged sentences

In addition, from December 2011 to February 2017, Mr.

Campbell was the Chief Executive

Officer and a director of NXChain, Inc., a publicly-traded start-up shell company in the cryptocurrency business that was a successor

to AgriVest Americas Inc., a publicly-traded start-up shell company that sought to acquire cattle ranches in Brazil for conversion

to soybean farms.

Campbell spent the first 20 years of his career in the high-tech industry creating and operating various

companies that included a computer retailing operation, data-storage peripheral company with three computer disk-drive manufacturing

companies through joint ventures with the Russian, Chinese and Spanish governments, a specialized call-center company for telco

broadband provisioning and an online broadband services ordering and order aggregation company with the Regional Bell Operating

Cooper became our President and a director on September 12, 2018.

Cooper has spent the majority of the

last 18 years as a venture capital and private equity investor.

In addition, from January 2013 to April 2015, Mr.

Cooper was initially

Chief Operating Officer and then Chief Executive Officer of Advocate Inc., an enterprise software startup company.

spent his early career as a management consultant prior to joining Oracle Corp.

in 1994 where he held various roles initially

in Europe, where he ran advanced technology consulting, then in the U.S., where he ran worldwide business development and subsequently

was Vice President of Corporate development and a managing director of the Oracle venture fund.

Campbell was the Chief Executive Officer

and a director of NXChain, Inc., a publicly-traded start-up shell company in the cryptocurrency business that was a successor to AgriVest

Americas Inc., a publicly-traded start-up shell company that sought to acquire cattle ranches in Brazil for conversion to soybean farms.

Campbell spent the first 20 years of his career in the high-tech industry creating and operating various companies that included

a computer retailing operation, data-storage peripheral company with three computer disk-drive manufacturing companies through joint

ventures with the Russian, Chinese and Spanish governments, a specialized call-center company for telco broadband provisioning and an

online broadband services ordering and order aggregation company with the Regional Bell Operating Companies.

Skupen became our Chief Financial Officer on September 12, 2018.

21 unchanged sentences

of our directors and executive officers have been involved in any of the following events during the past ten years:

any bankruptcy petition

filed by or against any business of which such person was a general partner or executive officer either at the time of the

bankruptcy or within two years prior to that time;

any conviction in

a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences);

being subject to

any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently

or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or

banking activities;

being found by a

court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading

Commission to have violated a federal or state securities or commodities law, where the judgment has not been reversed, suspended,

being the subject

of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed,

suspended or vacated, relating to an alleged violation of (i) any federal or state securities or commodities law or regulation;

(ii) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary

or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease- and-desist

order, or removal or prohibition order;

or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection

with any business entity;

or being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended

or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Securities Exchange Act of 1934), any

registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association,

entity or organization that has disciplinary authority over its members or persons associated with a member.

currently have two directors:

Michael Campbell and Piers Cooper.

We have determined that these directors are not independent directors,

as that term is used in the Nasdaq Listing Rules of the Nasdaq Stock Market LLC.

Once we have acquired significant assets and

are no longer a “shell”

bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either

at the time of the bankruptcy or within two years prior to that time;

conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other

minor offences);

subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,

permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities

or banking activities;

found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures

Trading Commission to have violated a federal or state securities or commodities law, where the judgment has not been reversed,

suspended, or vacated;

the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently

reversed, suspended or vacated, relating to an alleged violation of (i) any federal or state securities or commodities law

or regulation;

(ii) any law or regulation respecting financial institutions or insurance companies including, but not limited

to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent

cease- and-desist order, or removal or prohibition order;

or (iii) any law or regulation prohibiting mail or wire fraud or

fraud in connection with any business entity;

or being the subject of, or a party to, any sanction or order, not subsequently

reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Securities Exchange

Act of 1934), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange,

association, entity or organization that has disciplinary authority over its members or persons associated with a member.

currently have only one director:

Michael Campbell.

We have determined that Mr.

Campbell is not an independent director, as that

term is used in the Nasdaq Listing Rules of the Nasdaq Stock Market LLC.

Once we have acquired significant assets and are no longer

a “shell”

company, we will appoint one or more independent directors to our board of directors.

43 unchanged sentences

Chief Executive Officer

Former Chief Executive Officer

amounts paid to Mr.

amounts earned by Mr.

Campbell under his consulting agreement.

Hanks resigned

as our Chief Executive Officer, and Mr.

Campbell was appointed our Chief Executive Office, on September 12, 2018.

Equity Awards At Annual Period End

14 unchanged sentences

event of retirement.

Security Ownership

of Certain Beneficial Owners and Management and Related Stockholder Matters.

following table sets forth, as of March 28, 2020, the names, addresses and number of shares of common stock beneficially owned

by (i) all persons known to our management to be beneficial owners of more than 5% of the outstanding shares of our common stock,

(ii) each director of our company, (iii) each named Executive Officer and (iv) all executive officers and directors of our company

as a group (except as indicated, each beneficial owner listed exercises sole voting power and sole dispositive power over the

shares beneficially owned):

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

following table sets forth, as of May 31, 2021, the names, addresses and number of shares of common stock beneficially owned by

(i) all persons known to our management to be beneficial owners of more than 5% of the outstanding shares of our common stock, (ii) each

director of our company, (iii) each named Executive Officer and (iv) all executive officers and directors of our company as a group (except

as indicated, each beneficial owner listed exercises sole voting power and sole dispositive power over the shares beneficially owned):

Name and Address of

1 unchanged sentence

M1 Advisors LLC (2)

Piers Cooper (3)

Dean Skupen (3)

All executive officers and directors as a group (2 persons)

Less than 1%.

Except as indicated

in the footnotes to this table, we believe that all persons named in the table have sole voting and investment power with

respect to all common stock shown as beneficially owned by them.

In accordance with the rules of the Securities and Exchange

Commission (the “Commission”), a person or entity is deemed to be the beneficial owner of common stock that can

be acquired by such person or entity within sixty (60) days upon the exercise of options or warrants or other rights to acquire

common stock.

Each beneficial owner’s percentage ownership is determined by assuming that options and warrants that

are held by such person (but not those held by any other person) and which are exercisable within sixty (60) days have been

The inclusion herein of such shares listed as beneficially owned does not constitute an admission of beneficial

Represents shares

of common stock owned of record by M1 Advisors LLC.

5% Stockholders:

The Cooper Family Living Trust Dtd 7/20/98

As of May 31, 2021 there were 12,960,621 shares of common

stock outstanding.

Except as indicated in the footnotes

to this table, we believe that all persons named in the table have sole voting and investment power with respect to all common stock

shown as beneficially owned by them.

In accordance with the rules of the Securities and Exchange Commission (the “Commission”),

a person or entity is deemed to be the beneficial owner of common stock that can be acquired by such person or entity within sixty

(60) days upon the exercise of options or warrants or other rights to acquire common stock.

Each beneficial owner’s percentage

ownership is determined by assuming that options and warrants that are held by such person (but not those held by any other person)

and which are exercisable within sixty (60) days have been exercised.

The inclusion herein of such shares listed as beneficially

owned does not constitute an admission of beneficial ownership.

shares of common stock owned of record by M1 Advisors LLC.

The address of Michael B.

Campbell and M1 Advisors LLC is 11756 Willard

Avenue, Tustin, CA 92782.

Campbell is the sole manager of M1 Advisors LLC.

Represents shares

of common stock owned of record by a family trust for which Mr.

Cooper and his wife are the trustees.

The address of Mr.

is 11756 Willard Avenue, Tustin, CA 92782.

Represents shares

of common stock of record by DSS Consulting Corporation, a company controlled by Mr.

The address of DSS Consulting

Corporation is 638 Lindero Canyon Road, Oak Park, CA 9137.

Certain Relationships

and Related Transactions, and Director Independence.

and M1 Advisors LLC is 11753 Willard Avenue, Tustin, CA 92782.

Campbell is the

sole manager of M1 Advisors LLC.

shares of common stock of record by DSS Consulting Corporation, a company controlled by Mr.

The address of DSS Consulting Corporation

is 2945 Townsgate Road, Suite 200, West Lake Village CA 91361.

and Sally Cooper are the trustees of The Cooper Family Living Trust Dtd 7/20/98.

of the trust is 452 Lakeview Way, Emerald Hills, CA 94062.

Certain Relationships and Related Transactions, and Director Independence.

the best of our knowledge, except as set forth below, during the last fiscal year, there were no material transactions, or series

4 unchanged sentences

has an interest.

Principal Accountant

Fees And Services.

Principal Accountant Fees And Services.

aggregate fees billed for professional services rendered by RBSM LLP, our principal accountants for the years ended December 31,

1 unchanged sentence

provided by the independent accountant in connection with statutory and regulatory filings or engagements for these periods were

the Years ended December 31,

For the Years ended December 31,

Audit Fees and Audit Related Fees

35 unchanged sentences

1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 .***

XBRL Instance Document

XBRL Taxonomy Extension

Schema Document

XBRL Taxonomy Calculation

Linkbase Document

XBRL Taxonomy Definition

Linkbase Document

XBRL Taxonomy Label

Linkbase Document

XBRL Taxonomy Presentation

Linkbase Document

Instance Document

Taxonomy Extension Schema Document

Taxonomy Calculation Linkbase Document

Taxonomy Definition Linkbase Document

Taxonomy Label Linkbase Document

Taxonomy Presentation Linkbase Document

Not incorporated by reference.

Not subject to liability.

A signed original

of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and

furnished to the Securities and Exchange Commission or its staff upon request.

to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report

to be signed on its behalf by the undersigned, thereunto duly authorized on the 1 st day of April 2020.

CalEthos, Inc.

Michael Campbell

signed original of this written statement required by Section 906 has been provided to the Company and will be retained by

the Company and furnished to the Securities and Exchange Commission or its staff upon request.

to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to

be signed on its behalf by the undersigned, thereunto duly authorized on the 30 th day of June 2021.

Michael Campbell

Chief Executive

(Principal Executive

Executive Officer

Executive Officer)

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf

1 unchanged sentence

Michael Campbell

Chief Executive

Officer and Director

March 30, 2020

Michael Campbell

(Principal Executive Officer)

Chief Financial

March 30, 2020

(Principal Accounting Officer)

March 30, 2020

31, 2019 and 2018

Executive Officer and Director

June 30, 2021

Executive Officer)

Financial Officer

June 30, 2021

Accounting Officer)

the Years Ended December 31, 2020 and 2019

to the Financial Statements

Reports of Independent Registered Public Accounting Firms

Balance Sheets at December 31, 2019 and 2018

Report of Independent Registered Public Accounting Firm

Balance Sheets as of December 31, 2020 and 2019

Statements Operations for the Years ended December 31, 2020 and 2019

4 unchanged sentences

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Board of Directors and Stockholders of

CalEthos, Inc.

the Board of Directors and Stockholders of CalEthos, Inc.

on the Financial Statements

have audited the accompanying balance sheet of CalEthos, Inc.

have audited the accompanying balance sheets of CalEthos, Inc.

(the “Company”), a Nevada corporation, as of December

31, 2020 and 2019, and the related statements of operations, changes in stockholders’

(deficit) equity and cash flows for

the years ended December 31, 2019 and 2018, and the related notes (collectively referred to as the financial statements).

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

31, 2019 and 2018, and the results of its operations and its cash flows for the years ended December 31, 2019 and 2018, in conformity

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

(deficit) equity and cash flows

for the years ended December 31, 2020 and 2019, and the related notes (collectively referred to as the financial statements).

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

31, 2020 and 2019, and the results of its operations and its cash flows for the years ended December 31, 2020 and

2019, in conformity with accounting principles generally accepted in the United States of America.

Paragraph –

1 unchanged sentence

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

in Note 1, the Company had an accumulated deficit at December 31, 2019, and a net loss and periodic cash flow difficulties for

year ended December 31, 2019.

Those conditions raise substantial doubt about the Company’s ability to continue as a going

As described in Note

1, the Company had an accumulated deficit at December 31, 2020, a net loss and periodic cash flow difficulties for year ended

December 31, 2020.

Those conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans in regards to these matters are also described in Note 1.

The financial statements do not include

any adjustments that might result from the outcome of this uncertainty.

Our opinion is not modified with respect to that matter

The financial statements do not include any adjustments

that might result from the outcome of this uncertainty.

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

Our responsibility is to express an opinion on

the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company

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

in accordance with the U.S.

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

and the PCAOB.

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

financial statements based on our audits.

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

(United States) (the “PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

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

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

Those standards require that we plan and perform the audits

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

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

As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but

not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Those standards require that we plan and perform the audits to obtain

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

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

As part of our audit,

we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion

on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

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

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

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles

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

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

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

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

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant

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

We believe that our audits

provide a reasonable basis for our opinion.

Audit Matters

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

communicated to the audit committee and that:

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

(2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

have served as the Company’s auditor since 2018.

March 30, 2020

York Washington DC Nevada California Greece China and India

ANTEA INTERNATIONAL with offices worldwide

June 30, 2020

of December 31,

1 unchanged sentence

Cash and cash equivalents

Cash held by officer

Prepaid expenses

Total Current Assets

LIABILITIES AND STOCKHOLDERS’

1 unchanged sentence

Accounts payable and accrued expenses

Notes payable, net

Convertible promissory notes, net

Total Current Liabilities

Total Liabilities

Stockholders’

Series A convertible preferred stock, par value $0.001, 3,600,000 shares authorized, 85,975 issued and outstanding (liquidation value of $119,000)

Series A convertible preferred stock, par value $0.001, 3,600,000 shares authorized,

85,975 issued and outstanding as of December 31, 2019 (liquidation value of $119,000)

Preferred stock par value $0.001, 100,000,000 shares authorized, no shares issued and outstanding

4 unchanged sentences

Accumulated deficit

(10,082,000 )

Total Stockholders’

Total Liabilities and Stockholders’

accompanying notes to the financial statements.

accompanying notes are integral to the financial statements

of Operations

4 unchanged sentences

Total operating expenses

Other Expense –

finance costs

Loss before income tax provision

Income tax provision

Loss from operations

Other expenses

Financing costs

Loss on extinguishment of series A convertible preferred stock

Loss before provision for income taxes

Provision for income taxes

Deemed dividend on conversion price reset of preferred stock series A

Net Loss attributable to shareholders

Net Loss attributable to common stockholders

$ (1,535,000 )

Earnings per share:

- Basic and diluted

Weighted average common shares outstanding:

Net loss per share, basic and diluted

Weighted average common shares outstanding –

basic and diluted

accompanying notes to the financial statements.

accompanying notes are integral to the financial statements

of Changes in Stockholders’

Equity (Deficit)

the Years Ended December 31, 2020 and 2019

Founder Preferred

A Convertible

Stockholders’

1 unchanged sentence

$ (7,827,000 )

Shareholders’

assumption of liabilities

Common stock issued for cash

Issuance of Founder preferred stock

Issuance of series A convertible preferred

Conversion of Founder preferred stock

(15,754,744 )

Balance Dec 31, 2018

$ (7,827,000 )

Proceeds from the sale of series A convertible preferred stock

Relative fair value of warrants issued with convertible promissory

Beneficial conversion feature associated with convertible promissory

Relative fair value of warrants issued with convertible promissory notes

Beneficial conversion feature (“BCF”) associated with convertible promissory notes

Stock options issued for services

Conversion price reset for preferred stock series A

Deemed dividend on conversion price reset

of preferred stock series A

Deemed dividend on conversion price reset of preferred stock series A

Deposits from issuance of founder preferred shares

Balance, December 31, 2019

$ (9,326,000 )

accompanying notes to the financial statements.

Conversion of series A preferred stock to convertible promissory notes

Fair value of warrants issued with the conversion of series A convertible preferred stock

Debt premium on convertible promissory notes issued for conversion of series A convertible preferred stock

Relative fair value of warrants issued with convertible promissory notes

Balance, December 31, 2020

$ (10,082,000 )

$ (1,323,000 )

accompanying notes are integral to the financial statements

of Cash Flows

the Years Ended December 31,

flows from operating activities:

Cash flows from operating activities

$ (1,499,000 )

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

of convertible promissory notes discounts

value of equity-based compensation

in operating assets and liabilities:

payable and accrued expenses

cash used in operating activities

flows from investing activities:

held by officer

cash provided by investing activities

flows from financing activities:

from the issuance of convertible promissory notes

from issuance of convertible preferred stock

cash used in financing activities

change in cash

at beginning of reporting period

at end of reporting period

disclosure of cash flows information:

disclosure of noncash financing activities:

funds from issuance of founder preferred shares

fair value of warrants issued with convertible notes

conversion feature issued with convertible notes

subscription receivable

Shareholders’

assumption of liabilities

accompanying notes to the financial statements.

31, 2019 and 2018

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

Amortization of convertible promissory notes discounts

Loss on conversion of convertible preferred stock

Fair value of warrants issued with convertible promissory notes

Fair value of equity-based compensation

Changes in operating asset and liabilities

Accounts payable and accrued expenses

Net cash used in operating activities

Cash flows from investing activity

Cash held by officer

Net cash provided by investing activity

Cash flows from financing activities

Proceeds from the issuance of convertible promissory notes

Proceeds from the issuance of notes payable

Proceeds from issuance of convertible preferred stock

Net cash provided by financing activities

Net change in cash

Cash at beginning of reporting period

Cash at end of reporting period

Supplemental disclosure of cash flows information

Interest paid

Income tax paid

Supplemental disclosure of non-cash financing activities:

Conversion of series A preferred stock to convertible promissory notes

Fair value of warrants issued with the conversion of series

A convertible preferred stock

Debt premium on issuance of convertible promissory notes

for conversion of series A convertible preferred stock

Relative fair value of warrants issued with convertible notes

Beneficial conversion feature issued with convertible notes

Stock subscription receivable

accompanying notes are integral to the financial statements

to the Financial Statements

the Years Ended December 31, 2020 and 2019

1 - Organization and Accounting Policies

(the “Company”) was incorporated on March 20, 2002 under the laws of the State of Nevada.

Since the second quarter

of 2016, the Company has been a “shell”

Since the second quarter of

2016, the Company has been a “shell”

company, as defined in Rule 12b-2 under the Exchange Act.

December 20, 2018, we filed a Certificate of Amendment to our Articles of Incorporation with the Secretary of State of the State

of Nevada to change the Company name from “RealSource Residential, Inc.”

to “CalEthos, Inc.”This amendment

became effective immediately upon filing on December 20, 2018.

