What changed in this filing

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Item 9A. Controls and Procedures

2022-03-31 compared with 2021-06-30 · 1152 added, 768 removed, 301 unchanged (86% of the section changed)

Controls and Procedures.

and Procedures.

Controls and Procedures

required by paragraph (b) of Rules 13a-15 or 15d-15 under the Exchange Act, our principal executive officer and principal financial

officer evaluated our company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange

Act) as of the end of the period covered by this Annual Report on Form 10-K.

Based on this evaluation, these officers concluded

that as of the end of the period covered by this Annual Report on Form 10-K, these disclosure controls and procedures were not

required by paragraph (b) of Rules 13a-15 or 15d-15 under the Exchange Act, our principal executive officer and principal financial officer

evaluated our company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as

of the end of the period covered by this Annual Report on Form 10-K.

Based on this evaluation, these officers concluded that as of the

end of the period covered by this Annual Report on Form 10-K, these disclosure controls and procedures were not effective.

conclusion that our disclosure controls and procedures were not effective was due to the presence of material weaknesses in internal

control over financial reporting as identified below under the heading “Management’s Report on Internal Control Over

Financial Reporting.”

Management anticipates that such disclosure controls and procedures will not be effective until the

material weaknesses are remediated.

of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control

issues, if any, within our company have been detected.

These inherent limitations include the realities that judgments in decision-making

can be faulty and that breakdown can occur because of simple error or mistake.

Management’s

control over financial reporting as identified below under the heading “Management’s Report on Internal Control Over Financial

Reporting.” Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses

are remediated.

of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues,

if any, within our company have been detected.

These inherent limitations include the realities that judgments in decision-making can

be faulty and that breakdown can occur because of simple error or mistake.

Report on Internal Control Over Financial Reporting

management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules

13a-15(f) and 15d-15(f) of the Exchange Act) for our company.

Our internal control over financial reporting is designed to provide

reasonable assurance, not absolute assurance, regarding the reliability of financial reporting and the preparation of financial

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

Internal control over financial reporting includes those policies and procedures that:

(i) pertain to the maintenance of records

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

(ii) provide reasonable

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

accepted accounting principles in the United States of America, and that our receipts and expenditures are being made only in

accordance with authorizations of our management and directors;

and (iii) provide reasonable assurance regarding prevention or

timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial

management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f)

and 15d-15(f) of the Exchange Act) for our company.

Our internal control over financial reporting is designed to provide reasonable assurance,

not absolute assurance, regarding the reliability of financial reporting and the preparation of financial statements for external purposes

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

Internal control over financial reporting

includes those policies and procedures that:

(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly

reflect the transactions and dispositions of our assets;

(ii) provide reasonable assurance that transactions are recorded as necessary

to permit preparation of financial statements in accordance with generally accepted accounting principles in the United States of America,

and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors;

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that

could have a material effect on the financial statements.

of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

In addition, projections

of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes

in conditions and that the degree of compliance with the policies or procedures may deteriorate.

management, including our principal executive officer and principal financial officer, conducted an evaluation of the design and

operation of our internal control over financial reporting as of December 31, 2020 based on the criteria set forth in Internal

Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

This evaluation

included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating

effectiveness of controls and a conclusion on this evaluation.

Based on this evaluation, our management concluded our internal

control over financial reporting was not effective as at December 31, 2020 due to the following material weaknesses which are

indicative of many small companies with small staff:

(i) inadequate segregation of duties and effective risk assessment;

insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application

of both US GAAP and SEC guidelines;

(iii) inadequate security and restricted access to computer systems including insufficient

disaster recovery plans;

of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in

conditions and that the degree of compliance with the policies or procedures may deteriorate.

management, including our principal executive officer and principal financial officer, conducted an evaluation of the design and operation

of our internal control over financial reporting as of December 31, 2021 based on the criteria set forth in Internal Control - Integrated

Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

This evaluation included review of the documentation

of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion

on this evaluation.

Based on this evaluation, our management concluded our internal control over financial reporting was not effective

as at December 31, 2021 due to the following material weaknesses which are indicative of many small companies with small staff:

(i) inadequate

segregation of duties and effective risk assessment;

(ii) insufficient written policies and procedures for accounting and financial reporting

with respect to the requirements and application of both US GAAP and SEC guidelines;

(iii) inadequate security and restricted access

to computer systems including insufficient disaster recovery plans;

and (iv) no written whistle-blower policy.

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staff to allocate responsibilities.

During the period covered by this Report, we have not been able to remediate the material

weaknesses identified above.

To remediate such weaknesses, we plan to implement the following changes once our financial resources

will support the required staffing level:

(i) appoint additional qualified personnel to address inadequate segregation of duties

and ineffective risk management;

(ii) adopt sufficient written policies and procedures for accounting and financial reporting

and a whistle-blower policy;

and (iii) implement sufficient security and restricted access measures regarding our computer systems

and implement a disaster recovery plan.

The remediation efforts set out in (i) and (iii) are largely dependent upon our company

securing additional financing to cover the costs of implementing the changes required.

If we are unsuccessful in securing such

funds, remediation efforts may be adversely effected in a material manner.

Report does not include an attestation report of our independent registered public accounting firm regarding internal control

over financial reporting.

Our internal control over financial reporting was not subject to attestation by our independent registered

public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s

report in this Report.

of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control

issues, if any, within our company have been detected.

These inherent limitations include the realities that judgments in decision-making

can be faulty and that breakdowns can occur because of simple error or mistake.

During the period covered by this Report, we have not been able to remediate the material weaknesses

identified above.

To remediate such weaknesses, we plan to implement the following changes once our financial resources will support

the required staffing level:

(i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk

(ii) adopt sufficient written policies and procedures for accounting and financial reporting and a whistle-blower policy;

and (iii) implement sufficient security and restricted access measures regarding our computer systems and implement a disaster recovery

The remediation efforts set out in (i) and (iii) are largely dependent upon our company securing additional financing to cover

the costs of implementing the changes required.

If we are unsuccessful in securing such funds, remediation efforts may be adversely effected

in a material manner.

Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial

Our internal control over financial reporting was not subject to attestation by our independent registered public accounting

firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in

of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues,

if any, within our company have been detected.

These inherent limitations include the realities that judgments in decision-making can

be faulty and that breakdowns can occur because of simple error or mistake.

In Internal Control Over Financial Reporting.

were no changes in our internal control over financial reporting during the year ended December 31, 2020 that have materially

affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other Information.

Directors, Executive Officers and Corporate Governance.

were no changes in our internal control over financial reporting during the year ended December 31, 2021 that have materially affected,

or are reasonably likely to materially affect, our internal control over financial reporting.

Executive Officers and Corporate Governance.

and Executive Officers

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

directors and executive officers, their ages and their positions held with our company are as follows:

Held with the Company

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Financial Officer

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

Technical Officer

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

There are no family relationships among our directors or officers.

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For the past 20 years, Mr.

been the managing director of M1 Advisors LLC, a business advisory and consulting firm that has engineered, orchestrated and provided

support and services to numerous private-to-public transitions, debt and equity financings and hyper-organic-growth and consolidation

strategies in a wide range of industries.

Campbell has been

the managing director of M1 Advisors LLC, a business advisory and consulting firm that has engineered, orchestrated and provided support

and services to numerous private-to-public transitions, debt and equity financings and hyper-organic-growth and consolidation strategies

in a wide range of industries.

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 Companies.

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.

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.

Skupen is a business advisor who has

provided various financial accounting services to, or acted as the Interim Chief Financial Officer for, a number of public companies

Skupen is a business advisor who has provided

various financial accounting services to, or acted as the Interim Chief Financial Officer for, a number of public companies since 2010.

Prior to that, he was a Partner at Stonefield Josephson, Inc.

(now Marcum, LLP), an accounting firm with five offices

throughout California where he provided auditing and consulting services to public companies and to privately-held entrepreneurial

companies transitioning to public ownership in diverse industries.

Skupen graduated from the University of Southern California

with a Bachelor of Science degree in Accounting.

In addition, he is licensed as a Certified Public Accountant in the State of

(now Marcum, LLP), an accounting firm with five offices throughout California

where he provided auditing and consulting services to public companies and to privately-held entrepreneurial companies transitioning

to public ownership in diverse industries.

Skupen graduated from the University of Southern California with a Bachelor of Science

degree in Accounting.

In addition, he is licensed as a Certified Public Accountant in the State of California.

(Peter) Kim .

Kim became our Chief Technical Officer on August 17, 2021, and President of our South Korean subsidiary, AIQ

LTD, in October 2021.

Kim has 20 years of experience in the high-tech industry working as an engineer and executive in

chip development, software, communications, and IT services.

Kim has a long-term relationship with the Korean IT industry through

his involvement in projects with Samsung, LG, KT (Korea Telecom), Hyundai Electronics, and SK Hynix.

