What changed in this filing

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Item 1. Business

2023-04-17 compared with 2022-03-31 · 165 added, 127 removed, 24 unchanged (92% of the section changed)

9 unchanged sentences

However, in 2016 we

disposed of all of our real estate and other assets and continued operations as a public “shell”

disposed of all of our real estate and other assets and continued operations as a public “shell” company.

September 12, 2018, M1 Advisors, LLC, a Delaware limited liability company controlled by Michael Campbell, our current Chief Executive

1 unchanged sentence

2018, we filed a Certificate of Amendment to our Articles of Incorporation with the Secretary of State of the State of Nevada to (i)

change our corporate name from “RealSource Residential, Inc.” to “CalEthos, Inc.” and(ii) to increase our authorized

change our corporate name from “RealSource Residential, Inc.” to “CalEthos, Inc.” and (ii) to increased our authorized

shares of common stock from 4,000,000 shares to 100,000,000 shares.

This amendment became effective immediately upon filing on December

to the outbreak of the 2020 COVID-19 pandemic we had intended to focus our business development efforts on building a chain of large-format

cannabis superstores to serve the needs of the rapidly-growing Southern California cannabis market.

We spent over two years putting together

business opportunities for retail licenses, store leases and display agreements with brands while trying to find adequate financing to

fund our business plan.

However, at the end of 2020, we concluded that there were too many issues in the cannabis industry due

to federal legalization and that adequate funding was not available for us to execute our plans.

This caused us to review other business

opportunities and prospects and, after many months of research, we determined there was a sizable opportunity to create high-performance

computer systems for bitcoin miners as an alternative to the Chinese mining machine manufacturers that controlled that market in the

bitcoin industry for the last 10 or more years.

September 2021, we closed a convertible debt financing of $3.5 million to fund the initial phase of product development.

In connection

with such capital raise, our board of directors determined that we are no longer a shell

company, as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

In connection

with our change of business direction, we have started the process of changing our corporate name to AIQ Blockchain, Inc., which we intend

to complete upon receipt of all requisite regulatory approvals.

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.

intention in acquiring the public company was to use it as a financing and acquisition vehicle for building a chain of large-format cannabis

retail superstores to serve the needs of the rapidly-growing Southern California market.

Over the subsequent two-year period, management

assembled a number of acquisitions for retail licenses, store leases and display agreements with numerous cannabis brands as part of

executing its business plan.

However, once the COVID 19 pandemic lockdowns hit in early 2020 and Federal legalization of cannabis did

not materialize after the 2020 elections, funding for cannabis-related businesses became less available and by the end of 2020, we concluded

it would be better to pursue other business opportunities for our public company.

After months of research, we determined there was a

sizable opportunity to develop and manufacture high-performance computer systems for the cryptocurrency mining industry.

In March 2021,

we created a new business plan to develop a five nanometer ASIC chip and bitcoin mining computer system in South Korea utilizing Samsung

technology and foundry capacity.

August 2021, we hired an experienced chief technology officer from the chip industry to lead our product development and in September

2021, we closed a convertible debt financing of $3.5 million to fund the initial phase of product development.

In connection with such

capital raise, our board of directors determined that we are no longer a shell company, as defined in Rule 12b-2 of the Securities Exchange

Act of 1934, as amended (the “Exchange Act”).

November 5, 2021, we incorporated AIQ System Inc.

(“AIQ”), as a wholly-owned subsidiary in Seoul, Republic of Korea to

support our product development efforts and to manage all of our computer chip and system development teams and activities.

the subsequent eight months ended June 30, 2022, the bitcoin market went into decline, and we decided to abandon our chip and system

development efforts and to discontinue the operations of AIQ as of July 1, 2022.

the development of our computer chip and system in Korea, we had also developed a plan to build a large-scale, clean-energy powered,

containerized, immersion-cooled data center operation in Southern California to support the use of the systems we were developing for

our company and for others.

After the bitcoin market bottomed out in June 2022, we determined that we could develop a profitable business

by offering data center colocation services to a larger customer base of enterprise companies.

As of July 1, 2022, we commenced

our current operating plan to focus solely on the development and construction of clean-energy powered data centers that will utilize

immersion and liquid-cooled and conventional energy efficient systems and will provide clean-energy-powered colocation services to

large enterprise information technology (IT) customers.