May 16, 2018, certain majority stockholders of the Company, including certain former directors and officers of the Company, entered

into a stock purchase agreement dated May 16, 2018 (the “Control Purchase Agreement”) with RealSource Acquisition

Group, LLC, a Utah limited liability company (“RealSource Acquisition”), whereby RealSource Acquisition agreed to

purchase an aggregate of 11,006,356 shares (440,256 shares after giving effect to the Reverse Stock Split (see Note 3) (the “Control

Shares”) of the Company’s issued and outstanding shares of common stock for an aggregate purchase price of $180,000.

Immediately prior to the closing under the Control Purchase Agreement on September 12, 2018 (the “Closing Date”),

RealSource Acquisition assigned its rights under the Control Purchase Agreement to M1 Advisors, LLC, a Delaware limited liability

company (“M1 Advisors”), pursuant to a purchase agreement and assignment and assumption of contract rights dated as

of August 28, 2018 between RealSource Acquisition and M1 Advisors.

M1 Advisors paid RealSource Acquisition $80,000 as consideration

for such assignment.

on the Closing Date, and in accordance with the amended and restated bylaws of the Company and the requirements of the Control

Purchase Agreement, (a) each of Michael S.

December 20, 2018, we filed a Certificate of Amendment to our Articles of Incorporation with the Secretary of State of the State of Nevada

to change the Company name from “RealSource Residential, Inc.”

to “CalEthos, Inc.”.

This amendment became effective

immediately upon filing on December 20, 2018.

May 16, 2018, certain majority stockholders of the Company, including certain former directors and officers of the Company, entered into

a stock purchase agreement dated May 16, 2018 (the “Control Purchase Agreement”) with RealSource Acquisition Group, LLC,

a Utah limited liability company (“RealSource Acquisition”), whereby RealSource Acquisition agreed to purchase an aggregate

of 11,006,356 shares (440,256 shares after giving effect to the Reverse Stock Split (see Note 3) (the “Control Shares”) of

the Company’s issued and outstanding shares of common stock for an aggregate purchase price of $180,000.

Immediately prior to the

closing under the Control Purchase Agreement on September 12, 2018 (the “Closing Date”), RealSource Acquisition assigned

its rights under the Control Purchase Agreement to M1 Advisors, LLC, a Delaware limited liability company (“M1 Advisors”),

pursuant to a purchase agreement and assignment and assumption of contract rights dated as of August 28, 2018 between RealSource Acquisition

and M1 Advisors.

M1 Advisors paid RealSource Acquisition $80,000 as consideration for such assignment.

on the Closing Date, and in accordance with the amended and restated by laws of the Company and the requirements of the Control Purchase

Agreement, (a) each of Michael S.

Anderson, Nathan W.

Kelly Randall resigned as directors of the Company,

(b) Michael Campbell, the sole member of M1 Advisors, and Piers Cooper were elected to the Company’s board of directors,

Hanks also resigned as president and chief executive officer of the Company, Mr.

Randall also resigned as chief operating

office and chief financial officer of the Company, Mr.

Campbell was appointed the chief executive officer of the Company and Piers

Cooper was appointed president of the Company.

Kelly Randall resigned as directors of the Company, (b) Michael Campbell,

the sole member of M1 Advisors, and Piers Cooper were elected to the Company’s board of directors, and (c) Mr.

Hanks also resigned

as president and chief executive officer of the Company, Mr.

Randall also resigned as chief operating office and chief financial officer

of the Company, Mr.

Campbell was appointed the chief executive officer of the Company and Piers Cooper was appointed president of the

the Closing Date, the Company entered into a series A preferred stock purchase agreement dated as of the Closing Date (the “Preferred

Purchase Agreement”) with M1 Advisors, which is an entity controlled by Michael Campbell, the Company’s chief executive

officer and a director of the Company at such time, Piers Cooper, the Company’s president and a director of the Company

at such time, the members of RealSource Acquisition, and the other investors who were signatories thereto (collectively, the Purchasers”).

Pursuant to the Preferred Purchase Agreement, the Company sold to the Purchasers an aggregate of 15,600,544 shares of the Company’s

series A preferred stock, which has since been re-designated as Founder preferred stock (“Founder Preferred Stock”),

for an aggregate purchase price of $16,000, or $0.001 per share.

Of the Founder Preferred Stock purchased, 9,320,414 shares were

purchased by M1 Advisors, 4,674,330 shares were purchased by Mr.

Cooper and an aggregate of 1,195,000 shares were purchased by

the members of RealSource Acquisition or their assigns.

following the above transactions, an aggregate of 15,600,544 shares of Founder Preferred Stock and 630,207 shares of common stock

was issued and outstanding.

At such time, the shares of Founder Preferred Stock and common stock owned by M1 Advisors represented

approximately 60.14% of the issued and outstanding shares of capital stock of the Company on a fully-diluted basis and the shares

of Founder Preferred Stock owned by Mr.

Cooper represented approximately 28.80% of the issued and outstanding shares of capital

stock of the Company on a fully-diluted basis.

The shares of Founder Preferred Stock acquired by M1 Advisors were purchased with

funds that M1 Advisors borrowed from another entity controlled by Mr.

Purchase Agreement”) with M1 Advisors, which is an entity controlled by Michael Campbell, the Company’s chief executive officer

and a director of the Company at such time, Piers Cooper, the Company’s president and a director of the Company at such time, the

members of RealSource Acquisition, and the other investors who were signatories thereto (collectively, the Purchasers”).

to the Preferred Purchase Agreement, the Company sold to the Purchasers an aggregate of 15,600,544 shares of the Company’s series

A preferred stock, which has since been re-designated as Founder preferred stock (“Founder Preferred Stock”), for an aggregate

purchase price of $16,000, or $0.001 per share.

Of the Founder Preferred Stock purchased, 9,320,414 shares were purchased by M1 Advisors,

4,674,330 shares were purchased by Mr.

Cooper and an aggregate of 1,195,000 shares were purchased by the members of RealSource Acquisition

or their assigns.

following the above transactions, an aggregate of 15,600,544 shares of Founder Preferred Stock and 630,207 shares of common stock was

issued and outstanding.

At such time, the shares of Founder Preferred Stock and common stock owned by M1 Advisors represented approximately

60.14% of the issued and outstanding shares of capital stock of the Company on a fully-diluted basis and the shares of Founder Preferred

Stock owned by Mr.

Cooper represented approximately 28.80% of the issued and outstanding shares of capital stock of the Company on a

fully-diluted basis.

The shares of Founder Preferred Stock acquired by M1 Advisors were purchased with funds that M1 Advisors borrowed

from another entity controlled by Mr.

the change in control, as described above, the board of directors determined to establish the Company in the rapidly-growing cannabis

industry, initially in the State of California.

The primary activity of the Company’s management is to seek and investigate

various opportunities in the California cannabis industry, and if such investigation warrants, acquire assets and create a business

around them, acquire part or all of an operating cannabis business and or invest or joint venture with other more established

companies already in the cannabis industry.

The Company will not restrict its search to any specific business, segment of the

cannabis industry or geographical location and the Company may participate in a business venture of virtually any kind or nature

that is beneficial to the Company and its shareholders.

Management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness

of accounting policies and their application.

Critical accounting policies and practices are those that are both most important

to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective,

or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain.

The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted

accounting principles.

As of December 31, 2020, the primary activity of the Company’s management

is to develop and implement a plan to manufacture high-performance computer systems that are scalable, upgradeable and cost effective

for processing cryptocurrencies, tokens and blockchain-based transactions, and if other opportunities warrant, acquire assets

and all or part of other companies operating in the cryptocurrency mining hardware industry and or invest or joint venture with

other more established companies already in the industry.

The Company will not restrict its search to any specific business, segment

of the cryptocurrency mining hardware industry or geographical location and the Company may participate in a business venture

of virtually any kind or nature that is beneficial to the Company and its shareholders.

of Presentation

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

The Company has

no established operations.

accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States

of America (“GAAP”) and assuming that the Company will continue as a going concern.

The Company has no established operations

as of December 31, 2020.

Management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting

policies and their application.

Critical accounting policies and practices are those that are both most important to the portrayal of

the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments,

often as a result of the need to make estimates about the effects of matters that are inherently uncertain.

The Company’s significant

and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.

Concern and Liquidity

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financing and shareholder contributions.

Management expects to incur additional losses and cash outflows in the foreseeable future

in connection with its operating activities.

Company’s financial statements have been presented on a going concern basis, which contemplates the realization

of assets and the satisfaction of liabilities in the normal course of business.

Management expects to incur additional losses and cash outflows in the foreseeable future in

connection with its operating activities.

Company’s financial statements have been presented on a going concern basis, which contemplates the realization of assets and the

satisfaction of liabilities in the normal course of business.

Company is subject to a number of risks similar to those of other similar stage companies, including dependence on key individuals;

successful development, marketing and branding of products;

development, marketing and branding of products;

uncertainty of product development and generation of revenues;

on outside sources of financing;

dependence on outside

sources of financing;

risks associated with research and development;

dependence on third-party suppliers and collaborators;

protection of intellectual property;

of intellectual property;

and competition with larger, better-capitalized companies.

Ultimately, the attainment of

profitable operations is dependent on future events, including obtaining adequate financing to fund its operations and generating

a level of revenues adequate to support the Company’s cost structure.

Ultimately, the attainment of profitable operations

is dependent on future events, including obtaining adequate financing to fund its operations and generating a level of revenues adequate

to support the Company’s cost structure.

Company will need to raise debt or equity financing in the future in order to continue its operations and achieve its growth targets.

However, there can be no assurance that such financing will be available in sufficient amounts and on acceptable terms, when and

if needed, or at all.

The precise amount and timing of the funding needs cannot be determined accurately at this time, and will

depend on a number of factors, including market demand for the Company’s products and services, the success of product development

efforts, the timing of receipts for customer deposits, the management of working capital, and the continuation of normal payment

terms and conditions for purchase of goods and services.

The Company believes its cash balances and cash flow from operations

will not be sufficient to fund its operations and growth for the next twelve months from the issuance date of these financial

If the Company is unable to substantially increase revenues, reduce expenditures, or otherwise generate cash flows

from operations, then the Company will likely need to raise additional funding from investors or through other avenues to continue

as a going concern.

Reclassification

amounts for 2018 have been reclassified to conform to the classification for 2019.

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

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

assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting

Value Disclosures of Financial Instruments

However, there can be no assurance that such financing will be available in sufficient amounts and on acceptable terms, when and if needed,

The precise amount and timing of the funding needs cannot be determined accurately at this time, and will depend on a number

of factors, including market demand for the Company’s products and services, the success of product development efforts, the timing

of receipts for customer deposits, the management of working capital, and the continuation of normal payment terms and conditions for

purchase of goods and services.

The Company believes its cash balances and cash flow from operations will not be sufficient to fund its

operations and growth for the next twelve months from the issuance date of these financial statements.

If the Company is unable to substantially

increase revenues, reduce expenditures, or otherwise generate cash flows from operations, then the Company will likely need to raise

additional funding from investors or through other avenues to continue as a going concern.

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

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

liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods.

Value of Financial Instruments

Company has estimated the fair value of its financial instruments using the available market information and valuation methodologies

considered to be appropriate and has determined that the book value of the Company’s prepaid expenses, accounts payable

and accrued expenses, as of December 31, 2019 and 2018, respectively, approximate fair value based of their short-term nature.

considered to be appropriate and has determined that the book value of the Company’s prepaid expenses, accounts payable and accrued

expenses, as of December 31, 2020 and 2019, respectively, approximate fair value based of their short-term nature.

Value Measurement

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

the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as

of the measurement date.

Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value

that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable

inputs be used when available.

Observable inputs are inputs that market participants would use in valuing the asset or liability

and are developed based on market data obtained from sources independent of the Company.

Unobservable inputs are inputs that reflect

the Company’s assumptions about the factors that market participants would use in valuing the asset or liability.

are three levels of inputs that may be used to measure fair value:

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

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

Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable

inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.

Observable inputs

are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from

sources independent of the Company.

Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that

market participants would use in valuing the asset or liability.

There are three levels of inputs that may be used to measure fair value:

1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

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3 - Unobservable inputs which are supported by little or no market activity.

fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs

when measuring fair value.

fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when

measuring fair value.

of and for the year ended December 31, 2020, the Company had no assets or liabilities that require fair value measurement.

Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.

At December 31, 2019 and 2018, the Company held only cash deposits at a financial institution.

Company follows FASB Accounting Standards Codification (“ASC”) section 850-10 for the identification of related parties

and disclosure of related party transactions.

and Cash Equivalents

Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash

Cash and cash equivalents are recorded at cost, which approximates its fair value.

As of December 31, 2020 and

2019, the Company held only cash deposits at a financial institution.

Company follows FASB Accounting Standards Codification (“ASC”) section 850-10 for the identification of related parties and

disclosure of related party transactions.

to ASC section 850-10-20 the related parties include (a.) affiliates of the Company (“Affiliate”

means, with respect

to any specified Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled

by or is under common control with such Person, as such terms are used in and construed under Rule 405 under the Securities Act);

(b.) entities for which investments in their equity securities would be required, absent the election of the fair value option

under the Fair Value Option of ASC section 825–10–15, to be accounted for by the equity method by the investing entity;

(c.) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship

of management;

(d.) principal owners of the Company;

means, with respect to any

specified Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is

under common control with such Person, as such terms are used in and construed under Rule 405 under the Securities Act);

(b.) entities

for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value

Option of ASC section 825–10–15, to be accounted for by the equity method by the investing entity;

(c.) trusts for the benefit

of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management;

(d.) principal owners

of the Company;

(e.) management of the Company;

(f.) other parties with which the Company

may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that

one of the transacting parties might be prevented from fully pursuing its own separate interests;

and (g.) other parties that

can significantly influence the management or operating policies of the transacting parties or that have an ownership interest

in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties

might be prevented from fully pursuing its own separate interests.

(f.) other parties with which the Company may deal if one party controls or can significantly

influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from

fully pursuing its own separate interests;

and (g.) other parties that can significantly influence the management or operating policies

of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other

to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense

allowances, and other similar items in the ordinary course of business.

However, disclosure of transactions that are eliminated

in the preparation of consolidated or combined financial statements is not required in those statements.

The disclosures shall

(a.) the nature of the relationship(s) involved;

(b.) a description of the transactions, including transactions to which

no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other

information deemed necessary to an understanding of the effects of the transactions on the financial statements;

(c.) the dollar

amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the

method of establishing the terms from that used in the preceding period;

and (d.) amounts due from or to related parties as of

the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

However, disclosure of transactions that are eliminated in the

preparation of consolidated or combined financial statements is not required in those statements.

The disclosures shall include:

the nature of the relationship(s) involved;

(b.) a description of the transactions, including transactions to which no amounts or nominal

amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary

to an understanding of the effects of the transactions on the financial statements;

(c.) the dollar amounts of transactions for each

of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that

used in the preceding period;

and (d.) amounts due from or to related parties as of the date of each balance sheet presented and, if

not otherwise apparent, the terms and manner of settlement.

and Contingencies

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Certain conditions may exist as of the date the financial

statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events

occur or fail to occur.

The Company assesses such contingent liabilities, and such assessment inherently involves an exercise

In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted

claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted

claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur

or fail to occur.

The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment.

In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result

in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived

merits of the amount of relief sought or expected to be sought therein.

the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability

can be estimated, then the estimated liability would be accrued in the Company’s financial statements.

If the assessment

indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be

estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material,

would be disclosed.

contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would

be disclosed.

Company accounts for debt discounts originating in connection with conversion features that remain embedded in the related notes

in accordance with ASC 470-20, Debt with Conversion and Other Options .

These costs are classified on the balance

sheet as a direct deduction from the debt liability.

The Company amortizes these costs over the term of its debt agreements as

interest expense-debt discount in the statement of operations.

If the assessment indicates

that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the

nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

Company accounts for debt discounts originating in connection with conversion features that remain embedded in the related notes in accordance

with ASC 470-20, Debt with Conversion and Other Options .

These costs are classified on the balance sheet as a direct deduction

from the debt liability.

The Company amortizes these costs over the term of its debt agreements as interest expense - debt discount in

the statement of operations.

connection with financing arrangements, the Company has issued warrants to purchase shares of its common stock.

The outstanding

warrants are standalone instruments that are not puttable or mandatorily redeemable by the holder and are classified as equity

The Company measures the fair value of the awards using the Black-Scholes option pricing model as of the measurement date.

The outstanding warrants

are standalone instruments that are not puttable or mandatorily redeemable by the holder and are classified as equity awards.

measures the fair value of the awards using the Black-Scholes Merton (“BSM”) option pricing model as of the measurement date.

account for our stock-based compensation under ASC 718, “

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Stock Compensation ”

fair value based method.

Under this method, compensation cost is measured at the grant date based on the value of the award and

is recognized over the service period, which is usually the vesting period.

This guidance establishes standards for the accounting

for transactions in which an entity exchanges it equity instruments for goods or services.

It also addresses transactions in which

an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments

or that may be settled by the issuance of those equity instruments.

use the fair value method for equity instruments granted to non-employees and use the Black-Scholes model for measuring the fair

value of options.

The stock based fair value compensation is determined as of the date of the grant (measurement date) and is

recognized over the vesting periods.

and Diluted Net Loss per Common

net loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding during

Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during

the period, adjusted for the dilutive effect of common stock equivalents.

In periods when losses are reported, the weighted-average

number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive.

Company had a net loss for the year ended December 31, 2019, the series A convertible preferred stock and the outstanding warrants

would be considered anti-dilutive.

Company accounts for income taxes in accordance with ASC 740, Income Taxes , deferred tax assets and liabilities are computed

based on the difference between the financial reporting and income tax bases of assets and liabilities using the enacted marginal

ASC 740 requires that the net deferred tax asset be reduced by a valuation allowance if, based on the weight of available

evidence, it is more likely than not that some portion or all of the net deferred tax asset will not be realized.

using the fair value

based method.

Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over

the service period, which is usually the vesting period.

This guidance establishes standards for the accounting for transactions in which

an entity exchanges it equity instruments for goods or services.

It also addresses transactions in which an entity incurs liabilities

in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by

the issuance of those equity instruments.

use the fair value method for equity instruments granted to non-employees and use the BSM model for measuring the fair value of options.

