What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-15 compared with 2022-11-14 · 87 added, 99 removed, 79 unchanged (70% of the section changed)

9 unchanged sentences

of Operations

As of the filing of this Report, it is our plan to continue our focus on

building a large-scale, clean-energy powered, containerized, immersion-cooled data center operation that will provide wholesale colocation

services to high-density computing, enterprise customers.

While it was originally part of our strategy to build such a facility for our

own utilization with the bitcoin mining systems that we planned to manufacture and use for our own bitcoin mining operations, going forward,

our operating plan is to focus only on developing and building clean-energy powered, containerized, immersion-cooled data centers for

enterprise customers.

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

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

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

the land acquisition is closed, we intend to complete a land use plan that will be submitted to authorities for approval and for permits

to start construction.

We expect, based on all related factors, that a submittable plan, which will include civil engineering, data center

and infrastructure design and construction schedule will take approximately three months to complete.

Once submitted to the appropriate

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

required permits for construction, and that the construction could take another six months or more to complete depending on supply chain

issues at the time for data center, electrical and communication connectivity components of the data center build.

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

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

As a result, management has not fully

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

of the filing of this Report, it is our plan to continue our focus on building a large-scale, clean-energy-powered, modular data center

operation using the latest energy-efficient immersion, liquid and conventional cooling technologies and provide wholesale colocation

services to enterprise IT and hyperscale customers.

While it was originally part of our strategy to build such a facility for our own

utilization with the bitcoin mining systems that we planned to manufacture and use for our own bitcoin mining operations, going forward,

our operating plan is to focus only on developing and building clean-energy powered data centers for enterprise IT and hyperscale customers.

To implement this plan, we have optioned 80 acres of land for the initial phase of development and are having on-going discussions and

negotiations to acquire clean energy from the local power utility and nearby geothermal power plants and solar farms and evaluating various

paths to run conduit for accessing close-by fiber networks.

intend to engage a Data Center Architect and Engineering firm to complete a feasibility study and site development plan.

Once the plan

is developed, we will submit plans to authorities for approval and for permits to start construction.

We expect, based on all related

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

will take approximately three to six months to complete.

Once submitted to the appropriate governmental departments and agencies for

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

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

electrical and communication connectivity components of the data center build.

we move through the development process to build a clean-energy powered data center operation, we will continue to refine and finalize

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

As a result, management has not fully determined our actual

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

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

18 unchanged sentences

of Operations

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

For the Three Months Ended

September 30,

For the Nine Months Ended

September 30,

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

Operating expenses

Professional fees

Stock based compensation

(11,168,000 )

General and administrative expenses

Impairment loss

Total operating (income)expenses

(11,008,000 )

Income (loss) from operations

Other income (expense)

Operating expenses

Loss from operations

Other income (expenses)

Interest income

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Total other expenses

Income (loss) before provision for income taxes

Loss before provision for income taxes

Provision for income taxes

Net income (loss)

$ (3,926,000 )

$ (2,813,000 )

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

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

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

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

Since the Company discontinued the

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

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

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

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

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

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

had no revenues for the three months ended March 31, 2023 and 2022.

operating expenses were $97,000 and $3,419,000 for the three months ended March 31, 2023 and March 31, 2022, respectively.

of $3,322,000 was due to no stock-based compensation for the three months ended March 31, 2023 because of the forfeiture of the stock-based

Stock based compensation expense for the three months ended March 31, 2022 was $3,170,000.

Other income (expense)

Our other income and expenses is comprised of interest income of approximately $14,000 from the short-term investment

of our cash balance, and financing cost of approximately $116,000 for the interest incurred with our notes payable and convertible promissory

and Capital Resources

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

September 30,

financial position as of March 31, 2023 and December 31, 2022 were as follows:

Current assets

2 unchanged sentences

$ (3,424,000 )

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

The working deficit

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

The increase in the working capital deficit was due

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

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

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

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

See Notes 4 and 5 to the accompanying unaudited financial statements

of the Company.

For the Nine Months Ended

September 30,

$ (3,143,000 )

March 31, 2023, we had cash of approximately $1,913,000.

The working deficit increased by approximately $281,000 from December 31, 2022

to March 31, 2023.

The increase in the working capital deficit was due primarily to the decrease in cash of $154,000 and the increase

in accounts payable and accrued expenses of approximately $123,000.

March 31, 2023, we had outstanding promissory notes and accrued interest in the aggregate amount of $80,000 and outstanding convertible

notes and accrued interest in the aggregate amount of $5,036,000, which were past due and all of which were in default.

See Notes 4 and

5 to the accompanying unaudited condensed consolidated financial statements.

For the Three Months Ended

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by (used in) financing activities

Net cash used in financing activities

Effect of exchange rate changes

Increase (decrease) in Cash during the Period

Net decrease in Cash during the Period

Cash, Beginning of Period

1 unchanged sentence

flows used in operating activities

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

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

flows used in investing activity

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

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

the third quarter of 2022.

cash used in operating activities decreased by $163,000 during the three months ended March 31, 2023 as compared to the three months

ended March 31, 2022 due to a decrease in cash expense of approximately $155,000.

flows used in investing activities

cash used in investing activities was $84,000 during the three months ended March 31, 2023 compared to $37,000 for the three months ended

March 31, 2022.

The cash used during the three months ended March 31, 2023 was the deposit for the land purchase option.

The cash used

during the three months ended March 31, 2022 was the payment for design and development work for our proposed ASIC chip, which was discontinued

in the third quarter of 2022.

flows used in financing activities

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

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

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

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

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

Once the plans are

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

will cost between $60 to 75 million to build.

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

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

However, there can be

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

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

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

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

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

cash used in financing activities was nil during the three months ended March 31, 2023 as compared to $25,000 for the three months ended

March 31, 2022 due to repayment of notes payable.

estimate that we will require up to $2 million for expenses and operating costs to complete the development of a comprehensive plan for

our planned clean-energy powered, containerized, immersion-cooled data center operation.

Once the plans are approved for construction

by the requisite authorities, the Company estimates the initial phase of our planned data center operation will cost between $60 to $75

million to build.

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

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

However, there can be no assurance

that such financing will be available in sufficient amounts and on acceptable terms when it is needed.

The precise amount and timing

of our funding needs cannot be determined accurately at this time, and will depend on a number of factors, including but not limited

to the condition of the capital market, investor interest in our business plan, demand for our services by enterprise customers, the

timing of approvals from authorities to start construction, the management of working capital, and reasonable payment terms and conditions

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

Accounting Policies

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of Consolidation

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

consolidated financial statements include the accounts of our company and our wholly-owned subsidiary from the formation date.

intercompany transactions and balances have been eliminated in consolidation.

7 unchanged sentences

and Debt Discounts

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

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

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

accordance with ASC 470-20, Debt with Conversion and Other Options , we first allocated the cash proceeds of the notes between

the notes and the warrants on a relative fair value basis.

Secondly, proceeds are then allocated to the conversion feature.

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

with ASC 470-20.

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

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

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

based method.

Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over

the service period, which is usually the vesting period.

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

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

Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the

service period, which is usually the vesting period.

This guidance establishes standards for the accounting for transactions in which

6 unchanged sentences

Accounting Pronouncements

Company’s management reviewed all recently issued accounting standard updates (“ASU’s”) not yet adopted by the

Company and does not believe the future adoptions of any such ASU’s may be expected to cause a material impact on the Company’s

condensed consolidated financial condition or the results of its operations.

management reviewed all recently issued accounting standard updates (“ASU’s”) not yet adopted by us and does not believe

the future adoptions of any such ASU’s may be expected to cause a material impact on our condensed consolidated financial condition

or the results of its operations.

Sheet Arrangements

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

of March 31, 2023, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.

Quantitative and Qualitative Disclosures about Market Risk

1 unchanged sentence

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis