What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-14 compared with 2022-08-15 · 87 added, 63 removed, 91 unchanged (62% of the section changed)

9 unchanged sentences

of Operations

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.

As 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 implement this plan, we intend to complete the purchase of 80 acres of land and to negotiate a Power Purchase

Agreement with the local utility company for up to 100 megawatts of clean energy from local geothermal power plants and solar farms and

to evaluate various paths for accessing close-by fiber networks.

the land acquisition is closed, we intend to complete a land use plan 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 and construction schedule will take approximately three months to complete.

Once submitted to the appropriate

governmental departments and agencies for approval, it is expected that it could take another three months or more before we receive the

required permits for construction, and that the construction could take another six 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

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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.

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 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.

require substantial financing to complete the development and construction of the planned data center operation.

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.

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 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.

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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

For the Three Months Ended

September 30,

For the Nine Months Ended

September 30,

Operating expenses

from operations

other expenses

before provision for income taxes

for income taxes

Professional fees

Stock based compensation

(11,168,000 )

General and administrative expenses

Impairment loss

Total operating (income)expenses

(11,008,000 )

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.

Income (loss) from operations

Other income (expense)

Interest income

Financing costs

Total other expenses

Income (loss) before provision for income taxes

Provision for income taxes

Net income (loss)

$ (2,063,000 )

$ (2,813,000 )

Company had no revenues for the nine months ended September 30, 2022 and 2021.

(income) expense for the nine months ended September 30, 2022 was $4,020,000, compared to $(2,587,000) for the nine months ended September

The increase of $6,607,000, in operating income, pertains primarily to (1) reversal of $4,791,000 of stock-based compensation

expense, for the year ended December 31, 2021, related to the forfeiture of the stock-based awards.

Since the Company discontinued the

development in South Korea of the Company’s 5 nanometer ASIC chip and containerized, immersion-cooled bitcoin mining computer system,

management determine that performance-based service would not be achievable.

Also, the stock-based compensation for the nine months ended

September 31, 2022 was nil, because of the reversal of unvested restricted stock awards, which was

forfeited, compared to the stock based compensation expense of $1,745,000 for the nine months ended September 31, 2021.

The expense of $90,000 for settling a legal case for the nine months ended September 30, 2022.

and Capital Resources

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

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

September 30,

Current assets

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$ (2,913,000 )

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

Working deficit increased

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

For the Six Months Ended

September 30, 2022, the Company had cash of approximately $2,249,000 and prepaid expenses of approximately $1,000.

The working deficit

increased by approximately $2,335,000 from December 31, 2021 to September 30, 2022.

The increase in the working capital deficit was due

primarily to the decrease in cash of $798,000 and the increase in convertible promissory of approximately $1,526,000 .

At September 30, 2022, the Company had outstanding promissory notes and

accrued interest in the aggregate amount of $104,000 and outstanding convertible notes and accrued interest in aggregate amount of $4,806,000,

all of which were past due and all of which were in default.

See Notes 4 and 5 to the accompanying unaudited financial statements

of the Company.

For the Nine Months Ended

September 30,

Net cash used in operating activities

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flows used in operating activities

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.

cash used in operating activities increased by $373,000 during the nine months ended September 30, 2022 as compared to the nine months

ended September 30, 2021 due to an increase in cash expense of approximately $403,000.

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.

cash used in investing activity increased by $106,000 during the nine months ended September 30, 2022 as compared to the nine months

ended September 30, 2021 due to payments for design and development work for the Company’s ASIC chip which was discontinued in

the third quarter of 2022.

flows used in financing activities

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

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

convertible promissory notes and notes payable amounting to $3,550,000 and $128,000, respectively.

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

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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.

will cost between $60 to 75 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,

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Sheet Arrangements

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

of September 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