The stock based fair value compensation is determined as of the date of the grant (measurement date) and is recognized over the vesting

Company accounts for income taxes in accordance with ASC 740, Income Taxes , deferred tax assets and liabilities are computed based

on the difference between the financial reporting and income tax bases of assets and liabilities using the enacted marginal tax rate.

ASC 740 requires that the net deferred tax asset be reduced by a valuation allowance if, based on the weight of available evidence, it

is more likely than not that some portion or all of the net deferred tax asset will not be realized.

Company is a United States Company, incorporated in the state of Delaware and has its office in California.

The Company has no

foreign operations.

tax reform bill that Congress voted to approve December 20, 2017, also known as the “Tax Cuts and Jobs Act”, made

sweeping modifications to the Internal Revenue Code, including a much lower corporate tax rate, changes to credits and deductions,

and a move to a territorial system for corporations that have overseas earnings.

The act replaced the prior-law graduated corporate

tax rate, which taxed income over $10 million at 35%, with a flat rate of 21%.

The Company has no foreign

tax reform bill that Congress voted to approve December 20, 2017, also known as the “Tax Cuts and Jobs Act”, made sweeping

modifications to the Internal Revenue Code, including a much lower corporate tax rate, changes to credits and deductions, and a move

to a territorial system for corporations that have overseas earnings.

The act replaced the prior-law graduated corporate tax rate, which

taxed income over $10 million at 35%, with a flat rate of 21%.

Company accounts for income taxes using an asset and liability approach, which requires the recognition of taxes payable or refundable

for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized

in the Company’s financial statements or tax returns.

The measurement of current and deferred tax assets and liabilities

is based on provisions of enacted tax laws;

for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in the

Company’s financial statements or tax returns.

The measurement of current and deferred tax assets and liabilities is based on provisions

of enacted tax laws;

the effects of future changes in tax laws or rates are not anticipated.

If necessary,

the measurement of deferred tax assets is reduced by the amount of any tax benefits that are not expected to be realized based

on available evidence.

Company has adopted guidance related to the accounting for uncertainty in income taxes which prescribes rules for recognition,

measurement and classification in the financial statements of tax positions taken or expected to be taken in a tax return.

guidance prescribes a two-step approach which involves evaluating whether a tax position will be more likely than not (greater

than 50 percent likelihood) sustained upon examination based on the technical merits of the position.

The second step requires

that any tax position that meets the more likely than not recognition threshold be measured and recognized in the financial statements

at the largest amount of benefit that is a greater than 50 percent likelihood of being realized upon settlement.

If necessary, the measurement of deferred

tax assets is reduced by the amount of any tax benefits that are not expected to be realized based on available evidence.

Company has adopted guidance related to the accounting for uncertainty in income taxes which prescribes rules for recognition, measurement

and classification in the financial statements of tax positions taken or expected to be taken in a tax return.

The guidance prescribes

a two-step approach which involves evaluating whether a tax position will be more likely than not (greater than 50 percent likelihood)

sustained upon examination based on the technical merits of the position.

The second step requires that any tax position that meets the

more likely than not recognition threshold be measured and recognized in the financial statements at the largest amount of benefit that

is a greater than 50 percent likelihood of being realized upon settlement.

Company’s policy is to recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense.

The Company is not currently under examination by any taxing authority nor has the Company been notified of a pending examination.

The statute of limitations for which the Company is generally no longer subject to federal or state income tax examinations by

tax authorities is for years before 2012.

Cash Held by Officer

the transition of the new Company management in September 2018, the Company’s previous bank account was closed.

management was not able to set up a new bank account.

The fourth quarter, of 2018, operating expenses, of approximately $38,000

were paid from a bank account held in the name of the Company’s Chief Executive officer.

the $50,000 raised from the issuance of the Series A convertible preferred stock, in the fourth quarter of 2018 (see note 5),

was transferred into a bank account held in the name of the Chief Executive Officer.

amounts for cash held by officer of $12,000, as of December 31, 2018, was a net amount.

During the first quarter of 2019, the

Company has its own bank account and funds of the Company have been transferred into the Company’s bank account.

Company is not currently under examination by any taxing authority nor has the Company been notified of a pending examination.

of limitations for which the Company is generally no longer subject to federal or state income tax examinations by tax authorities is

for years before 2013.

use ASC 260, “

Earnings Per Share ”

for calculating the basic and diluted earnings (loss) per share.

We compute basic

earnings (loss) per share by dividing net income (loss) by the weighted average number of common shares outstanding.

Diluted earnings

(loss) per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common

shares outstanding during the period using the treasury stock method.

Dilutive potential common shares include outstanding stock options

and warrants and stock awards.

For periods with a net loss, basic and diluted loss per share are the same, in that any potential common

stock equivalents would have the effect of being anti-dilutive in the computation of net loss per share.

were 1,800,214 common share equivalents at December 31, 2020 and 1,397,000 common share equivalents at December 31, 2019.

For the years ended December 31, 2020 and 2019, these potential shares were excluded from the shares used to calculate diluted.

These securities

were not included in the computation of diluted net earnings per share as their effect would have been antidilutive.

Accounting Pronouncements

to accounting principles are established by the Financial Accounting Standards Board’s (“FASB”) in the form of Accounting

Standards Update (“ASU”) to the FASB’s Codification.

We consider the applicability and impact of all ASUs on our financial

position, results of operations, cash flows, or presentation thereof.

The Company reviewed all recently issued pronouncement in 2021,

but not yet effective, and does not believe the future adoption of any such pronouncements may be expected to cause a material impact

on the Company’s financial condition or the results of its operations.

Cash and Cash Equivalents

equivalents are short-term cash investments, which are made for varying periods of up to three (3) months, depending on the immediate

cash requirements of the Company and earn interest at prevailing short-term investment rate.

As of December 31, 2020 and 2019, the Company

held only cash deposits at a financial institution amounting to $0 and $123,000, respectively.

Related Party Transactions

the years ended December 331, 2019 ad 2018, the Company paid approximately $180,000 and $45,000 to M1 Advisors for the services

of the Company’s CEO and miscellaneous operating expenses.

Company incurred approximately $180,000 for years ended December 31, 2020 and 2019, and paid approximately $112,000 and $180,000,

respectively, to M1 Advisors for the services of the Company’s CEO and miscellaneous operating expenses.

Accounts Payable and Accrued Expenses

payable and accrued expenses as of December 31, are as follows:

Accounts payable

Accrued expenses

Accrued interest

Accounts payable and accrued expenses

Notes Payable

During the year ended December 31, 2020, the Company

issued a promissory note for $11,000 (“Promissory Note”).

The total proceeds were $10,000, due to approximately $1,000 for

an original issue discount.

The Promissory Note is non-interest bearing with the principal due and payable in August 2020.

of unpaid principal on the date of maturity will accrue interest at rate of 10% per annum (default interest).

The original issue discount

was amortized over the term of the Promissory Note, which was one month.

As of September 30, 2020, the Promissory note was in default,

so the Company accrued approximately $1,000 of default interest.

Convertible Promissory Notes

the year ended December 31, 2020, the Company issued convertible promissory notes in the amount of $213,000 (the “Notes”).

The total proceeds were approximately $460,000, due to approximately $46,000 of original issue discount.

The Notes are non-interest

bearing with the principal due and payable starting in February 2020.

Any amount of unpaid principal on the date of maturity will

accrue interest at rate of 10% per annum (default interest).

The principal amount and all accrued interest are convertible into

shares of the Company’s common stock, as of the date of issuance, at a rate of $1.00 per share (“Conversion Rate”).

The conversion rate is adjustable if, at any time when any principal amount of the Notes remains unpaid or unconverted, the Company

issues or sells any shares of the Company’s common stock for no consideration or for a consideration per share (before deduction

of reasonable expenses or commissions or underwriting discounts or allowances in connection therewith), which is less than the

Conversion Rate in effect on the date of such issuance (or deemed issuance) of such shares of common stock (a “Dilutive

Issuance”).

Immediately upon a Dilutive Issuance, the Conversion Rate will be reduced to the amount of the consideration

per share received by the Company in such Dilutive Issuance.

Events of default include failure to issue conversion shares, the

occurrence of a breach or default under any other agreement, instrument or document involving any indebtedness for borrowed money

of more than $100,000 in the aggregate, bankruptcy filing, application for the appointment of a custodian, trustee or receiver,

insolvency, the Company’s common stock delisted, or dissolution, winding up, or termination of the business of the Company.

connection with the issuance of the Notes, the Company issued to the purchasers of the Notes stock purchase warrants to purchase

an aggregate of 253,000 shares of the Company’s common stock for a purchase price of $1.50 per share, subject to adjustments.

accordance with ASC 470 - Debt , the Company has allocated the cash proceeds amounts of the Notes among the Notes, the warrants

and the conversion feature.

The relative fair value of the warrants issued totaled approximately $205,000 and of the beneficial

conversion totaled approximately $239,000, which amounts are being amortized and expensed over the term of the Notes.

year ended December 31, 2019, the amortization expense was approximately $277,000.

Company determined that the conversion feature of the Notes would not be an embedded feature to be bifurcated and accounted for

as a derivative in accordance with ASC 818-15 Derivatives and Hedging .

of December 31, 2019, convertible promissory notes consisted of the following:

The total cash proceeds were approximately $60,000, approximately $147,000 from the conversion of Series A Preferred Stock into convertible

promissory note and approximately $6,000 original issue discount (“OID”).

