What changed in this filing

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Item 9A. Controls and Procedures

2023-04-17 compared with 2022-03-31 · 579 added, 605 removed, 848 unchanged (58% of the section changed)

and Procedures.

Controls 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

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to computer systems including insufficient disaster recovery plans;

and (iv) no written whistle-blower policy.

no written whistle-blower policy.

plan to take steps to enhance and improve the design of our internal controls over financial reporting when our company has sufficient

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

Executive Officers and Corporate Governance.

Other Information.

Directors, Executive Officers and Corporate Governance.

and Executive Officers

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of the Board and Chief Executive Officer

Joel D, Stone

President and Chief Operations Officer

Financial Officer

Technical Officer

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

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ordering and order aggregation company with the Regional Bell Operating Companies.

Stone became our President and Chief Operating Officer on March 28, 2023.

Stone has 24 years of broad-based operations, engineering,

construction, integration, transformation, and technical leadership in the data center infrastructure, sourcing, and telecommunications

Prior to joining our company, Mr.

Stone led the Global Site Sourcing teams for Meta Platforms that supported the data center

infrastructure teams from 2019 to 2022.

Prior to 2019, Mr.

Stone served as Senior Vice President and Chief Operating Officer of RagingWire

Data Centers, an NTT communications company, where he was responsible for critical facilities engineering, design, construction, and data

center operations from 2016-2018.

Prior to RagingWire, Mr.

Stone served as Vice President of Global Data Center Operations for CenturyLink

Communications, responsible for 58 data centers around the world and a global team of 600+ people from 2011to 2016.

Prior to CenturyLink,

Stone was Group Operations Director at Global Switch in London, one of the largest wholesale data center providers in Europe and Asia.

Stone spent nine years at Microsoft where he was responsible for all North America data center operations.

Earlier in his career,

Stone built-out two state-of-the-art data centers in Silicon Valley (Santa Clara) for Cable & Wireless Communications.

Skupen became our Chief Financial Officer on September 12, 2018.

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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:

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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.

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

Our chief executive officer,

Campbell, currently serves as a consultant to our company.

Stone, our President and Chief Operating Officer, is currently our only

employee and devotes the majority of his time to advancing the company’s mission and executing our business plan.

Management intends

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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

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

permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities

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,

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

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.

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

conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding

traffic violations and other minor offences);

subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated,

of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending

or otherwise limiting his involvement in any type of business, securities 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;

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;

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

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.

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

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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

As we continue to develop our data center and commence selling colocation services, we expect to increase the size of our board to include independent directors who will approve the compensation arrangements

with our executive officers.

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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

on the cover of this Annual Report.

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 on the cover

of this Annual Report.

16(a) Beneficial Ownership Compliance

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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.

Executive 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, 2022 and 2021.

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

COMPENSATION TABLE

Principal Position

Incentive Plan Compensation

Deferred Compensation Earnings

Other Compensation ($)

Name and Principal Position

Stock Awards ($)

Option Awards ($)

Non-Equity Incentive Plan Compensation ($)

Nonqualified Deferred Compensation Earnings

All Other Compensation ($)

Michael Campbell

$ 200,000 (2)

Chief Executive officer (1)

2,895,000 (1)

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.

Chief Technology Officer

Chief Financial

Represents a restricted stock share award that was to vest upon the completion

of the multiple phases of our previous chip development business plan.

In August 2022, we abandoned the chip development business plan

and Mr, Campbell and Mr.

Kim’s consulting agreements were terminated and the associated restricted stock share awards were cancelled.

amounts earned by Mr.

Campbell under his consulting agreement.

Represents amounts earned by Mr.

Kim under his consulting

Kim terminated his consulting engagement in August of 2022.

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.

August 17, 2021 and August 31, 2022, we had consulting agreements in place with M1 Advisors LLC, a limited liability company controlled

by Michael Campbell, our 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.

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

In addition, pursuant to such consulting agreements, M1 Advisors was granted

a restricted stock award of 1,500,000 shares of common stock and Mr.

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

common stock.

In August 2022, we terminated the chip development

business plan and terminated the consulting agreements with M1 Advisors and Mr.

