What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-15 compared with 2022-05-16 · 79 added, 56 removed, 75 unchanged (64% of the section changed)

9 unchanged sentences

of Operations

of the filing of this Report, it is the intention of the board of directors for our company to develop and manufacture high-performance

computer systems that are scalable, upgradeable, and cost effective for processing cryptocurrencies, tokens and blockchain-based transactions.

In November 2021, we established AIQ Systems, a subsidiary company in South Korea, and contracted an engineering design team to start

the development of an ASIC chip, which we plan to incorporate into an industrial-grade immersion-cooled bitcoin mining system.

the first phase of ASIC chip development is complete, we are now waiting for the release by one of the qualified semiconductor foundries

of a low-voltage design kit that will allow us to move to the next phase of chip development.

In parallel to chip development, we have

been working with a number of vendors that can supply immersion-cooled systems that will be altered to accommodate the electrical distribution

and cooling specifications we require to meet our system performance and energy consumption goals.

we move through the chip and immersion-cooled bitcoin mining system development process, we will continue to refine and finalize the

course of action needed to implement our business plan and operations.

As a result, management has not fully determined our actual short-term

or long-term capital requirements, which management expects to be substantial.

is anticipated that we will incur expenses in the implementation of the business plan described herein, and such expenses will require

substantial financing to complete the development of our ASIC chip and immersion-cooled bitcoin mining system and to achieve our goals,

and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or

terminate our product development plans, any commercialization efforts or other operations.

We may not be able to secure financing on

favorable terms, or at all, to meet our future capital needs.

of the filing of this Report, it is our plan to continue our focus on building a large-scale, clean-energy powered, containerized, immersion-cooled

data center operation that will provide wholesale colocation services to high-density computing, enterprise customers.

While it was originally

part of our strategy to build such a facility for our own utilization with the bitcoin mining systems that we planned to manufacture

and use for our own bitcoin mining operations, going forward, our operating plan is to focus only on developing and building clean-energy

powered, containerized, immersion-cooled data centers for enterprise customers.

To this end, we are currently negotiating the acquisition

of up to 1,000 acres of land in Southern California on which we plan to initially build a 100-megawatt (MW) clean-energy powered, containerized,

immersion-cooled data center.

Our strategy is to have the data center operations powered by a direct off-grid connection to 100% clean-energy

sources and a substation for connectivity to the local utility’s electrical grid for back-up and to use for transmitting any excess

electricity to other potential clean-energy customers.

our negotiations for land and power purchase agreements are completed, we intend to complete a land use plan and environmental impact

report that will be submitted to authorities for approval and for permits to start construction.

We expect, based on all related factors,

that a submittable plan, which will include civil engineering, data center and infrastructure design, a construction schedule, and preliminary

environmental reports, will take approximately six months to complete.

Once submitted to the appropriate governmental departments and

agencies for approval, it is expected that it could take another 12 months or more before we receive the required permits for construction,

and that the construction could take another 6 months or more to complete depending on supply chain issues at the time for data center,

electrical and communication connectivity components of the data center build.

we move through the development process to build a clean-energy powered, containerized, immersion-cooled data center, we will continue

to refine and finalize the courses of action needed to implement our business plan and operations.

As a result, management has not fully

determined our actual short-term or long-term capital requirements, which management expects to be substantial.

is anticipated that we will incur significant expenses in the implementation of our business plan as described herein, and that we will

require substantial financing to complete the development of a submittable land use plan and the construction of the planned data center

A failure to obtain this necessary capital when required on acceptable terms, or at all, could force us to delay, limit,

reduce or terminate our development plans, any commercialization efforts and any other operations.

We may not be able to secure financing

on favorable terms, or at all, to meet our future capital needs.

In addition, even if we are able to obtain sufficient funding to commence

our business operations, we may need to pursue additional financing in the future to make expenditures and/or investments to support

the growth of our business and may require additional capital to pursue our business objectives and respond to new competitive pressures,

pay extraordinary expenses or fund our growth, including through acquisitions.

Additional funds, however, may not be available when we

need them on terms that are acceptable to us, or at all.

the growth of our business.

In addition, we may require additional capital to pursue our business objectives and respond to new competitive

pressures, pay extraordinary expenses or fund our growth, including through acquisitions.

Additional funding, however, may not be available

when required on terms that are acceptable to us, or at all.

If we are unable to obtain adequate financing or financing on terms satisfactory

to us when we require it, our ability to commence our proposed business operations, to continue to grow and support our business and

to respond to business challenges could be significantly limited.

to us when it is required, our ability to commence and grow our proposed business operations, to support our business and to respond

to business challenges could be significantly limited.

currently have only limited capital with which to pay these anticipated expenses.