The Notes are non-interest bearing with the principal

due and payable starting in February 2021.

Any amount of unpaid principal on the date of maturity will accrue interest at rate of 10%

per annum (default interest).

The principal amount and all accrued interest are convertible into shares of the Company’s common

stock, as of the date of issuance, at a rate of $1.00 per share (“Conversion Rate”).

The conversion rate is adjustable if,

at any time when any principal amount of the Notes remains unpaid or unconverted, the Company issues or sells any shares of the Company’s

common stock for no consideration or for a consideration per share (before deduction of reasonable expenses or commissions or underwriting

discounts or allowances in connection therewith), which is less than the Conversion Rate in effect on the date of such issuance (or deemed

issuance) of such shares of common stock (a “Dilutive Issuance”).

Immediately upon a Dilutive Issuance, the Conversion Rate

will be reduced to the amount of the consideration per share received by the Company in such Dilutive Issuance.

Events of default include

failure to issue conversion shares, the occurrence of a breach or default under any other agreement, any money judgment, writ or similar

process entered or filed against the Company or any its property or other assets for more than $100,000, bankruptcy filing, application

for the appointment of a custodian, trustee or receiver, insolvency, the Company’s common stock delisted, or dissolution, winding

up, or termination of the business of the Company.

connection with the issuance of the Notes, the Company issued to the purchasers of the Notes stock purchase warrants to purchase an aggregate

of 359,000 shares of the Company’s common stock for a purchase price of $1.50 per share, subject to adjustments.

accordance with ASC 470 - Debt , the Company has accounted for the issuance of the Notes as an extinguishment of the series A preferred

Under extinguishment accounting, the difference between the fair value of the Notes and book basis of the series A preferred stock

of $86,000 was accounted for as a loss on extinguishment.

Also, the fair value of the Warrants of $52,000 was recorded as a loss on extinguishment.

The difference between the fair value of the Notes and the face value of the notes of $58,000 was recorded as additional paid on capital.

In addition, the Company has allocated the cash proceeds amounts of the Notes among the Notes, the warrants and the conversion

The relative fair value of the warrants issued totaled approximately $3,000 and of the beneficial conversion totaled approximately

$0, which amounts are being amortized and expensed over the term of the Notes.

For the year ended December 31, 2020, the amortization

expense was approximately $187,000.

Company determined that the conversion feature of the Notes would not be an embedded feature to be bifurcated and accounted for as a

derivative in accordance with ASC 818-15 Derivatives and Hedging .

The convertible promissory notes consisted of the following:

December 31, 2020

December 31, 2019

Principal Amount

2 unchanged sentences

Conversion feature discount

discounts of $166,000, as of December 31, 2019, will be amortized and expensed over the remaining contractual life of the convertible

promissory notes.

discounts of $5,000 as of December 31, 2020, will be amortized and expensed over the remaining contractual life of the convertible promissory

The amortization expense will be approximately $5,000 for the year ending December 31, 2021.

As of the date

of release of these financial statements, approximately $242,000 of the convertible promissory notes, were not repaid as of

the maturity date.

The note holders have not requested payment.

expense on default convertible notes amounted to approximately $39,000 and $0 for the years ended December 31, 2020 and

Stockholders’

(Deficit) Equity

August 28, 2018, the Company filed a Certificate of Change to the Articles of Incorporation with the Secretary of State of the

State of Nevada to (i) reduce the authorized shares of common stock from 100,000,000 shares to 4,000,000 shares and (ii) to effectuate

a stock combination or reverse stock split whereby every 25 outstanding shares of the Company’s common stock were converted

into one share of common stock.

August 28, 2018, the Company filed a Certificate of Change to the Articles of Incorporation with the Secretary of State of the State

of Nevada to (i) reduce the authorized shares of common stock from 100,000,000 shares to 4,000,000 shares and (ii) to effectuate a stock

combination or reverse stock split whereby every 25 outstanding shares of the Company’s common stock were converted into one share

of common stock.

This amendment became effective on August 30, 2018.

All share and per share amounts in these financial

statements have been restated to give effect to such reverse stock split.

December 20, 2018, the Company filed a Certificate of Amendment to the Articles of Incorporation with the Secretary of State of

the State of Nevada to increase the Company’s authorized shares of common stock from 4,000,000 shares to 100,000,000 shares.

This amendment became effective immediately upon filing on December 20, 2018.

Company is authorized to issue 200,000,000 shares of which 100,000,000 shares shall be preferred stock, par value $0.001 per share,

and 100,000,000 shares shall be common stock, par value $0.001 per share.

accordance with the Control Purchase Agreement, the Company was required to effectuate a reverse stock split of the Company’s

common stock (the “Reverse Stock Split”).

The Company’s board of directors approved the Reverse Stock Split

of the Company’s authorized, issued and outstanding shares of common stock at a ratio of one for twenty-five.

In connection

with the Reverse Stock Split, which was effected on September 11, 2018, the issued and outstanding shares of the Company’s

common stock decreased from 15,719,645 shares to 630,207 shares as of December 31, 2017.

The par value was amended to be $0.001

All share information has been retroactively restated for the Reverse Stock Split.

the year ended December 31, 2018, the Company issued 250,000 shares of the Company’s common stock for $250.

All share and per share amounts in these financial statements have

been restated to give effect to such reverse stock split.

December 20, 2018, the Company filed a Certificate of Amendment to the Articles of Incorporation with the Secretary of State of the State

of Nevada to increase the Company’s authorized shares of common stock from 4,000,000 shares to 100,000,000 shares.

This amendment

became effective immediately upon filing on

December 20, 2018.

Company is authorized to issue 200,000,000 shares of which 100,000,000 shares shall be preferred stock, par value $0.001 per share, and

100,000,000 shares shall be common stock, par value $0.001 per share.

accordance with the Control Purchase Agreement, the Company was required to effectuate a reverse stock split of the Company’s common

stock (the “Reverse Stock Split”).

The Company’s board of directors approved the Reverse Stock Split of the Company’s

authorized, issued and outstanding shares of common stock at a ratio of one for twenty-five.

In connection with the Reverse Stock Split,

which was effected on September 11, 2018, the issued and outstanding shares of the Company’s common stock decreased from 15,719,645

shares to 630,207 shares as of December 31, 2017.

The par value was amended to be $0.001 per share.

All share information has been retroactively

restated for the Reverse Stock Split.

of December 31, 2020 and 2019, the Company issued 16,634,951 shares for both periods at $0.001 per share.

Preferred Stock

September 12, 2018, the Company’s board of directors approved, and the Company filed with the Secretary of State of the

State of Nevada, a certificate of designation pursuant to which 15,754,744 shares of the Company’s authorized preferred

stock were designated as Series A Preferred Stock.

The Series A Preferred Stock had one vote per share, had other rights, including

upon liquidation of the Company, identical to those of the Company’s common stock, and was automatically convertible into

shares of the Company’s common stock, initially on a one-for-one basis, upon any increase in the Company’s authorized

but unissued shares of the Company’s common stock to a number that will allow for the issued and outstanding shares of Series

A Preferred Stock to be converted in full.

September 12, 2018, the Company issued and sold an aggregate of 15,754,744 shares of Series A Preferred Stock for an aggregate

purchase price of $16,000.

October 14, 2018, the board of directors of Company approved, and on October 22, 2018, the holders of all of the outstanding shares

of the Company’s Series A Preferred Stock consented to, an amendment to the certificate of designation that the Company

filed with the Secretary of State of the State of Nevada to create the outstanding Series A Preferred Stock, to change the designation

of the outstanding Series A Preferred Stock from “Series A Preferred Stock”

September 12, 2018, the Company’s board of directors approved, and the Company filed with the Secretary of State of the State of

Nevada, a certificate of designation pursuant to which 15,754,744 shares of the Company’s authorized preferred stock were designated

as Series A Preferred Stock.

The Series A Preferred Stock had one vote per share, had other rights, including upon liquidation of the

Company, identical to those of the Company’s common stock, and was automatically convertible into shares of the Company’s

common stock, initially on a one-for-one basis, upon any increase in the Company’s authorized but unissued shares of the Company’s

common stock to a number that will allow for the issued and outstanding shares of Series A Preferred Stock to be converted in full.

September 12, 2018, the Company issued and sold an aggregate of 15,754,744 shares of Series A Preferred Stock for an aggregate purchase

price of $16,000.

October 14, 2018, the board of directors of Company approved, and on October 22, 2018, the holders of all of the outstanding shares of

the Company’s Series A Preferred Stock consented to, an amendment to the certificate of designation that the Company filed with

the Secretary of State of the State of Nevada to create the outstanding Series A Preferred Stock, to change the designation of the outstanding

Series A Preferred Stock from “Series A Preferred Stock”

to “Founder Preferred Stock.”

An amendment to the Certificate to effect such change was filed with the Secretary of State of Nevada on October 29, 2018.

An amendment to the Certificate

to effect such change was filed with the Secretary of State of Nevada on October 29, 2018.

December 20, 2018, all of the Founder Preferred Stock was converted into 15,754,744 shares of the Company’s common stock.

A Convertible Preferred Stock

January 2019, the Company issued and sold an aggregate of 50,000 shares of Series A Preferred Stock for an aggregate purchase

price of $69,000, or $1.38 per share.