Previously, he was the President

of Aracore, a South Korean based Canadian ASIC chip development company that developed a 10nm SHA-256 ASIC chip for bitcoin mining machines.

Kim has also been involved in chip developments that included a Protocol Packet Classification chip for network security equipment

and a Network Processor Unit for a high-performance fiber backbone router and switch.

Kim has been a Samsung Foundry VIP customer

Shum has been Chief Executive Officer of INVO Bioscience (NASDAQ:

INVO) since October 2019 and a member of the board

of directors of INVO Bioscience since October 2017.

Prior to INVO Bioscience, Mr.

Shun served as Chief Financial Officer of Eastside

Distilling (NASDAQ:

EAST) from October 2015 to November 2019.

Prior to joining Eastside, Mr.

Shum was an employee and a member of the

board of directors of XZERES Corp.

(OTCQB:XPWR), a global renewable energy company, from October 2008 until April 2015, where he served

in various officer roles, including Chief Operating Officer from September 2014 until April 2015, Chief Financial Officer, Principal

Accounting Officer and Secretary from April 2010 until September 2014 (under former name, Cascade Wind Corp) and Chief Executive Officer

and President from October 2008 to August 2010.

Shum also serves as the managing principal of Core Fund Management, LP and the Fund

Manager of Core Fund, LP.

He was a founder of Revere Data LLC (now part of Factset Research Systems, Inc.) and served as its Executive

Vice President for four years, heading up the product development efforts and contributing to operations, business development, and sales.

He spent six years as an investment research analyst and portfolio manager of D.N.B.

Capital Management, Inc.

His previous employers

include Red Chip Review and Laughlin Group of Companies.

He earned a B.S.

in Finance and a B.S.

in General Management from Portland State

University in 1992.

Fontenot has spent 20 years as a self-employed IT and network specialist and in 2017 became an executive producer

of independent films.

Fontenot is a technology enthusiast and film producer that manages a 5013c foundation dedicated to (i) educating

the public on the history of video, arcade, and computer gaming - including the technical aspects and the impact of games on society;

(ii) fostering public interest in software development and gaming hardware to enable technological growth and inspire the next generation

of developers, and (iii) developing public space for action sports’ recreation - including mentoring youths and building programs

designed to help bridge the gender gap in various action sports categories as well as underserved community members.

of our officers are currently serving in such capacities as consultants to our company, and we presently have no employees.

officers and directors are also engaged in outside business activities.

Our officers and directors, other than Mr.

Campbell, anticipate

that they will devote limited time to our business until we are no longer a “shell”

company and are engaged in an

active trade or business The specific amount of time that management will devote to our company may vary from week to week or

even day to day, and therefore the specific amount of time that management will devote to our company on a weekly basis cannot

be ascertained with any level of certainty.

In all cases, management intends to spend as much time as is necessary to exercise

its fiduciary duties as officers and directors of our company.

Kim devote a majority of their time to advancing the company’s mission and executing our business plan.

Management intends

to spend as much time as is necessary to exercise its fiduciary duties as officers and directors of our company.

in Certain Legal Proceedings

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

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);

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

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

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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;

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,

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.

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

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.

board of directors has reviewed the composition of our board of directors and the independence of each director.

Based upon information

requested from and provided by each director concerning his background, employment and affiliations, including family relationships,

our board of directors has determined that each of Steven Shum and Sean Fontenot is an “independent director” as defined

under Rule 5605(a)(2) of the Nasdaq Marketplace Rules.

In making such determinations, our board of directors considered the relationships

that each such non-employee director has with our company and all other facts and circumstances our board of directors deemed relevant

in determining independence, including the beneficial ownership of our capital stock by each non-employee director.

do not have a standing Audit Committee.

We do not believe that the lack of an Audit Committee has had or will have any adverse

effect on our financial statements, based upon current operations;

however, our board of directors will consider establishing

an Audit Committee of independent directors as the number of directors increases.

Until such time, our board of directors will

perform the duties of an Audit Committee including delegating an auditor firm and interacting with them.

We do not believe that the lack of an Audit Committee has had or will have any adverse effect

on our financial statements, based upon current operations;

however, our board of directors will consider establishing an Audit Committee

of independent directors as the number of directors increases.

Until such time, our board of directors will perform the duties of an

Audit Committee including delegating an auditor firm and interacting with them.

do not have a standing Compensation Committee.

Presently, our executive officers, who constitute our only employees, do not take

salary or other benefits from our company.

As we continue to develop our initial products and commence selling such products on

a wholesale or retail basis, we expect to increase the size of our board to include independent directors who will approve the

compensation arrangements with our executive officers.

also do not have a Nominating Committee as we have not adopted any procedures by which security holders may recommend nominees

to our board of directors.

January 29, 2004, our Board of Directors adopted a Code of Business Conduct and Ethics that applies to, among other persons, members

of our board of directors, our company’s officers, contractors, consultants and advisors.

We will provide a copy of the

Code of Business Conduct and Ethics to any person without charge, upon request.

Presently, our executive officers, who constitute our only employees, do not take salary

or other benefits from our company.

As we continue to develop our initial products and commence selling such products on a wholesale

or retail basis, we expect to increase the size of our board to include independent directors who will approve the compensation arrangements

with our executive officers.

also do not have a Nominating Committee as we have not adopted any procedures by which security holders may recommend nominees to our

board of directors.

March 28, 2022, our Board of Directors adopted an amended Code of Business Conduct and Ethics that applies to, among other

persons, members of our board of directors, our company’s officers, contractors, consultants and advisors.

We will provide a copy

of the Code of Business Conduct and Ethics to any person without charge, upon request.

Requests can be sent to our company at the address

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16(a) Beneficial Ownership Compliance

16(a) of the Securities Exchange Act requires our executive officers and directors, and persons who own more than 10% of our common

stock, to file reports regarding ownership of, and transactions in, our securities with the Securities and Exchange Commission

and to provide us with copies of those filings.

Based solely on our review of the copies of such forms received by us, or written

representations from certain reporting persons, and without conducting any independent investigation of our own we believe that

during the fiscal year ended December 31, 2020, all filing requirements applicable to our officers, directors and greater than

10% percent beneficial owners were complied with.

Executive Compensation.

following table sets forth all compensation awarded to, earned by or paid to the chief executive officer (“CEO”) of

our company during the years ended December 31, 2020 and 2019.

No compensation was paid to any other executive officer of our

company during such periods.

16(a) of the Securities Exchange Act requires our executive officers and directors, and persons who own more than 10% of our common stock,

to file reports regarding ownership of, and transactions in, our securities with the Securities and Exchange Commission and to provide

us with copies of those filings.

Based solely on our review of the copies of such forms received by us, or written representations from

certain reporting persons, and without conducting any independent investigation of our own we believe that during the fiscal year ended

December 31, 2021, all filing requirements applicable to our officers, directors and greater than 10% percent beneficial owners were

complied with.

Compensation.

following table sets forth all compensation awarded to, earned by or paid to the executive officers of our

company during the years ended December 31, 2021 and 2020.

No compensation was paid to any other executive officer of our company during

such periods.

COMPENSATION TABLE

Name and Principal Position

Stock Awards ($)

Option Awards

Non-Equity Incentive Plan Compensation

Nonqualified Deferred Compensation Earnings

All Other Compensation ($)

Principal Position

Incentive Plan Compensation

Deferred Compensation Earnings

Other Compensation ($)

Michael Campbell (1)

$ 2,895,000 (1)

$ 200,064 (2)

$ 3,095,064 (2)

Chief Executive Officer

Chief Financial Officer

Hyuncheol Peter Kim

19,300,000 (1)

Represents a restricted stock share award that vests

as to 50% of the shares upon the completion of the first two phases of chip development, which include the “FPGA Simulation”

and “Tape Out” of our planned 5 nanometer ASIC chip, and will vest as to the remaining 50% of the shares upon the completion

of the next two phases of the chip development that include the completion of the Foundry Mask for production in the semiconductor

foundry and initial production run of chips and the completion of a bitcoin mining system ready for sale to customers;

however, that if we do not raise sufficient capital to complete the Foundry Mask, initial production run of chips and completion

of a bitcoin mining system ready for sale to customers within six months of completing the first two phases of development, then

all unvested shares will vest upon the completion of the first two milestones.

Notwithstanding the foregoing, no shares will vest

on any vesting date if the consultant is no longer providing services to us as an employee or consultant.

amounts earned by Mr.

Campbell under his consulting agreement.

amounts earned by Mr.

Skupen under his consulting agreement.

All 2020 compensation was accrued but deferred to

amounts earned by Mr.

Kim under his consulting agreement.

Kim commenced his consulting relationship with our company in September

August 17, 2021, we entered into consulting agreements with M1 Advisors LLC, a limited liability company controlled by Michael Campbell,

our sole director and Chief Executive Officer (“M1 Advisors”), and Hyuncheol Kim, pursuant to which M1 Advisors agreed to

continue to provide consulting services to our company and to cause Mr.