To this end and to implement our

going-forward plan, on March 28, 2023 we hired Joel Stone.

a senior data center executive with 24 years of data center experience, as our

President and Chief Operating Officer, and on March 30, 2023, we completed negotiations and signed an option agreement to acquire 80 acres

of commercially-zoned land in Imperial County, California that is surrounded by nearby geothermal power plants and solar farms.

currently in the process of negotiating with various power producers in the area to provide us with clean energy and with communication

companies for access to their close-by long-haul and dark fiber networks.

an experienced data center executive on board and the property under contract, we intend to complete a land use plan that will be submitted

for approval to local authorities and to apply for permits to start construction.

We expect, based on all related factors, that a submittable

plan, which will include data center and infrastructure design, will take between four to six months to complete.

Once submitted for

approvals and permits, it is expected that it could take another three to six months or more before we receive the required permits for

construction, and that the construction could take another six to eight 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.

The foregoing time estimates

are preliminary and are subject to change.

In addition, there can be no assurance that our use plan will receive all required regulatory

approvals or that we will be issued the required approvals or permits necessary to complete construction of the data center we intend

we move through the development process to build a clean-energy powered data center for enterprise IT customers, 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.

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 October 2021, Hyuncheol Kim joined our company as our Chief Technology Officer and we

established AIQ Systems, a South Korea subsidiary company, and contracted an engineering design team to start the development of an ASIC

chip, which we plan to incorporate into our planned industrial-grade immersion-cooled bitcoin mining system.

Currently, the first phase

of ASIC chip development is complete and 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 setting

up our South Korean subsidiary and organizing our engineering teams, we have been working with various semiconductor foundries to get

a low-voltage 5 nanometer (nm) design kit that will allow us to produce a competitive system with good performance and low energy consumption.

In addition, we have been working with various immersion-cooling system manufacturers to custom design a system around our ASIC chips

that meets the performance and energy consumption requirements of large U.S.

bitcoin mining companies.

there is a global chip shortage, which may continue causing a delay or efforts to secure a supply agreement with one of semiconductor

foundry companies that have the technology to meet our design specifications.

The continuation of this shortage will delay the completion

of the development of our chip and bitcoin mining system, and ultimately the time when we are able to produce chips for our planned bitcoin

mining systems.

do not intend to directly manufacture any chips we design and use in our products.

Instead, we intend to utilize what is known as a “fabless

model”, whereby we will cooperate with world-class production partners for all phases of the manufacturing process of our ICs (chips),

including wafer fabrication and packaging and testing.

Under the fabless model, we will be able to leverage the expertise of industry

leaders that are certified by the ISO in such areas as fabrication, assembly, quality control and assurance, reliability and testing.

In addition, the fabless model will allow us to avoid many of the significant costs and risks associated with owning and operating various

fabrication and packaging and testing facilities.

Our fabrication partners will be responsible for procurement of the majority of the

raw materials used in the production of our planned ICs.

As a result, we can focus our resources on research and development, product

design and additional quality assurances.

We intend to work closely with leading global production partners, including the leading semiconductor

foundries and IC fabrication companies.

we are able to get an adequate design kit from a foundry, the ASIC chip and immersion-cooled system development is expected to take from

six to eight months to complete.

At the final stages of development, we plan to complete a 1MW immersion-cooled bitcoin mining system

for testing and customer demonstration.

We are planning to design the systems to require over 50% less energy than conventional air-cooled

bitcoin mining operations that currently make up over 90% of the global bitcoin mining fleet.

we move through the chip and immersion-cooled bitcoin mining system development process, we intend to 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.

Our 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.

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.

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.

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

To fund our business plan going forward, we intend

to raise funds from investors by issuing common stock, preferred stock and/or debt securities.

Cryptocurrency

mining machines comprise the overwhelming majority of blockchain hardware.

The global Bitcoin mining machine market is relatively concentrated

with a few large players, most of which are China-based companies that have been in business for five or more years and control the majority

of market share.

competitors include many well-known domestic and international players.

We expect that competition in the Bitcoin mining industry will

continue to be intense as we compete not only with existing players that have been focused on Bitcoin mining, but also new entrants that

include well-established players in the semiconductor industry, and players who were not predisposed to this industry in the past.

of these competitors may also have stronger brand names, greater access to capital, longer histories, longer relationships with their

suppliers or customers and more resources than we do.

intellectual property consists of computer code for and FPGA simulation of an ASIC chip for bitcoin mining that is designed to be integrated

in immersion-cooled bitcoin mining systems.

We intend to rely on a combination of patent, copyright, trademark and trade secret laws

in the United States and other jurisdictions, as well as contractual protections, to protect our proprietary technology.

of the date of this Report, we do not have any patents or registered trademarks.

cannot provide any assurance that our proprietary rights with respect to our products will be viable or have value in the future since

the validity, enforceability and type of protection of proprietary rights in software-related industries are uncertain and still evolving.

our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or to obtain and use

information that we regard as proprietary.

Policing unauthorized use of our products is difficult, and while we are unable to determine

the extent to which piracy of our software products exists, software piracy can be expected to be a persistent problem.

the laws of some foreign countries do not protect proprietary rights to as great an extent as do the laws of the United States, and effective

Our means of protecting our proprietary

rights may not be adequate to protect us from the infringement or misappropriation of such rights by others.

of the filing of this Report, we have hired Joel Stone as our President and Chief Operating Officer and signed an option agreement to

acquire land for our planned large-scale, 100% geothermal/solar-powered, clean energy, data center operation.

complete the initial phase of our planned data center, we are now negotiating agreements for clean energy and fiber connectivity.

Over the next couple of months, we plan to finish negotiations with the local geothermal and solar power producers to deliver the

clean energy we require to power our data center and to complete agreements with multiple communication providers for access to

their close-by long-haul and dark fiber communication networks for data center connectivity.

believe that the significant experience of our new President and Chief Operating Officer in both building and operating data centers

and his industry relationships will be instrumental in helping us acquire the required third-party resources and assets and the management

team and staff necessary to execute our business plan.

In addition to acquiring the principal components (experienced personnel, land,

clean energy, and fiber connectivity) for our data center plan, we are also in the process of developing partnerships with leading-edge

containerized and modular designed immersion and liquid cooled data center system providers, whose systems we will offer for rent to

our customers.

We believe that, when construction of our data center is complete, the principal differentiators

of our data center operation in the marketplace are expected to be – we are powered by 100% certified clean energy, and we provide

leading-edge immersion and liquid cooled data center systems that will support the ever-increasing power and cooling needs of high-performance

enterprise IT computer systems.

the colocation segment of the data center industry, the customer typically leases the building/shell or data hall/suite level

rather than the smaller scale of retail colocation (racks/cages/cabinets).

Projects generally involve heavily-customized builds, although

many operators in this segment are moving toward a mix of build-to-suit and turnkey offerings.

Customers of colocation are

typically hyperscale content and media/entertainment providers, scale-oriented cloud service providers, hosting and IT managed services

providers, and telecommunications companies.

due to the ever-growing amounts of digital data being created on social media, and from internet streaming, gaming and overall

internet use, and the need for digital data to be readily available for consumption on the internet, and because of the migration of

software and computer applications to the cloud and their use, we believe there is a severe shortage of data center space in the

global market.

In some of the principal U.S.

markets, there are wait times of up to a five-years for additional capacity.

for new data center space is expected to continue growing at a high rate for the foreseeable future based on following recent

industry reports:

Center Market - The market size is estimated to grow by $615.96 billion from 2021 to 2026, growing at a compound

annual growth rate (CAGR) of 21.98% according to Technavio’s February 2022 market report.

Data Centers - The U.S.

Green Data Center Market Size was valued at $13.79 billion in 2022 and is expected to reach $24.20 billion by

2028, growing at a CAGR of 9.82% during 2022 to 2028 according to Arizton’s March 2023 industry report.

Center as a Services (DCaaS) - The global data center as a service market size was valued at $52.7 billion in 2021 and is expected to

expand at a CAGR of 26.2% from 2022 to 2030 according to Grand View Research’s January 2022 - Data Center As A Service Market Size

& Growth Report.

believe the Imperial County, California site we have optioned is a unique location in that it will provide us with a rare opportunity

to acquire commercially-zoned land on which we can combine nearby direct clean geothermal/solar energy with a 24/7 data center operation.

also believe 100% clean-energy-powered data centers are an important element in the ability of the U.S.

to meet its carbon neutral climate

goals and for enterprise IT companies to meet their shareholder and customer commitments to have an ESG-compliant, clean digital footprint

are developing our business model to compete in the colocation segment of the data center services industry, which is focused on

providing the processing, networking, and storage of data.

With the move to treat data as an asset, the data services market is

expected to experience significant growth over the next decade.

Industry automation and digital businesses are expanding, and these

businesses are expected to require huge amounts of data for their businesses.

North America is the most advanced region globally and

data center services are in high demand.

competition in the data center industry is primarily driven by the increasing presence of small and large-scale service

providers globally.

The key participants in the data center colocation market are Digital Realty Trust, Equinix, CenturyLink,

CyrusOne and China Telecom Corporation Limited, among many others.

Business ventures throughout the world are progressively

competing for market share by providing services to arrange information, store data, and benefit from cloud services.

together with the increasing demand of businesses to store increasing amounts of media and other information, represents gigantic

development in the market for cloud services.

data center services market is segmented by service (infrastructure, cloud and hosting, networks, consulting, and virtualization), data-center

(Tier 1, Tier 2, Tier 3, and Tier 4), end-user industry (BFSI, Healthcare, Retail, Manufacturing, and IT and Telecom), deployment mode

(On-premise and Cloud), and geography.

a new entrant into the data center marketplace, we will compete against larger, more established and better capitalized companies

that today control the majority of market share.

We believe our principal advantages will be our location, which provides us with

access to an abundance of reasonably-priced local geothermal and solar energy to power a 24/7 data center operation, the various

immersion and liquid cooled data center racking systems we will offer as a colocation service and our proximity to the Southern

California market and the multitudes of companies utilizing high- performance computing that want close-by data center space.

intellectual property will consist of data center designs and systems for supporting containerized, immersion and liquid cooled data

center systems that we will deploy for colocation services to enterprise IT customers.

We intend to rely on a combination

of patent, copyright, trademark and trade secret laws in the United States and other jurisdictions, as well as contractual

protections, to protect our proprietary service offerings and data center management systems.

However, as of the date of this

Report, we do not have any patents or registered trademarks.

cannot provide any assurance that our proprietary rights with respect to our data center designs, systems or services will be viable

or have value in the future since the validity, enforceability and type of protection of proprietary rights in these industries are uncertain

and continuingly evolving.

our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our design, systems and services or

to obtain and use information that we regard as proprietary.

Policing unauthorized use of our designs and services is difficult, and

while we are unable to determine the extent to which piracy of our designs, systems and services will exist, intellectual piracy can

be expected to be a persistent problem.

In addition, the laws of some foreign countries do not protect proprietary rights to as great

an extent as do the laws of the United States, and effective copyright, trademark, trade secret and patent protection may not be available

in those jurisdictions.

Our means of protecting our proprietary rights may not be adequate to protect us from the infringement or misappropriation

of such rights by others.

in recent years, there has been significant litigation in the United States involving patents and other intellectual property rights

particularly in the software and Internet-related industries.

We can become subject to intellectual property infringement claims as the

number of our competitors grows and our products and services overlap with competitive offerings.

These claims, even if not meritorious,

could be expensive to defend and could divert management’s attention from operating our business.

If we become liable to third

parties for infringing their intellectual property rights, we could be required to pay a substantial award of damages and to develop

non-infringing technology, obtain a license or cease selling the products that contain the infringing intellectual property.

unable to develop non-infringing technology or obtain a license on commercially reasonable terms, if at all.

currently do not have any employees and our officers and directors are serving our company as consultants and independent contractors.

in the data center design, systems and service offerings and Internet-related data management industries.

We can become subject to intellectual

property infringement claims as the number of our competitors grows and our services overlap with competitive offerings.

These claims,

even if not meritorious, could be expensive to defend and could divert management’s attention from operating our business.

become liable to third parties for infringing their intellectual property rights, we could be required to pay a substantial award of

damages and to develop non-infringing design, systems and service offerings, obtain a license or cease providing the services that contain

the infringing intellectual property.

We may be unable to develop non-infringing data center design, systems and service offerings or

obtain a license on commercially reasonable terms, if at all.

We currently have one employee, Joel Stone

our President and Chief Operating Officer and our other officers and directors are serving our company as consultants and independent

Risk Factors.

are a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this

Staff Comments.

Unresolved Staff Comments.

do not own any real property.

4 unchanged sentences

for our current operations.

Legal Proceedings.

know of no material active or pending legal proceeding against our company, nor are we involved as a plaintiff in any material proceeding

or pending litigation.

Mine Safety Disclosures.

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 1. Business