What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2023-04-17 compared with 2022-03-31 · 103 added, 88 removed, 71 unchanged (73% of the section changed)

Discussion and Analysis of Financial Condition and Results of Operation.

Management’s Discussion and Analysis of Financial Condition and Results of Operation.

following discussion should be read in conjunction with our audited financial statements and the related notes that appear elsewhere

7 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.

Currently, 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.

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.

It is the intention of our

board of directors for our company to pursue the development of the 80 acres of land in Imperial County, California that we recently

put under an exclusive option agreement and develop it for a large-scale, 100% geothermal/solar-powered, certifiable clean energy,

data center operation that will utilize immersion and liquid cooled and conventional energy efficient data center systems and provide colocation services to enterprise IT customers.

To implement our plan, we have

optioned the land and hired an experienced data center builder and operator and we are now in the process of acquiring the other principal

ingredients needed for our data center operation – clean energy and fiber connectivity.

To this end, over the next couple of months,

we plan to finish negotiations with local geothermal and solar power producers to deliver clean energy for our operation, and to complete

agreements with multiple communication providers for access to their close-by long-haul and dark fiber communication networks for connectivity.

We are also in the process of

developing partnerships with leading-edge containerized and modular 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 operations in the marketplace are expected to be that we are powered by 100% certified clean energy and that we provide

leading-edge immersion and liquid cooled energy-efficient data center systems that will support the ever-increasing power and cooling

needs of high-performance enterprise IT computer systems.

It 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 the property for a data center operation and to achieve our goals.

The failure to obtain this necessary capital when

needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our 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.

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.

3 unchanged sentences

following summary should be read in conjunction with our audited financial statements for the years ended December 31, 2022 and 2021.

For the years ended

For the years ended December 31,

Operating Expenses

and administrative

Total Expenses

Loss from operations

Professional fees

Restricted stock grants

Impairment loss

General and administrative

Total operating (income) expenses

Income (loss) from operations

Financing costs

Loss on extinguishment

of series A convertible preferred stock

Interest income

Net income (loss)

$ (2,181,000 )

$ (6,749,000 )

the years ended December 31, 2022 and 2021, we had no revenues.

operating expenses increased from $391,000 in the year ended December 31, 2020 to $6,152,000 in the year ended December 31, 2021,

which represented an increase of $5,761,000.

The increase was attributable to (1) accretion of stock-based compensation related

to the restricted stock awards issued to two consultants amounting to $4,791,000, (2) vested warrants amounting to $847,000, and

(3) other expenses such as filing, legal and transfer agent fees and consulting fees paid to outside third parties in 2021.

financing cost increased from $227,000 in the year ended December 31, 2020 to $597,000 in the year ended December 31, 2021, which

represented an increase of $370,000.

Financing costs increased due to the issuance of convertible promissory notes with associated

interest and discount.

on extinguishment of series A convertible preferred stock

the year ended December 31, 2020, our loss on extinguishment of series A convertible preferred stock of approximately $138,000 was attributable

to the difference between the fair value of the issued Notes as an extinguishment and book basis of the series A preferred stock, and

the fair value of the warrants issued.

professional fees decreased from $1,033,000 in the year ended December 31, 2021 to $667,000 in the year ended December 31, 2022, which

represented a decrease of approximately $366,000.

The decrease was attributable to a reduction in the use of outside professional services.

stock grant expense (gain )

Our restricted stock grant expense

(gain) decreased from an expense of $5,062,000 in the year ended December 31, 2021 to a gain of $(4,791,000) in the year ended December

31, 2022, which represented a decrease of $9,853,000 brought about by the cancellation of the stock grants made in 2021.

impairment loss increased from nil in the year ended December 31, 2021 to $154,000 in the year ended December 31, 2022, which represented

an increase of approximately $154,000 due to the impairment of intangibles and other assets as a result of the suspension of our South Korean subsidiary’s

and administrative expenses

general and administrative expenses decreased from $57,000 in the year ended December 31, 2021 to $51,000 in the year ended December 31,

2022, which represented a decrease of approximately $6,000.

financing cost increased from $597,000 in the year ended December 31, 2021 to $1,744,000 in the year ended December 31, 2022, which represented

an increase of $1,147,000.

Financing costs increased due to the amortization of debt issuance costs.

and Capital Resources

1 unchanged sentence

of December 31,

Current assets

Current liabilities

Working deficit

$ (3,143,000 )

working capital improved from a $1,323,000 deficit as of December 31, 2020 to a deficit of $578,000 as of December 31, 2021 for

a total change of $745,000.