January 2019, the Company issued and sold an aggregate of 50,000 shares of Series A Preferred Stock for an aggregate purchase price of

$69,000, or $1.38 per share.

Company initiated a private placement of shares of series A convertible preferred stock.

During the years ended December 31, 2019

and 2018, the Company sold 50,000 and 35,975, respectively, shares of Series A for total proceeds of approximately$69,000 and

$50,000, respectively, or $1.38 per share.

Series A is convertible into shares of the Company’s common stock at the rate of $1.38 per share, subject to adjustments

based on the Company’s future sales of financial instruments at a value less than $1.38 per share.

The holders of the Series

A have the right to convert any time after the date of issuance.

With the issuance of the convertible promissory notes, as explained

in Note 4 above, the Series A’s conversion rate adjusted to $1.00 per share.

In accordance with ASC - 470, the Company has

calculated the effect of the conversion rate adjustment, which was approximately $36,000.

The conversion rate adjustment

has been treated as a deemed dividend, which has been presented in the Statement of Changes in Stockholders’

Series A is mandatorily convertible upon (i) the closing of the sale of shares of the Company’s common stock to the public

in an underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended,

resulting in at least $10,000,000 of gross proceeds to the Company, (ii) the close of business on the sixtieth consecutive day

on which the closing price of the Company’s common stock on the OTC Markets is at least $2.80 per share, subject to appropriate

adjustment in the event of any stock dividend, stock split, stock combination or other similar recapitalization with respect to

the common stock, or (iii) the affirmative vote of the holders of at least 66⅔% of the outstanding shares of Series A, given

at a meeting of such stockholders duly called for that purpose or pursuant to a written consent of stockholders all outstanding

shares of Series A shall automatically be converted into shares of the Company’s common stock, at the then effective conversion

any matter presented to the stockholders of the Company for their action or consideration at any meeting of stockholders of the

Company (or by written consent of stockholders in lieu of meeting), each holder of outstanding shares of Series A shall be entitled

to cast the number of votes equal to the number of whole shares of common stock into which the shares of Series A held by such

holder are convertible as of the record date for determining stockholders entitled to vote on such matter.

Except as provided

by law or by the other provisions of the Articles of Incorporation, holders of Series A shall vote together with the holders of

common stock as a single class.

and after the date of the issuance of any shares of Series A, a cumulative dividend on each outstanding share of Series A Preferred

Stock shall accrue at a rate per annum equal to ten percent of the Series A original issue price.

Accrued dividends on the Series

A shall be paid in shares of the Company’s common stock, such shares to be valued for such purpose at the applicable series

A conversion price

Contributions

the quarter ended September 30, 2018, the Company did not have sufficient funds to pay off certain outstanding liabilities.

then-majority shareholders of the Company assumed and paid off these liabilities of approximately $9,000.

During the years ended December 31, 2019 and

2018, the Company sold 50,000 and 35,975, respectively, shares of Series A for total proceeds of approximately $69,000 and $50,000, respectively,

or $1.38 per share.

Series A is convertible into shares of the Company’s common stock at the rate of $1.38 per share, subject to adjustments based

on the Company’s future sales of financial instruments at a value less than $1.38 per share.

The holders of the Series A have the

right to convert any time after the date of issuance.

With the issuance of the convertible promissory notes, as explained in Note 5

above, the Series A’s conversion rate adjusted to $1.00 per share.

In accordance with ASC 470, the Company has calculated

the effect of the conversion rate adjustment, which was approximately $36,000.

The conversion rate adjustment has been treated as a deemed

dividend, which has been presented in the Statement of Changes in Stockholders’

Series A is mandatorily convertible upon (i) the closing of the sale of shares of the Company’s common stock to the public in an

underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, resulting

in at least $10,000,000 of gross proceeds to the Company, (ii) the close of business on the sixtieth consecutive day on which the closing

price of the Company’s common stock on the OTC Markets is at least $2.80 per share, subject to appropriate adjustment in the event

of any stock dividend, stock split, stock combination or other similar recapitalization with respect to the common stock, or (iii) the

affirmative vote of the holders of at least 66⅔% of the outstanding shares of Series A, given at a meeting of such stockholders

duly called for that purpose or pursuant to a written consent of stockholders all outstanding shares of Series A shall automatically

be converted into shares of the Company’s common stock, at the then effective conversion rate.

any matter presented to the stockholders of the Company for their action or consideration at any meeting of stockholders of the Company

(or by written consent of stockholders in lieu of meeting), each holder of outstanding shares of Series A shall be entitled to cast the

number of votes equal to the number of whole shares of common stock into which the shares of Series A held by such holder are convertible

as of the record date for determining stockholders entitled to vote on such matter.

Except as provided by law or by the other provisions

of the Articles of Incorporation, holders of Series A shall vote together with the holders of common stock as a single class.

and after the date of the issuance of any shares of Series A, a cumulative dividend on each outstanding share of Series A Preferred Stock

shall accrue at a rate per annum equal to ten percent of the Series A original issue price.

Accrued dividends on the Series A shall be

paid in shares of the Company’s common stock, such shares to be valued for such purpose at the applicable series A conversion price.

February 11, 2020, the Company converted 85,975 shares of Series A Preferred Stock into a Convertible Promissory Notes in the principal

amount approximately $147,000.

of Stock Options

1 unchanged sentence

Stock Options Plan to purchase 685,000, 250,000 and 15,000 shares of the Company’s common stock.

The Options will have

a life of three years from the vesting date and an exercise price of $0.001 per share with the following vesting terms:

The Options will have a life of

three years from the vesting date and an exercise price of $0.001 per share with the following vesting terms:

to purchase 685,000 shares

shares vest upon the signing of the consulting agreement;

shares vest on the first anniversary of the date on which the consultant serves as the Vice President of Capital Markets of

the Company as a full-time employee.

to purchase 250,000

385,000 shares vest upon

the signing of the consulting agreement;

300,000 shares vest on

the first anniversary of the date on which the consultant serves as full-time employee as the Company’s Vice President of Capital

As of the expiration of the contract, the employee was not hired by the Company.

These options would have been issued if

the performance condition was met.

As the performance condition was not met prior to expiration of the contract, these options

were neither issued nor ever granted.

to purchase 250,000 shares

shares vest upon the completion of the Company’s first Retail Showcase Store.

shares vest on the first anniversary date on which the consultant serves as the Vice President of Retail Store Development

of the Company as full-time employee;

As the performance condition was not met prior

to expiration of the contract, these options were neither issued nor ever granted;

shares vest on the first anniversary date on which the consultant serves as the Vice President of Retail Store Development of the

Company as full-time employee.

As the performance condition was not met prior to expiration of the contract, these options were

neither issued nor ever granted;

shares to vest 1/12 th per month thereafter.

As the performance condition was not met prior to expiration of the contract,

these options were neither issued nor ever granted.

to purchase 15,000 shares

shares to vest upon the completion of the Company’s first Retail Showcase Store.

options to be granted to the consultants will be performance-based awards to be vested once the individuals are considered to

be employees of the Company.

Each of the consultants has the option to become a full-time employee when the Company has received

As the performance condition was not met

prior to expiration of the contract, these options were neither issued nor ever granted.

options that could be granted to the consultants will be performance-based awards to be vested once the individuals are considered

to be employees of the Company.

Each of the consultants has the option to become a full-time employee only after Company has received

a minimum of $5,000,000 in debt or equity financing for the Company’s operations (the “Financing”).

the time that the Company would begin to operate and use the services of the three option holders.

Until the Financing occurs,

the Company will be in the predevelopment stage of its intended business model.

This is the time

that the Company would begin to operate and use the services of the three option holders.

Until the Financing occurs, the Company will

be in the predevelopment stage of its intended business model.

As of 12/31/2020 all of these consultant agreements had been terminated,

as such, no options were issued nor ever granted.

option to purchase 385,000 shares of the Company’s common stock, for $0.001 per share, was granted and vested on April 1, 2019.

For the year ended December 31, 2019, the compensation expense, classified as professional fees in the statement of operations,

was $577,000, which was calculated using the Black-Scholes fair value option-pricing model with key input variables provided by

management, as of the date of issuance:

volatility of 324%, fair value of common stock $1.50, term of option 3 years, risk free

rate of 2.29% and dividend rate of $0.

table below summarizes the Company’s warrants activities for the reporting period ended December 31, 2019 and 2018 (all

For the year ended December 31, 2019, the compensation expense, classified as professional fees in the statement of operations, was $577,000,

which was calculated using the BSM fair value option-pricing model with key input variables provided by management, as of the date of

volatility of 324%, fair value of common stock $1.50, term of option 3 years, risk free rate of 2.29% and dividend rate of

table below summarizes the Company’s stock option activities for the reporting period ended December 31, 2020 and 2019 (all

share and per share data reflects the reverse stock split):

Price Range Per Share

Relative Fair

Intrinsic Value

Balance, January 1, 2019

3 unchanged sentences

Unvested, December 31, 2020

following table summarizes information concerning outstanding and exercisable warrants as of December 31, 2019:

Warrants Outstanding

Warrants Exercisable

following table summarizes information concerning outstanding and exercisable stock options as of December 31, 2020:

Stock Options Outstanding

Stock Options Exercisable

Range of Exercise Prices

Number Outstanding

Average Remaining Contractual Life (in years)

Weighted Average Exercise Price

Number Exercisable

Average Remaining Contractual Life (in years)

Weighted Average Exercise Price

table below summarizes the Company’s warrant activities for the reporting period ended December 31, 2020 and 2019

of warrants issued

Average Exercise Price

January 1, 2019

December 31, 2019

December 31, 2020

Deferred Tax Assets and Income Tax Provision

December 31, 2019, the Company had net operating loss (“NOL”) carry–forwards for Federal income tax purposes

of $979,000 that may be offset against future taxable income through 2037, in general.

No tax benefit has been reported

with respect to these net operating loss carry-forwards in the accompanying financial statements because the Company believes

that the realization of the Company’s net deferred tax assets of approximately $206,000 was not considered more likely

than not and accordingly, the potential tax benefits of the net operating loss carry-forwards are fully offset by a full valuation

December 31, 2020, the Company had net operating loss (“NOL”) carry forwards for Federal income tax purposes of

$1,425,000 that may be offset against future taxable income.

No tax benefit has been reported with respect to these net

operating loss carry-forwards in the accompanying financial statements because the Company believes that the realization of the

Company’s net deferred tax assets of approximately $1,425,000 was not considered more likely than not and accordingly, the

potential tax benefits of the net operating loss carry-forwards are fully offset by a full valuation allowance.

September 12, 2018, the Company believes that an “ownership change”

has occurred within the meaning of Sections 382

and 383 of the Code.

An ownership change is generally defined as a more than 50 percentage point increase in equity ownership

by “5 percent shareholders”

(as that term is defined for purposes of Sections 382 and 383 of the Code) in any three-year

period or since the last ownership change if such prior ownership change occurred within the prior three-year period.

of the ownership change on September 12, 2018, the limitations on the use of pre-change losses and other carry forward tax attributes

in Sections 382 and 383 of the Code apply and the Company will not be able to utilize any portion of their NOL carry forwards

from the years prior to December 31, 2017 and the portion of the NOL for 2018 allocable to the portion of the year prior to September

The utilization of the NOL for 2018 allocable to the portion of the year after September 12, 2018 and the NOLs from

subsequent years should not be affected by the ownership change on the September 12, 2018.

has occurred within the meaning of Sections 382 and 383

An ownership change is generally defined as a more than 50 percentage point increase in equity ownership by “5 percent

shareholders”

(as that term is defined for purposes of Sections 382 and 383 of the Code) in any three-year period or since the

last ownership change if such prior ownership change occurred within the prior three-year period.

As a result of the ownership change

on September 12, 2018, the limitations on the use of pre-change losses and other carry forward tax attributes in Sections 382 and 383

of the Code apply and the Company will not be able to utilize any portion of their NOL carry forwards from the years prior to December

31, 2017 and the portion of the NOL for 2018 allocable to the portion of the year prior to September 12, 2018.

The utilization of the

NOL for 2018 allocable to the portion of the year after September 12, 2018 and the NOLs from subsequent years should not be affected

by the ownership change on the September 12, 2018.

tax assets consist primarily of the tax effect of NOL carry-forwards.

The Company has provided a full valuation allowance on the

deferred tax assets because of the uncertainty regarding its realization.

The valuation allowance increased by approximately 161,000

for the year ended December 31, 2019.

The Company has provided a full valuation allowance on the deferred

tax assets because of the uncertainty regarding its realization.

The valuation allowance increased by approximately $93,000 and

$161,000 for the reporting periods ended

December 31, 2020 and 2019, respectively.

of deferred tax assets are as follows as of December 31:

4 unchanged sentences

Tax Provision in the Statements of Operations

reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income

taxes is as follows for the years ended December 31:

statutory income tax rate

in valuation allowance on net operating loss carry-forwards

income tax rate

reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income taxes

is as follows for the years ended December 31:

Federal statutory income tax rate

Change in valuation allowance on net operating loss carry-forwards

Effective income tax rate

Subsequent Events

Company has evaluated all events that occur after the balance sheet date through the date when the financial statements were issued

Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued

to determine if they must be reported.

The following events occurred.

January 16, 2020, the Company entered into a Stock Purchase Agreement dated as of January 15, 2020 (the “Purchase Agreement”)

with Terra Tech Corp., a Nevada corporation (the “Seller”), pursuant to which the Company agreed to purchase from

the Seller (the “Share Purchase”) all of the issued and outstanding capital stock of 1815 Carnegie Santa Ana Corp.,

a California corporation and a wholly-owned subsidiary of the Seller (“Carnegie Corp.”), for an aggregate purchase

price of $6.0 million consisting of (i) $3.0 million in cash and (ii) $3.0 million in shares of the Company’s common stock

(the “Share Consideration”).

February 2020, the Company entered into a conversion agreement with the holders of the series A convertible preferred stock.

holders agreed to exchange the 85,975 shares of series A convertible preferred stock, with a value of approximately $119,000 along

with undeclared dividends of approximately $15,000 for a total of $133,000, into convertible promissory notes with a principal

amount of approximately $147,000, which includes an original issuance discount of $14,000.

Also, the holders received warrants

to purchase 73,304 shares of the Company’s common stock for $1.50 per share.

The convertible promissory notes have a maturity

date of February 28,2021.

The management of the Company determined the following reportable non-adjusting event:

January 5, 2021, Piers Cooper (“Mr.

Cooper”), our President and a member of our Board of Directors, resigned as an

officer and director of our company (“Termination Agreement”).

As part of the Termination Agreement, Mr.

Cooper’s

agreed to return 3,674,330 shares of the Company’s common stock (“Cancelled Shares”).

The Cancelled shares

were to be returned within thirty days of Mr.

Cooper’s execution of the Termination Agreement, which was January 5, 2021.

The Cancelled Shares were returned and cancelled on April 19, 2021.

January 2021, the Company issued a promissory note for cash amounting to $15,000 with 8% annual interest per year and a maturity date

of March 31, 2022.

Interest will be computed starting January 11, 2021 and payable at maturity date together with the principal amount.

In the event of default, the interest rate of the note shall increase to 10% per annum and computed on the basis of the actual number

of days elapsed and a 365-day year.

February 2021, the Company issued a promissory note for cash amounting to $25,000 with 10% annual interest per year and a maturity date

of February 19, 2022.

The principal and accrued interest is payable in a single installment on or before the maturity date.

of default, the interest rate of the note shall increase to 15% per annum and computed on the basis of the actual number of days elapsed

and a 365-day or 366-day year.

March 2021, the Company issued a convertible promissory note in the amount of $55,000 (the “Note”).

The total proceeds

were approximately $50,000, due to approximately $5,000 for an original issue discount.

The Note is non-interest bearing with the principal

due and payable starting in March 2022.

Any amount of unpaid principal on the date of maturity will accrue interest at rate of

10% per annum (default interest).

The principal amount and all accrued interest are convertible into shares of the Company’s common

stock, as of the date of issuance, at a rate of $1.00 per share (“Conversion Rate”).

The conversion rate is adjustable if,

at any time when any principal amount of the Notes remains unpaid or unconverted, the Company issues or sells any shares of the Company’s

common stock for no consideration or for a consideration per share (before deduction of reasonable expenses or commissions or underwriting

discounts or allowances in connection therewith), which is less than the Conversion Rate in effect on the date of such issuance (or deemed

issuance) of such shares of common stock (a “Dilutive Issuance”).

Immediately upon a Dilutive Issuance, the Conversion Rate

will be reduced to the amount of the consideration per share received by the Company in such Dilutive Issuance.

Events of default include

failure to issue conversion shares, the occurrence of a breach or default under any other agreement, any money judgment, writ or similar

process entered or filed against the Company or any of its property or other assets for more than $100,000, bankruptcy filing, application

for the appointment of a custodian, trustee or receiver, insolvency, the Company’s common stock delisted, or dissolution, winding

up, or termination of the business of the Company.

In connection with the issuance of the Notes, the Company issued to the purchasers

of the Notes stock purchase warrants (the “Warrants”) to purchase an aggregate of 27,500 shares of the Company’s common

stock for a purchase price of $1.50 per share, subject to adjustments.

February 2021, the Company signed a new consulting agreement that granted one of its shareholders an option to purchase

750,000 shares of the Company’s common stock at $0.001 per share for the consultancy work provided from August 2020

to February 2021.

The options were fully vested on the date of issuance.

March 2021, the CEO agreed to forgive approximately $68,000 due to him.

March 2021, the CFO agreed to reduce amount due to him from approximately $127,000 to $30,000.

For the reduction of $97,000, the

Company will issue 75,000 shares of common stock.

The remaining liability of $30,000 will be paid in cash.

In April 2021, the

Company issued a promissory note for cash amounting to $8,550 with 0% annual interest per year if paid at a maturity date of July 5,

In the event of default, the interest rate of the note shall increase to 8% per annum and computed on the basis of the actual number

of days elapsed and a 365-day or 366-day year.

In April 2021, an option holder exercised two options for 385,000 and 750,000

shares of the Company’s common stock at an exercise price of $0.001 for both options.

The shares for the options have yet to be issued.

April 2021, the Company issued a promissory note for cash amounting to $50,000 with 10% annual interest per year and a maturity date

of April 22, 2022.

The principal and accrued interest is payable in a single installment on or before the maturity date.

of default, the interest rate of the note shall increase to 15% per annum and computed on the basis of the actual number of days elapsed

and a 365-day or 366-day year.

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 9A. Controls and Procedures