Kim and canceled related restricted stock awards.

are currently structuring a new consulting agreement with M1 Advisors to continue providing consulting services and for Mr.

to continue serving as our Chief Executive Officer.

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.

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

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Plan category

Securities to

Plans (Excluding

Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights

Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights

Number of Securities Remaining Available for Future Issuance

Under Equity Compensation Plans (Excluding Securities Reflected

in Column (a))

2021 Equity compensation plan approved by security holders

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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.

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

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

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Equity Awards At Annual Period End

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.

of December 31, 2022, there were no awards outstanding.

Option Exercises

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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)

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

following table sets forth, as of April 13, 2023, 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

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as indicated, each beneficial owner listed exercises sole voting power and sole dispositive power over the shares beneficially owned):

Name and Address of

Name and Address of Beneficial Owner

Amount and Nature of Beneficial

Percent of Class(1)

M1 Advisors LLC(2)

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Dean Skupen(3)

Hyuncheol Peter Kim

Sean Fontenot(4)

All executive officers and directors as

All executive officers and directors as a group

5% Stockholders:

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.

The Cooper Family Living Trust Dtd 7/20/98 (6)

As of April 13, 2023, there were 14,495,621 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.

The address 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

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.

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, LLC.

Unsworth’s address is 246 Bayview Avenue, Belvedere CA 94920.

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 address 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

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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.

Principal Accountant Fees And Services.

aggregate fees billed for professional services rendered by RBSM LLP, our principal accountants for the years ended December 31, 2022

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

Exhibits, Financial

Statement Schedules.

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).

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

Description of Registered Securities

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

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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.

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

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)

XBRL Instance Document

XBRL Taxonomy Extension Schema Document

XBRL Taxonomy Extension Calculation Linkbase Document

XBRL Taxonomy Extension Definition Linkbase Document

XBRL Taxonomy Extension Label Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document

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

Not incorporated by reference.

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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 31 st day of March 2022.

be signed on its behalf by the undersigned, thereunto duly authorized on the 17 day of April 2023.

Michael Campbell

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Executive Officer and Director

March 31, 2022

April 17, 2023

Executive Officer)

Financial Officer

March 31, 2022

April 17, 2023

Accounting Officer)

/s/ Sean Fontenot

March 31, 2022

Sean Fontenot

/s/ Steven Shum

March 31, 2022

April 17, 2023

the Years Ended December 31, 2022 and 2021

to the Consolidated Financial Statements

of Independent Registered Public Accounting Firm PCAOB ID 587

Balance Sheets as of December 31, 2021 and 2020

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

to the Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm PCAOB ID 587

Consolidated Balance Sheets as of December 31, 2022 and 2021

Consolidated Statements of Operations and Comprehensive Loss for the Years ended December 31, 2022 and 2021

Consolidated Statements of Changes in Stockholders’ Deficit for the Years ended December 31, 2022 and 2021

Consolidated Statements of Cash Flows for the Years ended December 31, 2022 and 2021

Notes to the Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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.

on the Financial Statements

have audited the accompanying consolidated balance sheets of CalEthos Inc., (the “Company”) as of December 31, 2022 and 2021,

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

two year period ended December 31, 2022, and the related notes and schedules (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, 2022 and 2021, and the consolidated results of its operations and its cash flows for each of the two

years in the period ended December 31, 2022 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.

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

in Note 1 to the accompanying consolidated financial statements, although the Company has net income it is primarily attributable to

non-cash reversal of compensation for restricted stock units, has generated negative cash flows from operating activities, has an accumulated

deficit and has stated that substantial doubt exists about Company’s ability to continue as a going concern.

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.

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) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

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.

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Audit Matters

audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be

communicated to the audit committee and that:

(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.

critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required

to be 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.

determined that there are no critical audit matters.

have served as the Company’s auditor since 2018.

Balance Sheets

of December 31,

As of December 31,

Current assets

Cash and cash

Cash and cash equivalents

Prepaid and other current expenses

Total current assets

LIABILITIES AND STOCKHOLDERS’

Liabilities and stockholders’ deficit

Current liabilities

Accounts payable and accrued

Notes payable, net

promissory notes, net

Accounts payable and accrued expenses

Convertible promissory notes, net

Notes payable

Total current liabilities

Commitments and contingencies (Note 7)

Stockholders’ deficit

Series A convertible preferred

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

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;

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;

Preferred stock, value

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

24,495,621 and 25,995,621 shares issued and outstanding

Additional paid-in capital

Other comprehensive loss

Other comprehensive income (loss)

Stock subscription receivable

Accumulated deficit

( 14,650,000 )

( 16,831,000 )

stockholders’ deficit

Total stockholders’ deficit

( 3,143,000 )

liabilities and stockholders’ deficit

Total liabilities and stockholders’ deficit

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

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Operating expenses

and administrative expenses

operating expenses

Loss from operations

Professional fees

Restricted stock grants

( 4,791,000 )

Other expenses

Financing costs

on extinguishment of series A convertible preferred stock

other expenses

Loss before provision for income taxes

General and administrative expenses

Impairment loss

Total operating (income) expenses

( 3,918,000 )

Provision for income

Income (loss) from operations

( 6,152,000 )

Other income (expenses)

Interest income

Financing costs

( 1,744,000 )

Net loss per share,

basic and diluted

Weighted average common

shares outstanding – basic and diluted

Comprehensive loss:

Total other expenses

( 1,737,000 )

Income (loss) before provision for income taxes

( 6,749,000 )

Change in foreign currency

Comprehensive loss

Provision for income taxes

Net income (loss)

$ ( 6,749,000 )

Net income (loss) per share, basic

Net income (loss) per share, diluted

Weighted average common shares outstanding – basic

Weighted average common shares outstanding – diluted

Comprehensive income (loss):

Net income (loss)

$ ( 6,749,000 )

Change in foreign currency translation

Comprehensive income (loss)

$ ( 6,751,000 )

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

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the Years Ended December 31, 2022 and 2021

A Convertible

Comprehensive

Stockholders’

January 1, 2020

Income (Loss)

Series A Convertible

Preferred Stock

Additional Paid-In

Stock Subscription

Other Comprehensive

Total Stockholders’

Income (Loss)

Balance, December 31, 2020

$ ( 10,082,000 )

$ ( 1,323,000 )

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

Relative fair value of warrants issued with convertible promissory note

Stock options issued for services

Stock issued for debt forgiveness

Stock issued for accrued compensation

Stocks returned

( 3,674,330 )

Stock issued on exercise of options

Stock-based compensation

Restricted common stock awards issued for compensation

Foreign currency translation loss

( 6,749,000 )

Balance, December 31, 2021

( 16,831,000 )

fair value of warrants issued with convertible promissory note

options issued for services

issued for debt forgiveness

issued for accrued compensation

Stock-based compensation

Forfeiture of stock-based compensation

( 1,500,000 )

issued on exercise of options

common stock awards issued for compensation

currency translation loss

( 11,166,000 )

( 11,168,000 )

December 31, 2021

Foreign currency translation income

Net income (Loss)

Balance, December 31, 2022

$ ( 14,650,000 )

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Statements of Cash Flows

the Years Ended December 31,

For the Years Ended December 31,

Cash Flows From Operating Activities

$ ( 6,749,000 )

Net income (loss)

$ ( 6,749,000 )

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

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Amortization of convertible promissory note discounts

Fair value of equity-based compensation

Accretion of compensation

cost for restricted stock awards

Changes in operating asset and liabilities

Prepaid expenses

payable and accrued expenses

Net cash used in operating

Cash flows from investing activity

for other assets

Net cash used in investing

Forfeiture of restricted stock grants

( 11,168,000 )

Accretion of compensation cost for restricted stock awards

Changes in operating assets and liabilities

Prepaid expenses and other current assets

Accounts payable and accrued expenses

Net Cash Used in Operating Activities

Cash Flows From Investing Activities

Net Cash Used in Investing Activities

Cash Flows From Financing Activities

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

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

Proceeds from the issuance of convertible promissory notes

Proceeds from the issuance of notes payable

Repayments of notes payable

Proceeds from the exercise of options

Net Cash (Used in) Provided by Financing Activities

Effect of exchange rate changes on cash and cash equivalents

Net (decrease) increase in Cash

Cash, Beginning of Period

Cash, End of Period

Supplemental disclosure of cash flow information:

Cash paid for interest

Cash paid for income taxes

Non-cash investing and financing activities

Relative fair value of warrants issued with convertible promissory notes

Common stock issued for accrued compensation

Common stock issued from forgiven debt

Original issue discount recorded on convertible promissory notes

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

to the Consolidated Financial Statements

the Years Ended December 31, 2021 and 2020

For the Years Ended December 31, 2022 and 2021

1 - Organization and Accounting Policies

AND ACCOUNTING POLICIES

(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.”.

This amendment became effective

immediately upon filing on December 20, 2018.

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.

The Company is implementing its plan to build a clean-energy-powered, modular

immersion and liquid cooled data center that provides colocation data center services to enterprise IT customers.

In addition, the Company

may acquire assets and all or part of other companies operating in the high-density computing industry or to invest or joint venture with

other more-established companies already in the industry that would add value to the Company’s business strategy.

July 2022, due to the declining state of the bitcoin mining industry and market for its planned products, the Company’s board of

directors resolved to discontinue the development in South Korea of the Company’s 5 nanometer ASIC chip and containerized, immersion-cooled

bitcoin mining computer system and to focus exclusively on developing the clean-energy-powered data center segment of its business strategy.

The Company has suspended operations of its South Korean subsidiary and will decide in the next twelve months whether to use it to develop

other products or dissolve it.

Incorporation

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$ 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

2 unchanged sentences

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.

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

intercompany transactions and balances have been eliminated in consolidation.

Concern and Liquidity

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

Company incurred net income of approximately $ 2,181,000 for the year ended December 31, 2022, of which $ 4,791,000 was attributable to

a noncash transaction for the reversal of compensation for restricted stock units, and had an accumulated deficit of approximately $ 14,650,000

as of December 31, 2022.

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.

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

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additional funding from investors or through other avenues to continue as a going concern.

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.

preparation of consolidated financial statements in conformity with GAAP and requires management to make estimates and assumptions that

34 unchanged sentences

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.

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”)

103 unchanged sentences

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

of Income and Loss Per Share Anti-dilutive

SCHEDULE 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

Series A warrants issued with convertible promissory notes

Series B warrants to be issued upon exercise of Series A warrants

Warrants issued for services

Stock options

Total potential future

Total potential future shares

Accounting Pronouncements

1 unchanged sentence

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.

condensed consolidated financial condition or the results of its operations.

2 – Related Party Transactions

PARTY TRANSACTIONS

Company incurred approximately $ 200,000 and $ 199,000 for years ended December 31, 2022 and 2021, and paid approximately $ 200,000 and

$ 202,000 , respectively, to M1 Advisors for the services of the Company’s CEO and miscellaneous operating expenses.

3 – Intangible and Other Assets

AND OTHER ASSETS

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 was expected to be completed within

6 weeks for a total contract price of 198,000,000 Korean Won (“KRW”) or approximately $ 167,000 .

Total payments made to PICOCEL

as of December 31, 2022 amounted to approximately $ 69,000 .

On March 17, 2022, the Company and PICOCEL entered into a mutual agreement

to cancel and terminate the Agreement.

As of the date of the termination, PICOCEL had completed the first phase of the Agreement upon

delivery of the SHA-256 code and FPGA board simulator.

April 5, 2022, AIQ entered into a Technology Development Agreement (the “Agreement”) with NNS, Co., Ltd.

(the “Contractor”

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

The Agreement was expected to be completed within 9 weeks

for a total contract price of 99,000,000 KRW, including 9,000,000 KRW VAT, or approximately $ 82,000 .

The payments are scheduled as follows:

Within 5 days after signing the contract

Within 5 days after all conditions are met as stated in “Schedule B – Statement of Work”

of 90,000,000 KRW or approximately $ 69,000 was made to NNS as of December 31, 2022, which was expensed and included in the consolidated

statement of operations.

the six months ended June 30, 2022, the Bitcoin market was in a constant decline, and since the ASIC chip being developed by AIQ was

planned to be used for Bitcoin mining machines, management believes that there is an impairment indicator.

In August 2022,

management discontinued the operations of AIQ.

of impairment include significant underperformance relative to historical or projected future operating results, significant changes

in our use of the assets or in our business strategy, loss of or changes in customer relationships and significant negative industry

or economic trends.

When indications of impairment arise for a particular asset or group of assets, we assess the future recoverability

of the carrying value of the asset (or asset group) based on an undiscounted cash flow analysis.

If the carrying value exceeds projected,

net, undiscounted cash flows, an additional analysis is performed to determine the asset’ (or asset group), typically a discounted

cashflow analysis, and an impairment charge is recorded for the excess of carrying value over fair value.

of December 31, 2022, intangibles and other assets were fully impaired.

Impairment loss amounted to $ 154,000 , inclusive of a $ 12,000

impairment of prepaid VAT related to the services provided by PICOCEL and NNS.

table below summarizes the impairment loss for the year ended December 31, 2022:

OF IMPAIRMENT LOSS

Foreign exchange loss

Impairment loss

4 – Accounts Payable and Accrued Expenses

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

Schedule of Accounts Payable and Accrued Expenses

PAYABLE AND ACCRUED EXPENSES

following table summarizes the Company’s accounts payable and accrued expense balances as of December 31:

OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable

1 unchanged sentence

Accrued interest

Accounts payable and

accrued expenses

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

Accounts payable and accrued expenses

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

OF ACCRUED INTEREST

promissory notes

end of the year

Notes payable

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

Convertible promissory notes

Balance, end of the year

5 – Notes Payable

NOTES PAYABLE

table below summarizes the transactions as of 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

Balance, end of the year

July 7, 2020, the Company issued a promissory note in the principal amount of $ 11,000 .

The note is noninterest bearing.

The principal

was due on or before August 7, 2020.

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

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 amount outstanding under this note was $ 11,000 as of December 31, 2022.

principal and interest are past due, therefore in default.

For the year ended December 31, 2022, the Company has accrued approximately

$ 3,000 of default interest.

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

accrued at a rate of 10 % per annum.

The principal and any accrued interest was to 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

3 unchanged sentences

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.

The principal amount was settled in full on January 25, 2022.

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.

accrued at a rate of 10 % per annum.

The principal and any accrued interest was to be paid in a single installment on or before April

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

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The principal amount outstanding under this note was $ 50,000 as of December 31, 2022.

Interest accrued as of

December 31, 2021 is $ 2,000 .

The note principal and

interest are past due, therefore in default.

Interest accrued, including default interest, as of December 31, 2022 is $ 10,000 .

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

1 unchanged sentence

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.

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

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 (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 was settled in full on November 29, 2022.

expense on notes payable amounted to $ 14,000 and $ 8,000 for the years ended December 31, 2022 and 2021, respectively.

6 – Convertible Promissory Notes

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

respectively.

PROMISSORY NOTES

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 .

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).

Interest accrued as of December 31, 2022 is $ 133,000 .

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 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 .

The note principal and interest are past due, therefore in default.

connection with the issuance of the Notes, the Company issued to the purchasers of the Notes stock purchase warrants (the “Warrants”)

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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”).

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

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

Under extinguishment accounting, the difference between the fair value of the Notes and book basis of the series A preferred stock

of $ 86,000 was accounted for as a loss on extinguishment.

Also, the fair value of the Warrants of $ 52,000 was recorded as a loss on extinguishment.

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 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.

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 .

cost recognized for the amortization of debt discount was approximately $ 1,526,000 and $ 524,000 for the years ended December 31, 2022

and 2021, respectively.

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

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Balance, beginning of year

( 1,526,000 )

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:

interest rate used to amortize the debt discount for the years ended December 31, 2022 and 2021 ranges from 4.76 % to 64.60 %.

future shares to be issued on conversion of the notes as of December 31:

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.

Potential future shares

default interest expense for the convertible promissory notes amounted to $ 204,000 and $ 65,000 for the year ended December 31, 2022,

and 2021, respectively.

7 – 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

AND CONTINGENCIES

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

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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

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

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

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

and other wage-related claims.

In the complaint, the plaintiff claimed 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 alleged that, on or around March 27, 2020,

the Company ceased paying the plaintiff despite the plaintiff’s continuing efforts on behalf of our company and that the Company

agreed to continue to accrue his monthly retainer amount until such time that the Company received at least $ 100,000 in funding.

further alleged that he continued to work for our company for 38 additional weeks in reliance on our promise of payment.

The plaintiff

claimed that our refusal to make the promised payments amounts to violations of the California labor laws and seeks damages in excess

of $ 450,000 .

June 9, 2022, a Settlement Agreement and Mutual Release was reached by the parties in the above mentioned complaint whereby as full

consideration for the plaintiff’s execution of and compliance with the agreement and plaintiff’s release of all claims

against the defendants, the Company agreed to pay a gross settlement amount of $ 90,000 .

Such payment was made on June 23, 2022.

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

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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

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As part of the separation payment, the Company

issued 25,000

shares valued at $ 76,000

and paid $20,000 cash

in October 2021.

issued 25,000 shares valued at $ 76,000 and paid $ 20,000 cash in October 2021.

Common Stock Awards

1 unchanged sentence

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

The Awards had an initial term of one year, which was to be automatically renewed on a year-to-year basis unless either party gave a

written notice of termination.

2 unchanged sentences

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.

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

ASC 718 required the Company to estimate the service period over which the compensation cost would be recognized.

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

within 6 months for a total of 21 months service period.

Compensation cost was to be recognized ratably over 21 months and in the same

manner had the Company paid in cash.

The estimated service period would be adjusted for changes in actual and expected completion dates.

Any such change was to be recognized prospectively, and the remaining deferred compensation was to be recognized over the remaining service

Company issued restricted stock grants totaling 10,000,000

shares (“Grant Shares”) to Hyuncheol (Peter) Kim (“CTO”), the Company’s former Chief Technology Officer, and 1,500,000

to a M1 Advisors LLC, a company owned by the Company’s chief executive officer.

The value was $ 1.93

per share on the date of issuance (“Grant

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

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.

On July 27, 2022, the Company sent the CTO, a letter notifying him that

the Company’s Board of Directors had resolved to discontinue the Company’s 5 nanometer ASIC chip and bitcoin mining machine

project and that his consulting agreement was to terminate at the end of August 2022.

The Grant Shares issued in connection with his consulting

agreement were canceled.

As of the issuance date of these consolidated financial statements, the CTO had not executed the documentation

required for the Company to cancel the Grant Shares;

therefore, the Grant Shares are still legally outstanding, so the number of Grant

Shares has not been removed from the total shares issued and outstanding.

Since it is probable that the Grant Shares will not be earned,

the Company has reversed the expense recognized for the fair value of the Grant Shares.

at the end of August 2022, the Company canceled the restricted stock grant issued to M1 Advisors LLC.

table below summarizes the transactions related to the Company restricted stock awards as of December 31, 2022:

2 unchanged sentences

( 11,168,000 )

( 1,500,000 )

( 11,027,000 )

Balance as of December 31, 2022

stock grant compensation expense for the year ended December 31, 2022, is as follows:

OF RESTRICTED STOCK GRANT COMPENSATION EXPENSE

2022 Accretion expense

Reversal of 2021 accretion expense

( 4,791,000 )

Reversal of 2022 accretion expense

( 6,377,000 )

Restricted stock grant compensation

$ ( 4,791,000 )

of Stock Options and Warrants

16 unchanged sentences

Balance, January 1, 2021

Balance, December 31, 2020

( 1,435,000 )

Balance, December 31, 2021

Balance, December 31, 2022

Vested and exercisable, December 31, 2022

10 unchanged sentences

OF WARRANTS ACTIVITY

Average Strike Price/Share

Average Remaining Contractual Term (Years)

Average Grant Date Fair Value/Share

Weighted Average Strike Price/Share

Weighted Average Remaining Contractual Term (Years)

Weighted Average Grant Date Fair Value/Share

Balance, January 1, 2021

2 unchanged sentences

Unvested, December 31, 2021

Balance, December 31, 2020

Balance, January 1, 2022

Balance, December 31, 2022

5 unchanged sentences

Risk-free interest rate

0.27 % - 0.42 %

Expected volatility

Dividend yield

$ 0.10 – 1.95

9 – Earnings (Loss) Per Share EARNINGS (LOSS) PER SHARE

following table sets forth the computation of basic and diluted earnings (loss) per share for the years ended December 31:

SCHEDULE OF EARNINGS

PER SHARE BASIC AND DILUTED

Net income (loss)

$ ( 6,749,000 )

Effect of dilutive instruments

Convertible notes interest expense

Numerator for diluted EPS

( 6,749,000 )

Denominator - for basic EPS

Effect of dilutive instruments

Restricted stock awards

Convertible notes

Dilutive potential common shares

Denominator for diluted EPS

that could potentially dilute loss per share in the future were not included in the computation of diluted loss per share for the year

ended December 31, 2021 because their inclusion would be anti-dilutive.

Common share equivalents amounted to 3,942,608 for warrants,

3,947,394 for convertible notes and 11,500,000 for restricted stock units for total of 19,390,002 as of December 31, 2021.

ended December 31, 2022, the Company had 14,846,705 dilutive securities.

10 – Deferred Tax Assets and Income Tax Provision

TAX ASSETS AND INCOME TAX PROVISION

December 31, 2022, the Company had net operating loss (“NOL”) carry forwards for Federal income tax purposes of $ 3,070,000

5 unchanged sentences

Federal NOL’s have an indefinite carryover period and state

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

NOL’s begin to expire in 2037 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 $ 2,191,000

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

respectively.

The valuation allowance (decreased) increased by approximately $ ( 782,000 )

and $ 2,191,000 for the reporting periods ended December 31, 2022 and 2021, respectively.

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

1 unchanged sentence

Net deferred tax assets – Non-current:

Intangible assets

Impairment loss

Interest expense limitations

Stock-based compensation

Expected income tax benefit from

NOL carry-forwards

$ 1 , 002,000

Expected income tax benefit from NOL carry-forwards

Less valuation allowance

( 1,709,000 )

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:

Schedule of Reconciliation of Income Tax

statutory income tax rate

in valuation allowance on net operating loss carry-forwards

income tax rate

OF RECONCILIATION OF INCOME TAX

Federal statutory income tax rate

Change in valuation allowance on net operating loss carry-forwards

Effective income tax rate

11 – Subsequent Events

SUBSEQUENT EVENTS

Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued

1 unchanged sentence

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.

of Land for Building a Data Center

March 30, 2023, the Company signed an option agreement to acquire 80 acres of commercially zoned land in Imperial County, California

(the “Option”) for $ 3,360,000

(“Purchase Price”).

The Option expires

in September 2024.

The Company paid a non-refundable deposit of $ 84,000

on the signing of the Option.

The Company is

required to deposit an additional $ 84,000

into an escrow (“Escrow Funds”).

If the Company does not exercise the Option by September 2024, the Escrow funds will be returned to the Company.

Purchase Price is payable with a cash payment of $ 1,680,000 and the issuance of 840,000 shares of the Company’s common stock (the

“Purchase Shares”).

At the closing of the purchase (“Closing Date”), if the stock is trading at a value less

than $ 1.00 per share, the Company is required to issue a promissory note in the amount of $ 840,000 , payable on the third anniversary

of the closing date, with an interest rate equal to the Secured Overnight Financing Rate plus 2.0 % .

the Purchase Shares are issued at the Closing Date, the Company has agreed to repurchase the Shares (the “Put Option”).

Put Option period ends on the one-year anniversary after a six-month holding period.

However, if the Company’s common stock trades

above $ 2.00 per share for 120 consecutive days, the Put Option expires.

If the Company’s common stock trades below $ 2.00 per for

10 consecutive days, the Holder has the option for the Company to repurchase the Purchase Shares for $ 2.00 per share.

March 27, 2023, executed an offer of employment to hire an individual as the Company’s president and chief operating officer.

effective date of employment was March 28, 2023.

The salary is $ 250,000

per year, with an increase to $ 300,000

annually, immediately once permits have been

granted to start construction of the data center, and an increase to $ 350,000

annually, upon the data center being operational

and contracted for 25 %

of the planned 100MW colocation capacity.

the individual is eligible for a cash annual bonus and 2,000,000

shares that will be provided in an employee option

or a restricted stock award, if certain milestones are accomplished.

The stock grant will be included in a pending employment agreement

that is planned to be completed between the Company and employee with the next couple of weeks.

of Restricted Stock Awards

April 10, 2023, we completed the required paperwork for our transfer agent to cancel 10,000,000

shares of restricted stock that was previously issued to Mr.

Kim as our former CTO.

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