Campbell to serve as our Chief Executive Officer, and Mr.

agreed to provide consulting services and to serve as our Chief Technology Officer.

The term of M1 Advisor’s agreement is for a

period of one year, which will automatically renew unless either party gives written notice to the other of termination not less than

30 days prior to the then-current term.

The consulting agreement of Mr.

Kim will continue so long as we are continuing with our research

and development efforts to develop a five nanometer ASIC chip for bitcoin mining machines and a completed bitcoin mining system (the

“ Project ”), and thereafter will continue for a one-year term, which will automatically renew unless either

party gives written notice to the other of termination not less than 30 days prior to the then-current term.

Pursuant to such agreements,

each of M1 Advisors and Mr.

Kim will be paid consulting fees at the rate of $200,000 per annum for providing as many hours of work as

is necessary and reasonably required to meet our development schedule and achieve the mutually agreed to goals of our company.

addition, pursuant to such consulting agreements, M1 Advisors was granted a restricted stock award of 1,500,000 shares of common stock

Kim was granted a restricted stock award of 10,000,000 shares of common stock.

Such restricted stock awards vest as to 50% of

the shares upon the completion of the first two phases of chip development, which include the “FPGA Simulation” and “Tape

Out” of our planned 5 nanometer ASIC chip, and will vest as to the remaining 50% of the shares upon the completion of the next

two phases of the chip development that include the completion of the Foundry Mask for production in the semiconductor foundry and initial

production run of chips and the completion of a bitcoin mining system ready for sale to customers;

provided, however, that if we do not

raise sufficient capital to complete the Foundry Mask, initial production run of chips and completion of a bitcoin mining system ready

for sale to customers within six months of completing the first two phases of development, then all unvested shares will vest upon the

completion of the first two milestones.

Notwithstanding the foregoing, no shares will vest on any vesting date if the consultant is no

longer providing services to us as an employee or consultant.

October 20, 2018, we entered into a consulting agreement with DSS Consulting Corporation, a corporation controlled by Dean Skupen,

our Chief Financial Officer (“DSS Consulting”), pursuant to which DSS Consulting agreed to continue to provide

consulting services to our company and to cause Mr.

Skupen to serve as our Chief Financial Officer.

The agreement with DSS

Consulting will continue until terminated by either party.

Pursuant to such agreement, DSS Consulting was issued 250,000 shares of

common stock in March 2019 and DSS Consulting will be paid a monthly consulting fee in the amount of $5,000.

of our consulting agreements contains customary confidentiality restrictions and work-product provisions, as well as customary non-competition

covenants and non-solicitation covenants with respect to our employees, consultants and customers.

Compensation Plan Information

following table provides information as of December 31, 2021, regarding our compensation plans under which equity securities are authorized

for issuance:

Plan category

Securities to

Plans (Excluding

2021 Equity compensation plan approved by security holders

Equity compensation plans not approved by security holders

Equity Incentive Plan

October 4, 2021, we adopted our 2021 Equity Incentive Plan (the “Equity Plan”) to provide an additional means to attract,

motivate, retain and reward selected employees and other eligible persons.

Our stockholders also approved the Equity Plan on October

Employees, officers, directors and consultants that provide services to us or one of our subsidiaries were eligible to receive

awards under the Equity Plan.

Awards under the Equity Plan are issuable in the form of incentive or nonqualified stock options, stock

appreciation rights, stock bonuses, restricted stock, stock units and other forms of awards including cash awards.

of December 31, 2021, no equity grants had been made under the Equity Plan, and 2,500,000 shares authorized under the Equity Plan remained

available for award purposes.

The purpose of the Equity Plan is to further and promote the interests of our company and its stockholders by enabling us to attract,

retain and motivate employees, directors and consultants, or those who will become employees, directors or consultants, and to align

the interests of those individuals with the interests of our stockholders.

Administration .

The Equity Plan will be administered by an independent compensation committee appointed by the Board (the “Compensation Committee”),

which will have general administrative authority for the Equity Plan.

In the event that the Board has not appointed the Compensation

Committee, then the Board shall have all the powers of the Compensation Committee under the Equity Plan.

The Compensation Committee may

delegate certain limited authority to one or more of our senior executive officers to grant awards to employees who are not subject to

Section 16 of the Exchange Act.

Additionally, the Compensation Committee may designate persons other than members of the Compensation

Committee to carry out the day-to-day ministerial administration of the Equity Plan (other than with regard to the selection for participation

in the Equity Plan and/or the granting of any awards to participants) under such conditions and limitations as prescribed by the Compensation

Committee (the appropriate acting body, be it the Compensation Committee, the Board, or an executive officer within his or her delegated

authority, is referred to herein as the “Administrator”).

The Administrator’s determinations under the Equity Plan

need not be uniform and may be made selectively among the Equity Plan’s participants, whether or not such participants are similarly

Administrator has broad authority under the Equity Plan with respect to award grants including, without limitation, the authority to:

the Equity Plan’s participants;

awards in such amounts and form as the Administrator shall determine;

such restrictions, terms and conditions upon such awards as the Administrator shall deem

any technical defect(s) or technical omission(s), or reconciling any technical inconsistency(ies),

in the Equity Plan and/or any award agreement.

Persons eligible to receive awards under the Equity Plan include employees, directors and consultants, or those who will become

employees, directors or consultants, of our company and/or its subsidiaries.

Notwithstanding the above, incentive stock options may only

be granted under the Equity Plan to our employees.

The maximum number of shares of common stock that may be initially issued or transferred pursuant to awards under the

Equity Plan shall not exceed 2,500,000 shares, all of which may be issued as any type of award permitted under the Equity Plan, including,

but not limited to, incentive stock options.

The Equity Plan authorizes awards of stock options and restricted shares of common stock.

stock option is the right to purchase shares of common stock at a future date at a specified price per share (the “Exercise Price”).

The per share Exercise Price of an option generally may not be less than the fair market value of a share of common stock on the date

The maximum term of an option is ten years from the date of grant.

An option may either be an incentive stock option or a nonqualified

stock option.

Incentive stock option benefits are taxed differently from nonqualified stock options, as described under “Federal

Income Tax Consequences of Awards Under the Plan” below.

Incentive stock options are also subject to more restrictive terms and

are limited in amount by the U.S.

Internal Revenue Code (the “Code”) and the Equity Plan.

Incentive stock options may only

be granted to employees of our company or a subsidiary.

shares are shares of common stock granted to Equity Plan participants, subject to such restrictions, terms and conditions, if any, as

the Administrator deems appropriate, including, without limitation, (a) restrictions on the sale, assignment, transfer, hypothecation

or other disposition of such shares, (b) the requirement that the participant deposit such shares with our company while such shares

are subject to such restrictions, and (c) the requirement that such shares be forfeited upon termination of employment or service with

our company for any reason or for specified reasons within a specified period of time or for other reasons (including, without limitation,

the failure to achieve designated performance goals).

Upon satisfaction or lapse of the applicable restrictions, terms, and conditions,

subject to applicable securities laws, the participant will receive shares of common stock in exchange for such restricted shares.

The Administrator may provide for the deferred payment of awards and may determine the other terms applicable

to deferrals.

The Administrator may provide that awards under the Equity Plan earn dividends or dividend equivalents based on the amount

of dividends paid on outstanding shares of common stock.

and Termination of Awards .

Generally, and subject to limited exceptions set forth in the Equity Plan, if we dissolve or undergo

certain corporate transactions such as a merger, business combination, or other reorganization, or a sale of substantially all of its

assets, all awards then-outstanding under the Equity Plan will become fully vested or paid, as applicable, and will terminate or be terminated

in such circumstances, unless the Administrator provides for the assumption, substitution or other continuation of the award.

The Administrator

also has the discretion to establish other change in control provisions with respect to awards granted under the Equity Plan.

the Administrator could provide for the acceleration of vesting or payment of an award in connection with a corporate event that is not

described above and provide that any such acceleration shall be automatic upon the occurrence of any such event.

We may cancel any award under the Equity Plan, require reimbursement from a participant, and effect any other right of recoupment

of equity or other compensation provided under the Equity Plan in accordance with any clawback policies adopted by us.

Restrictions .

Subject to certain exceptions contained in the Equity Plan, awards under the Equity Plan generally are not transferable

by the recipient other than by will or the laws of descent and distribution and are generally exercisable, during the recipient’s

lifetime, only by the recipient.

Any amounts payable or shares issuable pursuant to an award generally will be paid only to the recipient

or the recipient’s beneficiary or representative.

The Administrator has discretion, however, to establish written conditions and

procedures for the transfer of awards to other persons or entities, provided that such transfers comply with applicable federal and state

securities laws.

Adjustments .

As is customary in incentive plans of this nature, each share limit and the number and kind of shares available under the Equity

Plan and any outstanding awards, as well as the exercise or purchase prices of awards, and performance targets under certain types of

performance-based awards, are subject to adjustment in the event of certain reorganizations, mergers, combinations, recapitalizations,

stock splits, stock dividends, or other similar events that change the number or kind of shares outstanding, and extraordinary dividends

or distributions of property to the stockholders.

Limit on Other Authority .

The Equity Plan does not limit the authority of the Board or any committee to grant awards or authorize

any other compensation, with or without reference to the our common stock, under any other plan or authority.

of or Changes to the Equity Plan .

The Board may amend or terminate the Equity Plan at any time and in any manner.

approval for an amendment will be required only to the extent then required by applicable law or any applicable listing agency or required

under Sections 422 or 424 of the Code to preserve the intended tax consequences of the plan.

For example, stockholder approval will be

required for any amendment that proposes to increase the maximum number of shares that may be delivered with respect to awards granted

under the Equity Plan (adjustments as a result of stock splits or similar events will not, however, be considered an amendment requiring

stockholder approval).

Unless terminated earlier by the Board, the authority to grant new awards under the Equity Plan will terminate

on October 4, 2031.

Outstanding awards, as well as the Administrator’s authority with respect thereto, generally will continue

following the expiration or termination of the Equity Plan.

Generally speaking, outstanding awards may be amended by the Administrator

(except for a repricing), but the consent of the award holder is required if the amendment (or any Equity Plan amendment) materially

and adversely affects the holder.

Income Tax Consequences of Awards under the Plan.

federal income tax consequences of the Equity Plan under current federal law, which is subject to change, are summarized in the

following discussion of the general tax principles applicable to the Equity Plan.

This summary is not intended to be exhaustive and,

among other considerations, does not describe the deferred compensation provisions of Section 409A of the Code to the extent an award

is subject to and does not satisfy those rules, nor does it describe certain elections under the Code (such as an election under Code

Section 83(b)), alternative minimum tax, or state, local, or international tax consequences.

respect to nonqualified stock options, we are generally entitled to deduct, and the participant recognizes taxable income in an amount

equal to the difference between the option exercise price and the fair market value of the shares at the time of exercise.

to incentive stock options, we are generally not entitled to a deduction nor does the participant recognize income at the time of exercise,

although the participant may be subject to the U.S.

federal alternative minimum tax.

Upon a disposition of shares acquired by exercise

of an incentive stock option before the end of the applicable incentive stock option holding periods, the participant generally must

recognize ordinary income equal to the lesser of (i) the fair market value of the shares at the date of exercise minus the exercise price

or (ii) the amount realized upon the disposition of the incentive stock option shares minus the exercise price.

Otherwise, a participant’s

disposition of shares acquired upon the exercise of an option (including an incentive stock option for which the incentive stock option

holding periods are met) generally will result in only capital gain or loss.

respect to restricted shares, we are generally entitled to deduct and the participant recognizes taxable income in an amount equal to

the excess of the fair market value over the price paid (if any) only at the time the restrictions lapse (unless the recipient elects

to accelerate recognition as of the date of grant).

an award is accelerated under the Equity Plan in connection with a “change in control” (as this term is used under the Code),

we may not be permitted to deduct the portion of the compensation attributable to the acceleration (“parachute payments”)

if it exceeds certain threshold limits under the Code (and certain related excise taxes may be triggered).

have the authority and the right to deduct or withhold, or require a participant to remit to us, an amount sufficient to satisfy any

income, payroll, and other taxes (including, without limitation, pursuant to the Federal Insurance Contributions Act and the Federal

Unemployment Tax Act) to the extent required by law to be withheld with respect to any taxable event concerning a participant arising

as a result of an award under the Equity Plan.

Equity Awards At Annual Period End

were no outstanding equity awards at December 31, 2020.

following table sets forth outstanding equity awards to our named executive officers as of December 31, 2021.

Michael Campbell

Stock Grant(1)

Hyuncheol Peter Kim

Restricted Stock Grant(1)

restricted stock awards vest as to 50% of the shares upon the completion of the first two phases of chip development, which include

the “FPGA Simulation” and “Tape Out” of our planned 5 nanometer ASIC chip, and will vest as to the remaining

50% of the shares upon the completion of the next two phases of the chip development that include the completion of the Foundry Mask

for production in the semiconductor foundry and initial production run of chips and the completion of a bitcoin mining system ready

for sale to customers;

provided, however, that if we do not raise sufficient capital to complete the Foundry Mask, initial production

run of chips and completion of a bitcoin mining system ready for sale to customers within six months of completing the first two

phases of development, then all unvested shares will vest upon the completion of the first two milestones.

Notwithstanding the foregoing,

no shares will vest on any vesting date if the consultant is no longer providing services to us as an employee or consultant.

Option Exercises

were no options exercised by any officer or director of our company during the year ended December 31, 2021.

Incentive Plan

our company does not have a long-term incentive plan in favor of any director, officer, consultant or employee of our company.

director compensation was paid during the years ended December 31, 2020 and 2019 in the form of cash expenses, stock awards, option

awards, non-equity incentive plan compensation, pension value and nonqualified deferred compensation earnings or any other type

of compensation.

We do not currently pay any cash fees to our directors, nor do we pay directors’

expenses in attending

board meetings.

director compensation was paid during the years ended December 31, 2021 and 2020 in the form of cash expenses, stock awards, option awards,

non-equity incentive plan compensation, pension value and nonqualified deferred compensation earnings or any other type of compensation.

We do not currently pay any cash fees to our directors, nor do we pay directors’ expenses in attending board meetings.

are not presently a party to any employment agreements.

and Retirement Plans

we do not offer any annuity, pension or retirement benefits to be paid to any of our officers, directors or employees, in the

event of retirement.

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

we do not offer any annuity, pension or retirement benefits to be paid to any of our officers, directors or employees, in the event of

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

following table sets forth, as of March 15, 2022, 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

1 unchanged sentence

Name and Address of

Beneficial Owner

M1 Advisors LLC (2)

(Michael Campbell) (2)

Dean Skupen (3)

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

Hyuncheol Peter Kim

Sean Fontenot (4)

All executive officers and directors as

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.

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

of similar transactions, or any currently proposed transactions, or series of similar transactions, to which we were or are to

be a party, in which the amount involved exceeds $120,000 or one percent of the average total assets at year end for each of the

last two fiscal years, and in which any director or executive officer, or any security holder who is known by us to own of record

or beneficially more than 5% of any class of our common stock, or any member of the immediate family of any of the foregoing persons,

has an interest.

Principal Accountant Fees And Services.

David Unsworth (5)

The Cooper Family Living

Trust Dtd 7/20/98 (6)

of March 15, 2022, there were 25,995,621 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, a company controlled by Michael Campbell.

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

Campbell has sole voting and investment

power over the shares held by M1 Advisors LLC.

shares of common stock owned of record by DSS Consulting Corporation, a company controlled by Dean Skupen.

DSS Consulting

Corporation’s address is 2945 Townsgate Road, Suite 200, West Lake Village CA 91361.

Skupen has sole voting and investment

power over the shares held by DSS Consulting Corporation.

Represents 3,080,000 shares of common stock issuable

upon the conversion of a convertible note, and 1,540,000 shares of common stock issuable upon the exercise of warrants, owned of

record by Nanosha Investments, LLC, a company controlled by Sean Fontenot.

The address of Nanosha Investments, LLC is 1202 Walnut

Avenue, Long Beach, CA 90813.

Fontenot has sole voting and investment power over the securities held by Nanosha Investments,

David Unsworth’s address is 246 Bayview Avenue, Belvedere

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

The address of the trust is 452 Lakeview

Way, Emerald Hills, CA 94062.

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 of

similar transactions, or any currently proposed transactions, or series of similar transactions, to which we were or are to be a party,

in which the amount involved exceeds $120,000 or one percent of the average total assets at year end for each of the last two fiscal

years, and in which any director or executive officer, or any security holder who is known by us to own of record or beneficially more

than 5% of any class of our common stock, or any member of the immediate family of any of the foregoing persons, has an interest.

Accountant Fees And Services.

aggregate fees billed for professional services rendered by RBSM LLP, our principal accountants for the years ended December 31, 2021

2020 and 2019, for the audit of financial statements, quarterly reviews of our interim financial statements and services normally

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

and 2020, for the audit of financial statements, quarterly reviews of our interim financial statements and services normally provided

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

For the Years ended December 31,

1 unchanged sentence

All Other Fees

the above table, “audit fees”

are fees billed by our company’s external auditor for services provided in auditing

our company’s financial statements for the periods indicated above.

“Audit-related fees”

are fees not included

in audit fees that are billed by the auditor for assurance and related services, including quarterly reviews, that are reasonably

related to the performance of the audit of our company’s financial statements.

“Tax fees”

are fees billed by

the auditor for professional services rendered for tax compliance, tax advice and tax planning.

“All other fees”

fees billed by the auditor for products and services not included in the foregoing categories.

the above table, “audit fees” are fees billed by our company’s external auditor for services provided in auditing our

company’s financial statements for the periods indicated above.

“Audit-related fees” are fees not included in audit

fees that are billed by the auditor for assurance and related services, including quarterly reviews, that are reasonably related to the

performance of the audit of our company’s financial statements.

“Tax fees” are fees billed by the auditor for professional

services rendered for tax compliance, tax advice and tax planning.

“All other fees” are fees billed by the auditor for products

and services not included in the foregoing categories.

board of directors pre-approves all services provided by our independent auditors.

All of the above services and fees were reviewed

and approved by our board of directors either before or after the respective services were rendered.

Exhibits, Financial Statement Schedules.

All of the above services and fees were reviewed and

approved by our board of directors either before or after the respective services were rendered.

Exhibits, Financial

Statement Schedules.

Articles of Incorporation (incorporated by reference to Exhibit 3.1 to our Registration Statement on Form SB-2 filed on July 5, 2002).

8 unchanged sentences

Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed on July 19, 2013).

Form of Warrant issued to Investors in the 2013 Private Placement.(incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K filed on December 13, 2013).

Form of Amendment to Note and Warrant (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on January 19, 2016).

Series A Preferred Stock Purchase Agreement dated as of September 12, 2018 among our company and the purchasers of Series A Preferred Stock listed therein (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on September 14, 2018).

Form of OID Convertible Promissory Note due February 28, 2021.

Form of Series A Warrant.

2021 Equity Incentive Plan (incorporated by reference to Exhibit Annex A to our Schedule 14C Information Statement filed on October 21, 2021).

Form of OID Convertible Promissory Note due February 28, 2021 (incorporated by reference to Exhibit 10.4 to our Annual Report on Form 10-K filed on March 30, 2021).

Form of Series A Warrant (incorporated by reference to Exhibit 10.5 to our Annual Report on Form 10-K filed on March 30, 2021).

Form of OID Promissory Note dated September 15, 2021 (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed on September 21, 2021).

Form of Series A Warrant dated September 15, 2021 (incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K filed on September 21, 2021).

Restricted Share Aware Agreement dated August 17, 2021 between CalEthos Inc.

and M1 Advisors LLC (incorporated by reference to Exhibit 4.3 to our Current Report on Form 8-K filed on September 21, 2021).

Restricted Share Aware Agreement dated August 17, 2021 between CalEthos Inc.

and Hyuncheol Kim (incorporated by reference to Exhibit 4.4 to our Current Report on Form 8-K filed on September 21, 2021).

Warrant dated September 15, 2021 of CalEthos to Mireya Lange (incorporated by reference to Exhibit 4.5 to our Current Report on Form 8-K filed on September 21, 2021).

Consulting Agreement dated as of August 17, 2021 between CalEthos Inc.

and M1 Advisors LLC (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on September 21, 2021).

Consulting Agreement dated as of August 17, 2021 between CalEthos Inc.

an Hyuncheol Kim (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on September 21, 2021).

Registration Rights Agreement dated as of September 15, 2021 between CalEthos Inc.

and Nonosha Investments LLC (incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K filed on September 21, 2021).

Consulting Agreement dated as of October 10, 2018 between CalEthos Inc.

and DSS Consulting Corporation.

Code of Conduct and Ethics of CalEthos Inc.

Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.***

2 unchanged sentences

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

Instance Document

Taxonomy Extension Schema Document

Taxonomy Calculation Linkbase Document

Taxonomy Definition Linkbase Document

Taxonomy Label Linkbase Document

Taxonomy Presentation Linkbase Document

Inline XBRL Instance Document

Inline XBRL Taxonomy Extension Schema Document

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Inline XBRL Taxonomy Extension Definition Linkbase Document

Inline XBRL Taxonomy Extension Label Linkbase Document

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Cover Page Interactive Data File (embedded within the Inline XBRL document)

Not incorporated by reference.

Not subject to liability.

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.

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.

be signed on its behalf by the undersigned, thereunto duly authorized on the 31 st day of March 2022.

Michael Campbell

1 unchanged sentence

Executive Officer)

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

of the registrant and in the capacities and on the dates indicated.

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

registrant and in the capacities and on the dates indicated.

Michael Campbell

Executive Officer and Director

June 30, 2021

March 31, 2022

Executive Officer)

Financial Officer

June 30, 2021

March 31, 2022

Accounting Officer)

/s/ Sean Fontenot

March 31, 2022

Sean Fontenot

/s/ Steven Shum

March 31, 2022

the Years Ended December 31, 2021 and 2020

to the Financial Statements

Report of Independent Registered Public Accounting Firm

to the Consolidated Financial Statements

of Independent Registered Public Accounting Firm PCAOB ID 587

Balance Sheets as of December 31, 2021 and 2020

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

Statement of Changes in Stockholders’

(Deficit) Equity for the Years ended December 31, 2020 and 2019

Statements of Operations and Comprehensive Loss for the Years ended December 31, 2021 and 2020

Statements of Changes in Stockholders’ Deficit for the Years ended December 31, 2021 and 2020

Statements of Cash Flows for the Years ended December 31, 2021 and 2020

Notes to the Financial Statements

to the Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Board of Directors and Stockholders of CalEthos, Inc.

on the Financial Statements

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, 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 –

Going Concern

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

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.

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.

the Board of Directors and Stockholders of

Opinion on the Financial Statements

have audited the accompanying consolidated balance sheets of CalEthos, Inc., (the Company) as of December 31, 2021 and 2020, and the

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

in the two year period ended December 31, 2021, and the related notes (collectively referred to as the consolidated financial statements).

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

as of December 31, 2021 and 2020, and the consolidated results of its operations and its cash flows for each of the years in the two

year period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

Company’s Ability to Continue as a Going Concern

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

in Note 1 to the consolidated financial statements, the Company has an accumulated deficit, recurring losses and expects future losses

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

Management’s evaluation of the events and conditions

and management’s plans regarding these matters are also described in Note 1.

The consolidated financial statements do not include any

adjustments that might result from the outcome of this uncertainty.

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

Our responsibility is to express an opinion on

the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company

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

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

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

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

As part of our audits,

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.

3 unchanged sentences

the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant

Our audits also included evaluating the accounting principles used and significant

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

4 unchanged sentences

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.

(i) relate to accounts or disclosures that are material to the consolidated financial statements

and (ii) 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.

June 30, 2020

have served as the Company’s auditor since 2018

Balance Sheets

of December 31,

Current assets

Cash and cash equivalents

Prepaid expenses

LIABILITIES AND STOCKHOLDERS’

Cash and cash

Total current assets

LIABILITIES AND STOCKHOLDERS’

Current liabilities

Accounts payable and accrued expenses

Accounts payable and accrued

Notes payable, net

Convertible promissory notes, net

Total Liabilities

Stockholders’

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

Common stock par value $0.001, 100,000,000 shares authorized;

16,634,951 and 16,634,951, respectively, shares issued and outstanding

promissory notes, net

Commitments and contingencies (Note 6)

Stockholders’ deficit

Series A convertible preferred

stock, par value $ 0.001 , 3,600,000 shares authorized;

no shares issued and outstanding

Preferred stock, par value

$ 0.001 , 100,000,000 shares authorized;

no shares issued and outstanding

Common stock, par value

$ 0.001 , 100,000,000 shares authorized;

25,995,621 and 16,634,951 shares issued and outstanding

Additional paid-in capital

Other comprehensive loss

Stock subscription receivable

Accumulated deficit

( 16,831,000 )

Total Stockholders’

Total Liabilities and Stockholders’

accompanying notes are integral to the financial statements

of Operations

( 10,082,000 )

stockholders’ deficit

( 1,323,000 )

liabilities and stockholders’ deficit

accompanying notes are an integral part of these Consolidated Financial Statements.

Statements of Operations and Comprehensive Loss

the Years Ended December 31,

Operating expenses

Professional fees

General and administrative expenses

Total operating expenses

and administrative expenses

operating expenses

Loss from operations

( 6,152,000 )

Other expenses

Financing costs

Loss on extinguishment of series A convertible preferred stock

on extinguishment of series A convertible preferred stock

other expenses

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 common stockholders

( 6,749,000 )

Net loss per share, basic and diluted

Weighted average common shares outstanding –

Provision for income

$ ( 6,749,000 )

$ ( 756,000 )

Net loss per share,

basic and diluted

accompanying notes are integral to the financial statements

of Changes in Stockholders’

Weighted average common

shares outstanding – basic and diluted

Comprehensive loss:

$ ( 6,749,000 )

$ ( 756,000 )

Change in foreign currency

Comprehensive loss

$ ( 6,751,000 )

$ ( 756,000 )

accompanying notes are an integral part of these Consolidated Financial Statements.

Statements of Changes in Stockholders’ Deficit

the Years Ended December 31, 2021 and 2020

A Convertible

Stockholders’

Balance, January 1, 2019

Comprehensive

Stockholders’

January 1, 2020

$ ( 9,326,000 )

Proceeds from the sale of series A convertible preferred stock

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

Deposits from issuance of founder preferred shares

Balance, December 31, 2019

$ ( 561,000 )

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

of series A preferred stock to convertible promissory notes

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

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

fair value of warrants issued with convertible promissory notes

December 31, 2020

( 10,082,000 )

( 1,323,000 )

accompanying notes are integral to the financial statements

of Cash Flows

( 10,082,000 )

( 1,323,000 )

fair value of warrants issued with convertible promissory note

options issued for services

issued for debt forgiveness

issued for accrued compensation

( 3,674,330 )

issued on exercise of options

common stock awards issued for compensation

currency translation loss

( 6,749,000 )

December 31, 2021

$ ( 16,831,000 )

$ ( 540,000 )

accompanying notes are an integral part of these Consolidated Financial Statements.

Statements of Cash Flows

the Years Ended December 31,

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$ ( 6,749,000 )

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

$ ( 756,000 )

Adjustments to reconcile net loss to net cash

used in operating activities:

Amortization of convertible

promissory note discounts

Loss on extinguishment

of convertible preferred stock

Fair value of warrants

issued for extinguishment of convertible preferred stock

Fair value of equity-based compensation

Accretion of compensation

cost for restricted stock awards

Changes in operating asset and liabilities

Accounts payable and accrued expenses

Net cash used in operating activities

Prepaid expenses

payable and accrued expenses

Net cash used in operating

Cash flows from investing activity

Cash held by officer

Net cash provided by investing activity

for other assets

Net cash used in investing

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

Proceeds from the issuance

of convertible promissory notes

Proceeds from the issuance

of notes payable

Repayment of notes payable

from the exercise of options

Net cash provided by

financing activities

Effect of exchange rate

changes on cash and cash equivalents

Net increase (decrease) in cash

Cash at beginning of

reporting period

Cash at end of reporting

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

Supplemental disclosure of non-cash financing

of series A preferred stock to convertible promissory notes

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

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

fair value of warrants issued with convertible promissory note

stock issued for accrued compensation

stock issued for debt forgiveness

Original issue discount recorded on convertible promissory

accompanying notes are an integral part of these Consolidated Financial Statements.

to the Consolidated Financial Statements

the Years Ended December 31, 2021 and 2020

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”

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

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

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.”.

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, 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”).

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.

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 December 31, 2021, 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.

to Certificate of Incorporation

October 2021, the Board of Directors authorized an amendment to the Articles of Incorporation of the Company to change the Company’s

name of AIQ Blockchain, Inc.

The name change has not yet been effected.

Incorporation

of Korean entity

November 5, 2021, AIQ System Inc.

(“AIQ”) was incorporated in Seoul, Republic of Korea.

AIQ is authorized to issue 3 million

shares of common stock.

At the date of incorporation, 10,000 shares were issued to the Company for 100,000,000 Korean Won or approximately

$ 89,000 for 100 % ownership of AIQ.

is in the business of (1) developing and manufacturing computer chips and system, (2) importing and exporting semiconductors and electronic

products, (3) wholesale and retail business of semiconductors and electronic products, and (4) any and all business activities incidental

to the foregoing activities.

of Presentation

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.

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

United States of America (“GAAP”).

of Consolidation

The consolidated

financial statements include the accounts of the Company and its wholly owned subsidiary from the formation date.

All material intercompany

transactions and balances have been eliminated in consolidation.

Concern and Liquidity

Company incurred a net loss of approximately $756,000 for the year ended December 31, 2020, and had an accumulated deficit of

approximately $10,082,000 as of December 31, 2020.

The Company has financed its activities principally through debt and equity

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.

Company incurred a net loss of approximately $ 6,749,000

for the year ended December 31, 2021 and

had an accumulated deficit of approximately $ 16,831,000

as of December 31, 2021.

The Company has

financed its activities principally through debt and equity 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 consolidated 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;

9 unchanged sentences

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.

1 unchanged sentence

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

5 unchanged sentences

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

preparation of consolidated financial statements in conformity with GAAP and 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 consolidated

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

Currency Translation

financial statements of foreign subsidiaries, for which the functional currency is the local currency, are translated into U.S.

using the exchange rate at the consolidated balance sheet date for assets and liabilities and a weighted-average exchange rate during

the year for revenue, expenses, gains and losses.

Translation adjustments are recorded as other comprehensive income (loss) within shareholders’

equity (deficit).

Gains or losses from foreign currency transactions are recognized in the consolidated statements of operations.

Value Measurement

6 unchanged sentences

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.

7 unchanged sentences

and Cash Equivalents

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

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

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

The Company maintains its cash and cash equivalents

in banks insured by the Federal Deposit Insurance Corporation (“FDIC”) in accounts that at times may be in excess of the

federally insured limit of $ 250,000 per bank.

The Company minimizes this risk by placing its cash deposits with major financial institutions.

As of December 31, 2021 and 2020, the Company had $ 2,797,000 and $ 0 in excess of the federal insurance limit, respectively.

expenses are assets held by the Company, which are expected to be realized and consumed within twelve months after the reporting period.

Other assets consist of long-term advances paid

for chip and processor design and development.

Company follows Financial Accounting Standards Board’s (“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

2 unchanged sentences

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

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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.

consolidated 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 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

(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;

6 unchanged sentences

Company follows ASC section 450-20 to report accounting for contingencies.

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.

Certain conditions may exist as of the date the consolidated

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 of judgment.

3 unchanged sentences

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.

can be estimated, then the estimated liability would be accrued in the Company’s consolidated 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

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

3 unchanged sentences

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.

The Company amortizes these costs over the term of its debt agreements as financing cost in the consolidated

statement of operations and comprehensive loss.

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

1 unchanged sentence

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, “

Compensation –

Stock Compensation ”

using the fair value

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, “ Compensation – Stock Compensation ” using the fair value

based method.

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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.

5 unchanged sentences

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

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

11 unchanged sentences

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.

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

1 unchanged sentence

for years before 2013.

use ASC 260, “

Earnings Per Share ”

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

use ASC 260, “ Earnings Per Share ” for calculating the basic and diluted earnings (loss) per share.

We compute basic

5 unchanged sentences

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

For periods with a net loss, basic and diluted loss per share is 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.

that could potentially dilute income (loss) per share in the future were not included in the computation of diluted income (loss) per

share on December 31 because their inclusion would be anti-dilutive as follows:

of Income and Loss Per Share Anti-dilutive

Restricted stock awards

Convertible promissory notes and accrued interest

Series A warrants issued with convertible promissory

Series B warrants to be issued upon exercise

of Series A warrants

Warrants issued for services

Stock options

Total potential future

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.

Company’s management reviewed all recently issued accounting standard updates (“ASU’s”) not yet adopted by the

Company and does not believe the future adoptions of any such ASU’s may be expected to cause a material impact on the Company’s

consolidated financial condition or the results of its operations.

2 – Related Party Transactions

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.

Company incurred approximately $ 199,000 and $ 180,000 for years ended December 31, 2021 and 2020, and paid approximately $ 202,000 and

$ 112,000 , respectively, to M1 Advisors for the services of the Company’s CEO and miscellaneous operating expenses.

3 – Accounts Payable and Accrued Expenses

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

Schedule of Accounts Payable and Accrued Expenses

Accounts payable

1 unchanged sentence

Accrued interest

Accounts payable and accrued expenses

Accounts payable and

accrued expenses

following table presents the details of accrued interest of December 31:

of Accrued Interest

promissory notes

end of the year

4 – 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.

table below summarizes the transactions for the years ended December 31:

of Notes Payable

Balance, beginning of the year

Balance, end of the

January 11, 2021, the Company issued a promissory note in the principal amount of $ 15,000 .

The interest on this note shall accrue beginning

from the date of issuance, at an interest rate of 8 % per annum.

The principal and any accrued interest are payable on or before March

During any event of default under the note, the interest rate shall increase to 10 % per annum.

Events of default include failure

to pay principal or interest, breach of covenants, breach of representations and warranties, borrower’s assignment of substantial

part of its property or business, any money judgment, writ, or similar process shall be entered or filed against the borrower or any

subsidiary of the borrower or any of its properties or other assets for more than $ 100,000 , bankruptcy, liquidation of business, and

cessation of operations.

The principal and the accrued interest amounting to $ 15,000 and $ 1,000 , respectively, was settled on October

February 19, 2021, the Company issued a promissory note in the principal amount of $ 25,000 .

The interest on the unpaid principal balance

accrues at a rate of 10 % per annum.

The principal and any accrued interest shall be paid in a single installment on or before February

If the Company fails to pay the balance of this note in full on the due date or fails to make any payment due within 15 days

of the due date, any unpaid principal shall accrue interest at the rate of 15 % per annum during the default (default interest).

of default include failure to make any payment including accrued interest when due, voluntary, or involuntary petition of bankruptcy,

appointment of a receiver, custodian, trustee or similar party to take possession of the Company’s assets or property, or assignment

made by the Company for the benefit of creditors.

The principal amount outstanding under this note was $ 25,000 as of December 31, 2021.

Interest accrued as of December 31, 2021 is $ 2,000 .

April 5, 2021, the Company issued a promissory note in the principal amount of $ 9,000 .

The interest on the unpaid principal balance accrues

at a rate of 8 % per annum.

If the Company fails to pay the balance of this note in full on the date or fails to make any payments due

within 15 days of the due date, any unpaid principal shall accrue interest at the rate of 8 % per annum during the default.

default include failure to make any payment including accrued interest when due, voluntary, or involuntary petition of bankruptcy, appointment

of a receiver, custodian, trustee or similar party to take possession of the Company’s assets or property, or assignment made by

the Company for the benefit of creditors.

The principal and accrued interest under this note was settled September 16, 2021.

April 22, 2021, the Company issued a promissory note in the principal amount of $ 50,000 .

The interest on the unpaid principal balance

accrues at a rate of 10 % per annum.

The principal and any accrued interest shall be paid in a single installment on or before April 22,

If the Company fails to pay the balance of this note in full on the date or fails to make any payments due within 15 days of the

due date, any unpaid principal shall accrue interest at the rate of 15 % per annum during the default.

Events of default include failure

to make any payment including accrued interest when due, voluntary, or involuntary petition of bankruptcy, appointment of a receiver,

custodian, trustee or similar party to take possession of the Company’s assets or property, or assignment made by the Company for

the benefit of creditors.

The principal amount outstanding under this note was $ 50,000 as of December 31, 2021.

Interest accrued as of

December 31, 2021 is $ 2,000 .

July 1, 2021, the Company issued a promissory note in the principal amount of $ 25,000 .

The interest on the unpaid principal balance accrues

at a rate of 10 % per annum.

The principal and any accrued interest shall be paid in a single installment on or before July 1,2022 .

the Company fails to pay the balance of this note in full on the date or fails to make any payments due within 15 days of the due date,

any unpaid principal shall accrue interest at the rate of 15 % per annum during the default (default interest).

Events of default include

failure to make any payment including accrued interest when due, voluntary, or involuntary petition of bankruptcy, appointment of a receiver,

custodian, trustee or similar party to take possession of the Company’s assets or property, or assignment made by the Company for

the benefit of creditors.

The principal amount outstanding under this note was $ 25,000 as of December 31, 2021.

Interest accrued as of

December 31, 2021 is $ 1,000 .

July 12, 2021, the Company issued a promissory note in the principal amount of $ 5,000 .

The interest on the unpaid principal balance accrues at a rate of 8 % per annum.

The principal and any accrued interest shall be paid in a single installment on or before October 12, 2021 .

principal amount of this note was settled on September 16, 2021.

August 10, 2021, the Company issued a promissory note in the principal amount of $ 7,000 .

The interest on the unpaid principal balance

accrues at a rate of 8 % per annum.

The principal and any accrued interest shall be paid in a single installment on or before November

10, 2021 .The principal amount of this note was settled on September 16, 2021.

August 2021, the Company issued four promissory notes to a single lender in the aggregate principal amount of $ 14,000 .

The interest on

the unpaid principal balance of these notes accrues at a rate of 8 % per annum.

The principal for each note shall be paid in a single

installment during November 2021 .

If the Company fails to pay the balance of these notes in full on the date or fails to make any payments

due within 15 days of the due date, any unpaid principal shall accrue interest at the rate of 8 % per annum during the default.

of default include failure to make any payment including accrued interest when due, voluntary, or involuntary petition of bankruptcy,

appointment of a receiver, custodian, trustee, or similar party to take possession of the Company’s assets or property, or assignment

made by the Company for the benefit of creditors.

The principal amount outstanding under these notes was $ 13,500 as of September 30,

The principal and the accrued interest aggregating to $ 14,000 was settled in October 2021.

the year ended December 31, 2020, the Company issued a promissory note for $ 11,000 .

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

$ 1,000 for an original issue discount.

This promissory note is non-interest bearing with the principal due and payable in August 2020 .

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

issue discount was amortized over the term of the note, which was one month.

The Company is in default on this promissory note as of

December 31, 2021.

The principal and accrued interest amounted to $ 11,000 and $ 2,000 , as of December 31, 2021 and $ 11,000 and nil as

of December 31, 2020, respectively.

expense on notes payable amounted to $ 8,000

as of December 31, 2021 and 2020, respectively.

5 – 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 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%

the year ended December 31, 2021, the Company issued two convertible promissory notes amounting to $ 55,000 and $ 3,850,000 (the “Notes”),

respectively.

The total aggregate proceeds were $ 3,550,000 due to a $ 355,000 aggregate original issue discount.

The Notes are non-interest

bearing with the principal due and payable on March 1, 2022 and August 31, 2022 , respectively.

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 and $ 1.25 per share (“Conversion

Rate”), respectively.

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

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 .

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 1,567,500 shares of the Company’s common stock for a purchase price of $ 1.50 to $ 1.87 per share, subject

to adjustments.

The Warrants were valued using the Black Scholes option pricing model for a total fair value of $ 3,004,000 based on a

3 -year term, volatility of 404.91 % to 405.93 %, a risk-free equivalent yield of 0.27 % to 0.42 %, and stock price ranging from $ 0.10 to

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 amounted to approximately $ 1,690,000 and the beneficial conversion

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

the year ended December 31, 2020, the Company issued convertible promissory notes in the amount of $ 213,000

(the “Notes”).

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

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.

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”).

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”).

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.

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

3 unchanged sentences

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

In addition, 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 $ 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.

cost recognized for the amortization of debt discount was approximately $ 524,000

and $ 187,000

for the years ended December 31, 2021 and

2020, respectively.

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 815-15 Derivatives and Hedging .

The convertible promissory notes consisted of the following:

December 31, 2020

December 31, 2019

Principal Amount

Original issue discount

Warrant discount

Conversion feature discount

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.

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

Stockholders’

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.

convertible promissory notes consisted of the following as of December 31:

of Convertible Promissory Notes

Balance, beginning of year

Balance, end of year

Balance, beginning of year

Balance, end of year

Net carrying amount

interest rate used to amortize the debt discount for the years ended December 31, 2021 and 2020 ranges from 4.76 %

The unamortized debt discounts will be amortized

within one year as of December 31, 2021 and 2020, respectively.

future shares to be issued on conversion of the notes as December 31, 2021 and 2020 are as follows:

of Potential Future Shares Issuance of Conversion Notes

Conversion price per share

Potential future share

expense on default convertible promissory notes amounted to $ 65,000 and $ 39,000 for the year ended December 31, 2021 and 2020, respectively.

6 – Commitments and Contingencies

Development Agreement

December 23, 2021, AIQ entered into a Technology Development Agreement (the “Agreement”) with PICOCEL, Co., Ltd.

(the “Contractor”

or “PICOCEL”) to develop a FPGA based Bitcoin mining simulation system.

The Agreement is expected to be completed

within 6 weeks for a total contract price of 198,000,000

Korean Won (“KRW”) or approximately

As of December 31, 2021, AIQ have made payments amounting to approximately $ 42,000 .

The remaining payments as of December 31, 2021 are scheduled, as follows:

of Remaining Payments

Within 14 days after signing the

Within 14 days after

delivery of the first set of PM103 FPGA prototype board

time to time, the Company may become subject to legal proceedings, claims and litigation arising in the ordinary course of business.

In addition, the Company may receive letters alleging infringement of patent or other intellectual property rights.

The Company is not

currently a party to any material legal proceedings, nor is the Company aware of any pending or threatened litigation that would have

a material adverse effect on the Company’s business, operating results, cash flows or financial condition should such litigation

be resolved unfavorably, except as follows.

3, 2022, a complaint was filed against our company in the Superior Court of California, County of Los Angeles titled Michael Sekula

CalEthos Inc, Michael Campbell and Does 1-25 (Case No.

22STCV00121) for, among other matters, failure to pay wages, fraud and other

wage-related claims.

In the complaint, the plaintiff claims he worked under a consulting agreement as Vice President of Brand Management

of our company and was to be paid $4,000 per month and to receive an option to purchase 50,000 shares of our common stock that was to

vest quarterly over the term of the agreement.

In the complaint, the plaintiff alleges that, on or around March 27, 2020, we ceased paying

the plaintiff despite the plaintiff’s continuing efforts on behalf of our company and that we agreed to continue to accrue his monthly

retainer amount until such time that we received at least $100,000 in funding.

Plaintiff further alleges that he continued to work for

our company for 38 additional weeks in reliance on our promise of payment.

The plaintiff claims that our refusal to make the promised

payments amounts to violations of the California labor laws and seeks damages in excess of $450,000.

We intend to dispute these claims

and to defend this litigation vigorously.

However, due to the inherent uncertainties of litigation, the ultimate outcome of this litigations

is uncertain.

An unfavorable outcome in this litigation could materially and adversely affect our business, financial condition and results

of operations.

continuing COVID-19 global pandemic has caused significant disruption to the economy and financial markets globally, and the full extent

of the potential impacts of COVID-19 are not yet known.

Circumstances caused by the COVID-19 pandemic are complex, uncertain and rapidly

The impact of COVID-19 has not been significant to the Company’s results of operations, financial condition, and liquidity

and capital resources.

Although no material impairment or other effects have been identified to date, there is substantial uncertainty

in the nature and degree of its continued effects over time.

That uncertainty affects management’s accounting estimates and assumptions,

which could result in greater variability in a variety of areas that depend on these estimates and assumptions as additional events and

information become known.

The Company will continue to consider the potential impact of the COVID-19 pandemic on its business operations.

7 – Stockholders’ Deficit

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”

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.

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.

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 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

Series A Convertible Preferred Stock (“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

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’ Deficit.

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.

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

7 unchanged sentences

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

Company entered into three separate consulting agreements with provisions for the issuance of options under the Company’s 2019

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:

to purchase 685,000 shares

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.

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.

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”).

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 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):

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 into a Convertible Promissory Notes in the principal amount approximately

January 2021, the Company’s President and a member of the Board of Directors, resigned as an officer and director of the Company

(“Termination Agreement”).

Part of the Termination Agreement stipulates the return of 3,674,330 shares of the Company’s

common stock (“Cancelled Shares”).

The Cancelled Shares were returned and cancelled on April 20, 2021.

March 2021, the Company’s Chief Executive Officer (“CEO’) agreed to forgive approximately $ 68,000 due to him, which

was treated as contributed paid in capital.

March 2021, the Company’s Chief Financial Officer agreed to reduce the amounts due to him from approximately $ 128,000 to $ 30,000 .

For the reduction of $ 98,000 , the Company will issue 75,000 shares of common stock.

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

September 2021, the Company entered into a release agreement with one of its consultants.

As part of the separation payment, the Company

issued 25,000

shares valued at $ 76,000

and paid $20,000 cash

in October 2021.

Common Stock Awards

August 17, 2021, the Company entered into Restricted Share Award Agreements (the “Award Agreements”) with two consultants

pursuant to which the Company issued to the consultants shares of common stock of the Company in exchange for their future services.

The Awards have an initial term of one year, which shall be automatically renewed on a year-to-year basis unless either party gives a

written notice of termination.

The two consultants who entered into these agreements include:

consultant who was granted 10,000,000 restricted share awards.

entity, which is owned by the Company’s CEO and majority shareholder, was granted 1,500,000 restricted share awards.

indicated in the Awards Agreement, fifty percent (50%) of the shares shall vest upon the completion of the first two development phases

of a 5 nanometer ASIC chip that includes the “FPGA Simulation” and “Tape Out”, and the remaining fifty (50%)

of the shares shall vest upon the completion of the next phases of the chip development that include the completion of the Foundry Mask

for production in the semiconductor foundry, initial production run of chips and the completion of a bitcoin mining system ready for

sale to customers.

Should the Company not raise sufficient capital to complete the Foundry Mask within 6 months of completing the first

two development phases, then 100 %

of the shares shall be considered vested.

Company’s management has accounted for the Award Grants as restricted stock compensation in accordance with ASC 718 – Stock

Compensation (“ASC 718”).

ASC 718 requires the Company to estimate the service period over which the compensation cost will

be recognized.

Management has estimated that the first two development phases will be completed within 15 months and the Foundry Mask

will be completed within 6 months for a total of 21 months service period.

Compensation cost will be recognized ratably over 21 months

and in the same manner had the Company paid in cash.

The estimated service period will be adjusted for changes in actual and expected

completion dates.

Any such change will be recognized prospectively, and the remaining deferred compensation will be recognized over the

remaining service period.

of December 31, 2021, a total of 11,500,000

shares were issued to the consultants.

The value was $ 1.93

per share on the date of issuance (“Grant

Date”) for an aggregate fair value of $ 22,195,000

stock-based award compensation was recorded as an increase in deferred compensation expense, common stock, and additional paid-in capital

in the Company’s books at the time of the grant.

table below summarizes the transactions related to the Company restricted stock awards as of December 31, 2021:

of Company Restricted Stock Awards

Grant date fair value

( 4,791,000 )

Balance as of December 31, 2021

of Stock Options and Warrants

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.

were fully vested on the date of issuance.

The fair value of the options was approximately $ 52,000 , as of the grant date, of which approximately

$ 38,000 was expensed and accrued during the year ended December 31, 2020 and $ 14,000 was expensed for the year ended December 31, 2021.

May 2021, the Company signed a letter of understanding that granted one of its shareholders an option to purchase 300,000 shares of the

Company’s common stock at $ 0.001 per share for the consultancy work provided during the Company’s restructuring phase from

February 17, 2021 through April 30, 2021.

The options were fully vested on the date of issuance.

The fair value of the options was approximately

$ 561,000 , as of grant date, which was expensed during the year ended December 31, 2021.

May 2021, an option holder exercised three options for 385,000 , 750,000 and 300,000 shares of the Company’s common stock at an

exercise price of $ 0.001 for each option, for total proceeds of approximately $ 2,000 .

table below summarizes the Company’s stock option activities for the years ended December 31, 2021 and 2020 (all share and per

share data reflects the reverse stock split):

of Stock Option Activities

Balance, January 1, 2020

Balance, December 31, 2020

( 1,435,000 )

Balance, December 31, 2021

Earned and exercisable, Dec 31, 2020

Vested and exercisable, December 31, 2021

Unvested, December 31, 2021

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

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

September 15, 2021, the Company issued warrants to purchase 100,000 shares of the Company’s common stock.

For the year ended December

31, 2021, the compensation expense, classified as professional fees in the consolidated statement of operations and comprehensive loss,

was $ 195,000 , 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 359 %, fair value of common stock $ 1.95 , estimated life of 3 years, risk free rate of 0.43 %

and dividend rate of $ 0 .

table below summarizes the Company’s warrant activities for the years ended December 31, 2021 and 2020 (all share and per share

data reflects the reverse stock split):

of Warrants Activity

Average Strike Price/Share

Average Remaining Contractual Term (Years)

Average Grant Date Fair Value/Share

Balance, January 1, 2020

Balance, December 31, 2020

Vested and exercisable, December 31, 2020

Unvested, December 31, 2020

Balance, December 31, 2020

Balance, December 31, 2021

Vested and exercisable, December 31, 2021

Unvested, December 31, 2021

following table sets forth the weighted-average assumptions used to estimate the fair value of warrants granted for the year ended December

of Fair Value of Warrants

Expected life (in years)

Risk-free interest rate

Expected volatility

Dividend yield

8 – Deferred Tax Assets and Income Tax Provision

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

December 31, 2021, the Company had net operating loss (“NOL”) carry forwards for Federal income tax purposes of $ 3,354,000

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

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.

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 $ 2,490,000 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.

Federal NOL’s have an indefinite carryover period and state

NOL’s begin to expire at 12-31-2040 if not utilized by then.

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

1 unchanged sentence

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.

The valuation allowance increased by approximately $ 2,191,000

for the reporting periods ended December 31, 2021 and 2020,

respectively.

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

Net deferred tax assets –

Expected income tax benefit from NOL carry-forwards

of Components of Deferred Tax Assets

Net deferred tax assets – Non-current:

Stock-based compensation

Expected income tax benefit from

NOL carry-forwards

$ 1 , 002,000

Less valuation allowance

Deferred tax assets, net of valuation allowance

( 2,490,000 )

Deferred tax assets,

net of valuation allowance

Tax Provision in the Statements of Operations

1 unchanged sentence

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

Schedule of Reconciliation of Income Tax

statutory income tax rate

in valuation allowance on net operating loss carry-forwards

income tax rate

9 – Subsequent Events

1 unchanged sentence

to determine if they must be reported.

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.

The management of the Company determined the following reportable events:

Technology Development Agreement

In relation to the Technology Development Agreement

entered on December 23, 2021, AIQ has made payments to PICOCEL amounting to approximately $ 42,000 as of the date of this report.

Notes Payable

Subsequent to December 31, 2021, the Company had

made payments to its notes payable holders amounting to $ 25,000 .

As of March 1, 2022, the Company did not pay the

outstanding balance of $ 55,000 due and payable for a convertible promissory note.

As per the promissory note, any unpaid balance as of

maturity accrues interest at a rate of 10.0 % per annum.

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