The improved working capital was due to the combined effect of the issuance of convertible debentures

and the forgiveness of debt during the year.

For the years ended

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by financing activities

Effect of exchange rate

Change in cash during the period

Cash, beginning of period

working capital decreased from a $578,000 deficit as of December 31, 2021 to a deficit of $3,143,000 as of December 31, 2022 for a

total change of $2,565,000.

The decline in our working capital was due to (i) an increase in a book basis of our convertible

promissory notes book basis increasing due to the amortization of debt issuance discounts and (ii) the decrease in our cash and cash

the years ended December 31,

cash used in operating activities

cash used in investing activities

cash provided by financing activities

of exchange rate changes

in cash during the period

Cash, beginning of

Cash, end of period

used in operating activities increased by approximately $382,000, which is predominantly related to the increase in our expenditures

for filing fees, legal fees, transfer agent fees and consulting fees paid during the year.

line with our current plan of operations, we made a $38,000 deposit to an engineering and design firm for the design and development

work for our ASIC chip.

provided by financing activities increased by $3,592,000 primarily due to the proceeds from the issuance of convertible debentures.

flows from operations

Cash used in operating activities

decreased to approximately $255,000 in 2022 from approximately $382,000 in 2021, which was predominantly related to the reduction in our

expenditures for filing fees, legal fees, transfer agent fees and consulting fees paid during the year.

flow from investing

We made payments of $105,000 in

2022 and $38,000 in 2021 to an engineering and design firm for the design and development work for our planned ASIC chip development.

flows from financing

We made payments of $50,000 to reduce notes payable in 2022 and 2021.

Additionally,

in 2021, we received $3,592,000 and $150,000 in proceeds from the issuance of convertible debentures and notes payable, respectively.

audited financial statements included in this Report have been prepared on a going concern basis, which implies that our company will

2 unchanged sentences

development stage and, apart from our cash balances, have only limited assets.

has not generated revenues in the last two fiscal years, has never paid any dividends and is unlikely to pay dividends or generate earnings

in the immediate or foreseeable future.

Our company has not generated revenues in the last two

fiscal years, has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future.

The continuation of our company as a going concern is dependent upon:

(i) continued financial

support from our shareholders;

(ii) the ability of our company to continue raising necessary debt or equity financing to achieve its

operating objectives;

and (iii) our ability to acquire assets and establish a business or merge or otherwise acquire business opportunities.

(i) continued financial support from our shareholders;

ability of our company to continue raising necessary debt or equity financing to achieve its operating objectives;

and (iii) our ability

to acquire assets and establish a business or merge or otherwise acquire business opportunities.

independent auditors included an explanatory paragraph in their report on our financial statements for the year ended December 31, 2022

13 unchanged sentences

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.

intercompany transactions and balances have been eliminated in consolidation.

Currency Translation

7 unchanged sentences

and Debt Discounts

accordance with ASC 470-20, Debt with Conversion and Other Options , the Company first allocates the cash proceeds of the notes

between the notes and the warrants on a relative fair value basis, secondly, proceeds are then allocated to the conversion feature.

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

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.

In accordance with ASC 470-20,

Debt with Conversion and Other Options , we first allocate the cash proceeds of the notes between the notes and any warrants on

a relative fair value basis.

Proceeds are then allocated to the conversion feature.

We account for debt discounts originating in connection with conversion

features that remain embedded in the related notes in accordance with ASC 470-20.

These costs are classified on the balance sheet as a

direct deduction from the debt liability.

We amortize these costs over the term of our debt agreements as financing cost in the consolidated

statement of operations and comprehensive loss.

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

10 unchanged sentences

Accounting Pronouncements

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.

Our management reviewed all recently-issued

accounting standard updates (“ASU’s”) not yet adopted by our 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

-our operations.

Sheet Arrangements

2 unchanged sentences

that are material to stockholders.

and Qualitative Disclosures About Market Risk.

Quantitative and Qualitative Disclosures About Market Risk.

a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide this information.

Statements and Supplementary Data.

Financial Statements and Supplementary Data.

financial statements and notes thereto and the reports of RBSM LLP, our independent registered public accounting firm, are set forth

on pages F-1 through F-18 of this Report.

In and Disagreements With Accountants On Accounting and Financial Disclosure.

Changes In and Disagreements With Accountants On Accounting and Financial Disclosure.

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 7. Management’s Discussion and Analysis