2 unchanged sentences

of Operations

table summarizes the results of operations for the three months ended March 31:

Operating expenses

Professional fees

General and administrative expenses

table summarizes the results of operations for the three and six months ended June 30:

the Three Months Ended

the Six Months Ended

based compensation

and administrative expenses

operating expenses

Loss from operations

from operations

other expenses

Financing cost

Loss before provision for income taxes

Provision for income taxes

before provision for income taxes

for income taxes

$ (4,174,000 )

Company had no revenues for the three months ended March 31, 2022 and 2021.

expenses for the three months ended March 31, 2022 were $3,419,000, compared to $75,000 for the three months ended March 31, 2021.

increase of $3,344,000 or 4,459% pertained primarily to (1) the accretion of stock-based compensation related to the restricted

stock awards issued to consultants totalling to $3,170,000 in relation to their services and (2) accretion of $90,000

for settling a legal case.

$ (8,100,000 )

Company had no revenues for the six months ended June 30, 2022 and 2021.

expenses for the six months ended June 30, 2022 were $6,987,000, compared to $711,000 for the six months ended June 30, 2021.

of $6,276,000 or 883% pertains primarily to (1) the accretion of stock-based compensation related to the restricted stock awards issued

two consultants totaling to $6,376,000 in relation to their services (2) and accretion of $90,000 for settling a legal case.

and Capital Resources

Company’s financial position as of March 31, 2022 and December 31, 2021 were as follows:

March 31, 2022

December 31, 2021

Company’s financial position as of June 30, 2022 and December 31, 2021 were as follows:

Current assets

2 unchanged sentences

$ (2,265,000 )

March 31, 2022, the Company had cash of approximately $2,749,000 and prepaid expenses of approximately $21,000.

June 30, 2022, the Company had cash of approximately $2,401,000 and prepaid expenses of approximately $3,000.

Working deficit increased

by approximately $705,000 from December 31, 2021 to March 31, 2022.

For the Three Months Ended

by approximately $1,687,000 from December 31, 2021 to June 30, 2022.

For the Six Months Ended

Net cash used in operating activities

6 unchanged sentences

flows used in operating activities

cash used in operating activities increased by $155,000 or 196% during the three months ended March 31, 2022 as compared to the three

months ended March 31, 2021 due to (1) payment of consulting fees and other operating expenses, (2) payment for prepaid expenses and

(3) payment of accounts payable and accrued expenses.

flows used in investing activities

cash used in investing activities increased by $37,000 or 100% during the three months ended March 31, 2022 as compared to the three

months ended March 31, 2021 due to payments for design and development work for the Company’s ASIC chip.

Net cash used in operating activities increased by

$370,000 or 259% during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 due to (1) stock based compensation

expense, (2) amortization of convertible promissory note discounts and, (3) impairment loss.

flows used in investing activity

cash used in investing activity increased by $107,000 or 100% during the six months ended June 30, 2022 as compared to the six months

ended June 30, 2021 due to payments for design and development work for the Company’s ASIC chip which was discontinued subsequent to June 30, 2022.

flows used in financing activities

cash used in financing activities increased to $25,000 during the three months ended March 31, 2022 due to repayment of notes payable.

Net cash provided by investing activities increased to $90,000 during the three months ended March 31, 2021 due to proceeds from convertible

Company had net cash used in financing activities during the six months ended June 30, 2022 due to $25,000 repayment of notes payable.

Conversely, it had net cash provided by financing activities during the six months ended June 30, 2021 mainly due to proceeds from convertible

promissory notes and notes payable amounting to $50,000 and $99,000, respectively.

Company estimates that it will require up to $2 million of its current cash for expenses and operating costs to complete the development

of a comprehensive plan for its planned clean-energy powered, containerized, immersion-cooled data center operation.

Once the plans are

approved for construction by the requisite authorities, the Company estimates the initial phase of its planned data center operation

will cost approximately $52 million to build.

the plan development phase, the Company will need to raise capital in order to build its planned operations and achieve its growth targets,

which the company plans to raise from investors by issuing common stock, preferred stock and/or debt securities.

However, there can be

no assurance that such financings will be available in sufficient amounts and on acceptable terms when it’s needed.

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

but not limited to the condition of the capital market, investor interest in our business plan, demand for the Company’s services

by enterprise customers, the timing of approvals from authorities to start construction, the management of working capital, and reasonable

payment terms and conditions for purchase of goods and services we will need to build our data center operation.

Accounting Policies

19 unchanged sentences

with ASC 470-20.

These costs are classified on the balance sheet as a direct deduction from the debt liability.

The Company amortizes

these costs over the term of its debt agreements as financing cost in the consolidated statement of operations and comprehensive loss.

These costs are classified on the consolidated balance sheet as a direct deduction from the debt liability.

amortizes these costs over the term of its debt agreements as financing cost in the consolidated statement of operations.

account for our stock-based compensation under ASC 718, “ Compensation – Stock Compensation ” using the fair value

14 unchanged sentences

Sheet Arrangements

of March 31, 2022, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.

of June 30, 2022, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.

Quantitative and Qualitative Disclosures about Market Risk

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis