What changed in this filing

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Item 1. Financial Statements

2023-08-14 compared with 2023-05-15 · 228 added, 167 removed, 229 unchanged (63% of the section changed)

Financial Statements

the Three Months Ended March 31, 2023

the Six Months Ended June 30, 2023

to the Condensed Consolidated Financial Statements

Condensed Consolidated Balance Sheets as of March 31, 2023 (unaudited) and December 31, 2022

Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022

Unaudited Condensed Consolidated Statements of Stockholders’ Deficit for the three months ended March 31, 2023 and 2022

Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022

Condensed Consolidated Balance Sheets as of June 30, 2023 (unaudited) and December 31, 2022

Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022

Unaudited Condensed Consolidated Statements of Stockholders’ Deficit for the three and six months ended June 30, 2023 and 2022

Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022

Notes to the Unaudited Condensed Consolidated Financial Statements

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statements include statements regarding, among other things:

ability to implement our current stated business plans;

ability to retain key members of our management team;

future financing or acquisition plans and our ability to consummate any such transactions on favorable terms if at all;

ability to close on the real estate property we have optioned and to obtain the necessary regulatory approvals required for the construction

and build-out of our planned data center operation;

anticipated needs for working capital;

ability to establish a market for our common stock and operate as a public company.

our ability to implement our current

stated business plans;

our ability to retain key members of

our management team;

our future financing or acquisition plans

and our ability to consummate any such transactions on favorable terms if at all ;

our anticipated needs for working capital;

our ability to establish a market for

our common stock and operate as a public company.

Forward-looking

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Consolidated Balance Sheets

June 30, 2023

December 31,2022

Current assets

2 unchanged sentences

Total current assets

Data center costs

Liabilities and stockholders’ deficit

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Condensed Consolidated Statements of Operations

the Three Months Ended March 31,

For the three months ended June

For the six months ended June

Operating Expenses

Professional fees

Equity-based compensation

General and administrative expenses

Total operating expenses

Impairment loss

Operating expense

Loss from operations

( 3,568,000 )

( 6,987,000 )

Other income (expenses)

Interest income

Gain on settlement of accounts payable

Financing costs

( 1,113,000 )

Total other expenses

( 1,113,000 )

Loss before provision for income taxes

( 4,174,000 )

( 8,100,000 )

Provision for income taxes

1 unchanged sentence

( 8,100,000 )

Net loss per share, basic and diluted

Weighted average common shares outstanding – basic and diluted

Comprehensive income (loss):

Comprehensive loss

Foreign currency translation loss

Comprehensive loss

$ ( 216,000 )

$ ( 4,172,000 )

Foreign currency translation adjustment

Comprehensive loss

$ ( 413,000 )

$ ( 8,101,000 )

Net loss per share - basic & diluted

Weighted average common shares outstanding - basic and diluted

accompanying notes to these Unaudited Condensed Consolidated Financial Statements.

Condensed Consolidated Statements of Stockholders’ Deficit

the Three Months Ended March 31, 2023

the Three and Six Months Ended June 30, 2023 and 2022

A convertible preferred stock

1 unchanged sentence

Stockholders’

January 1, 2023

Balance, January

$ ( 14,650,000 )

$ ( 3,143,000 )

currency translation income

March 31, 2023

Foreign currency

translation income

Balance March 31, 2023

( 14,849,000 )

( 3,340,000 )

the Three Months Ended March 31, 2022

A convertible preferred stock

Comprehensive

Stockholders’

January 1, 2022

Fair value of equity-based compensation

Cancellation of shares

( 10,000,000 )

Foreign currency

translation income

June 30, 2023

$ ( 15,066,000 )

currency translation loss

$ ( 3,532,000 )

Balance, January 1, 2022

$ ( 16,831,000 )

March 31, 2022

$ ( 540,000 )

compensation on restricted stock awards

Foreign currency

translation loss

( 3,926,000 )

Balance March 31, 2022

( 20,757,000 )

( 1,299,000 )

compensation on restricted stock awards

Foreign currency

translation income

( 4,174,000 )

June 30, 2022

$ ( 24,931,000 )

$ ( 2,265,000 )

accompanying notes to these Unaudited Condensed Consolidated Financial Statements.

Condensed Consolidated Statements of Cash Flows

the Three Months Ended March 31,

the Six Months Ended June 30,

Cash Flows From Operating Activities

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Fair value of equity-based compensation

Gain on settlement of accounts payable

Changes in operating assets and liabilities

3 unchanged sentences

Cash Flows From Investing Activities

Data center costs

Net Cash Used in Investing Activities

Cash Flows From Financing Activities

Repayments of notes payable

Repayments of Notes

Net Cash Used in Financing Activities

6 unchanged sentences

Cash paid for income taxes

Non-cash investing and financing activities:

Reclassification of other assets to intangible assets

Non-cash investing and financing activities - none

Accrued interest capitalized as data center cost

accompanying notes to these Unaudited Condensed Consolidated Financial Statements.

to Unaudited Condensed Consolidated Financial Statements

to the Unaudited Condensed Consolidated Financial Statements

1 – Organization and Accounting Policies

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(the “Company” or “we”) was incorporated on March 20, 2002 under the laws of the State of Nevada.

Company is implementing its plan to build a 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.

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 the 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.

Company is implementing its plan to build a clean-energy-powered data center operation using the latest energy-efficient building

materials and cooling technologies and to provide wholesale colocation services to enterprise IT and hyperscale customers.

addition, the Company may acquire assets and all or part of other companies operating in the high-density computing industry or

invest in or joint venture with other more-established companies already in the industry that would add value to the Company’s

business strategy.

of July 2022, the Company’s board of directors resolved to focus exclusively on developing a clean-energy-powered data center.

November 5, 2021, AIQ System Inc.

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disclosures normally included in the Company’s annual financial statements have been condensed or omitted.

The March 31, 2023,

condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required

These interim unaudited condensed consolidated financial statements, in the opinion of management, reflect all normal recurring

adjustments necessary for a fair presentation of the financial position, results of operations, and cash flows for the interim three-months

ended March 31, 2023 and 2022.

The results for the three months ended March 31, 2023 are not necessarily indicative of the results to

be expected for the full year ending December 31, 2023 or for any future period.

unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial

statements and the notes thereto for the year ended December 31, 2022, included in the Company’s annual report on Form 10-K filed

with the SEC on April 17, 2023.

The June 30, 2023 condensed

consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP.

These interim unaudited condensed consolidated financial statements, in the opinion of management, reflect all normal recurring adjustments

necessary for a fair presentation of the financial position, results of operations and cash flows for the interim six-month periods ended

June 30, 2023 and 2022.

The results for the six months ended June 30, 2023 are not necessarily indicative of the results to be expected

for the full year ending December 31, 2023 or for any future period.

unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company’s audited Consolidated

Financial Statements and the notes thereto for the year ended December 31, 2022, included in the Company’s annual report on

Form 10-K filed with the SEC on April 17, 2023.

and Going Concern

Company incurred net loss of approximately $ 199,000

for the three months ended March 31, 2023 and had an accumulated deficit of approximately $ 14,849,000

as of March 31, 2023.

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.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern for one

year from the issuance of these condensed consolidated financial statements.

Company incurred a net loss of approximately $ 416,000

for the six months ended June 30,

2023 and had an accumulated deficit of approximately $ 15,066,000

as of June 30, 2023.

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.

These conditions raise substantial

doubt about the Company’s ability to continue as a going concern for one year from the issuance of these condensed consolidated

financial statements.

Company’s condensed consolidated financial statements have been presented on a going concern basis, which contemplates the realization

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

of factors, including market demand for the Company’s products and services, the success of product development efforts, the timing

of receipts for customer deposits, the management of working capital, and the continuation of normal payment terms and conditions for

purchase of goods and services.

The Company believes its cash balances and cash flow from operations will not be sufficient to fund its

operations and growth for the next twelve months from the issuance date of these financial statements.

If the Company is unable to substantially

increase revenues, reduce expenditures, or otherwise generate cash flows from operations, then the Company will likely need to raise

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

The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might

be necessary if the Company is unable to continue as a going concern

of factors, including the development of its data center campus development, approvals for construction permits, construction times,

delivery of critical equipment, market demand for the Company’s wholesale colocation data center services, the timing of customer

commitments for data center space, the management of working capital, and payment terms and conditions for purchase of the Company’s

The Company believes its cash balances and cash flow from operations will not be sufficient to fund its operations and growth

for the next twelve months from the issuance date of these financial statements.

If the Company is unable to raise additional funding

from investors or through other avenues, it may not be able to continue as a going concern.

The accompanying unaudited condensed consolidated financial statements

do not include any adjustments that might be necessary if the Company is unable 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

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

months ended March 31, 2023 and 2022 because their inclusion would be anti-dilutive.

Common stock equivalents amounted to 7,510,448 and

19,011,450 as of March 31, 2023 and 2022, respectively.

and six months ended June 30, 2023 and 2022 because their inclusion would be anti-dilutive.

Common share equivalents amounted to 6,000,250

as of June 30, 2023.

Accounting Pronouncements

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condensed consolidated financial condition or the results of its operations.

2 – Other Assets

2 – Data Center Costs

March 30, 2023, the Company signed an option agreement to acquire 80

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required to deposit an additional $ 84,000

into an escrow (“Escrow Funds”) within 10 days after the execution of the agreement.

As of the issuance of these interim condensed consolidated financial statements, the escrow had not been set up.

Once the escrow is set up, the Company will deposit the $ 84,000 .

If the Company does not exercise

the Option by September 2024, the Escrow funds will be returned to the Company.

into escrow (“Escrow Funds”) within 10 days after the execution of the purchase agreement.

As of the issuance of these

interim condensed consolidated financial statements, the escrow had not been set up.

Once the escrow is set up, the Company will

deposit the $ 84,000 .

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

3 unchanged sentences

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”) under

specific circumstances.

However, the Put Option

expires if the Company’s common stock trades above $2.00 per share for 120 consecutive days.

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

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

Option”) under specific circumstances.

the Put Option expires if the Company’s common stock trades above $2.00 per share for 120 consecutive days.

Company’s common stock trades below $2.00 per share for 10 consecutive days, the Holder has the option for the Company to

repurchase the Purchase Shares for $2.00 per share.

of June 30, 2023, the Company has incurred and capitalized approximately $ 135,000 of cost for the development of the Data Center and

capitalized approximately $ 14,000 of interest expense from the convertible promissory notes.

June 23, 2023, the Company signed a contract with HDR Engineering, Inc.

to provide site assessment and feasibility to connect critical

resources for data center operations and develop a shovel-ready development plan for the Company’s initial 80-acre site.

plans to complete this development phase by the end of the third quarter of 2023 and the estimated cost to be approximately $ 500,000 .

3 – Accounts Payable and Accrued Expenses

PAYABLE AND ACCRUED EXPENSES

following table summarizes the Company’s accounts payable and accrued expense balances:

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

OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES

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Accounts payable and accrued expenses

following table presents the details of accrued interest:

following table presents the details of accrued interest as of the dates indicated:

OF ACCRUED INTEREST

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NOTES PAYABLE

table below summarizes the transactions:

table below summarizes the transactions as of the dates indicated:

OF NOTES PAYABLE

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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

assignment of a 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 March 31, 2023.

principal and interest are past due, therefore in default.

Interest accrued as of March 31, 2023 was $ 3,000 .

The principal and interest amount outstanding under this note was $ 11,000 and $ 3,000 , respectively,

as of June 30, 2023.

April 22, 2021, the Company issued a promissory note in the principal amount of $ 50,000 .

The interest on the unpaid principal balance

accrued at a rate of 10 % per annum.

The principal and any accrued interest were 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.

accrues 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 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.

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 $ 50,000 as of March 31, 2023.

The note principal and

interest are past due, therefore in default.

Interest accrued, including default interest, as of March 31, 2023 was $ 12,000 .

expense on notes payable amounted to $ 2,000 and $ 2,000 for the three months ended March 31, 2023 and 2022, respectively.

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 interest amount outstanding under this note was $ 50,000 and $ 14,000 , respectively, as of

June 30, 2023.

expense on these notes payable amounted to $ 6,000 and $ 6,000 for the six months ended June 30, 2023 and June 30, 2022, respectively.

5 – Convertible Promissory Notes

PROMISSORY NOTES

During the years ended December 2020 and 2019, the Company issued convertible promissory notes for approximately

As of March 31, 2023, the accrued and unpaid interest was approximately $ 193,000 .

2021, the Company issued two convertible promissory notes of $ 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).

Interest accrued as of March 31, 2023 is $ 230,000 .

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”), 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.

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”)

to purchase an aggregate of 1,567,500 shares of the Company’s common stock for a purchase price of $ 1.50 to $ 1.87 per share, subject

to adjustments.

The Warrants were valued using the Black Scholes option pricing model for a total fair value of $ 3,004,000 based on a

3 -year term, volatility of 404.91 % to 405.93 %, a risk-free equivalent yield of 0.27 % to 0.42 %, and stock price ranging from $ 0.10 to

accordance with ASC 470 - Debt, 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 amounted to approximately $ 1,690,000 and the beneficial conversion

amounted to nil, which amounts are being amortized and expensed over the term of the Notes.

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 nil and approximately $ 487,000 for the three months ended March 31, 2023 and

2022, respectively.

convertible promissory notes consisted of the following:

promissory notes consisted of the following as of the dates indicated:

OF CONVERTIBLE PROMISSORY NOTES

Balance, beginning of year

Balance, end of period

Balance, end of year

Balance, beginning of year

( 1,526,000 )

Balance, end of period

Balance, end of year

Net carrying amount

effective interest rate used to amortize the debt discount for the six months ended June 30, 2022 ranged from 4.76 % to 64.60 %.

future shares to be issued on conversion of the notes as of the dates indicated are as follows:

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Potential future share

default interest expense for the convertible promissory notes amounted to $ 114,000 and $ 18,000 for the three months ended March 31, 2023

and 2022, respectively.

expense on default convertible promissory notes amounted to $ 229,000 for the six months ended June 30, 2023, of which $ 14,000 was capitalized

as data center cost.

The interest expense and amortization of discount on default convertible promissory notes amounted to $ 37,000 and

$ 1,071,000 , respectively, for the six months ended June 30, 2022.

6 – Commitments and Contingencies

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

In addition, the Company may receive letters alleging infringement of patent or other intellectual property rights.

The Company is not

currently a party to any material legal proceedings, nor is the Company aware of any pending or threatened litigation that would have

a material adverse effect on the Company’s business, operating results, cash flows or financial condition should such litigation

be resolved unfavorably.

During the three months ended

March 31, 2023, a total of 73,304 warrants expired, leaving a remaining outstanding balance of 1,695,000 warrants as of March 31, 2023,

with a weighted average exercise price of $ 1.46 and average remaining life of 0 .75 years.

The Company is not currently a party to any material legal proceedings, nor is the Company aware of any pending or threatened litigation

that would have a material adverse effect on the Company’s business, operating results, cash flows, or financial condition should

such litigation be resolved unfavorably.

June 2023, the Company executed an employment agreement (“Employment Agreement”) to employ an individual to be the Company’s

President and Chief Operating Officer (“Executive”).

As compensation for services rendered, the Executive will be paid a

base salary of $ 250,000 per annum.

The Executive’s base salary may be increased as certain milestones are met, such as 1) when

the necessary governmental permits are granted to start construction of the Data Center, 2) once the Data Center is operational and at

least 25% of the planned MW’s of collation capacity is leased.

Also, at the discretion of the Company, following each calendar

year of continued employment, the Executive shall be eligible to receive a discretionary bonus of up to fifty percent ( 50%) of Executive’s

Base Salary during the first year of employment, up to seventy-five percent (75%) of Executive’s then-current Base Salary during

the second year of employment, and up to one-hundred percent (100%) of Executive’s then-current Base Salary during Executive’s

third year of employment (the “Bonus”).

Payment of the Bonus will be based on achieving certain goals and performance criteria

established by the Company .

In addition, the Executive was granted options to purchase 600,000 and 1,900,000 shares of the Company’s

common stock (see Note 7 – Stockholders Deficit) for further information.

Employment Agreement also provides for certain severance benefits upon termination by the Company without “cause” or by the

Executive for good reason.

In the event of a termination by the Company without cause or by the Executive for good reason after the first

full year of employment, the Executive would be entitled to (i) continued payment of the base salary for the lesser of six months or

the remaining term of the Employment Agreement, subject to the Executive signing a timely and effective separation agreement containing

a release of all claims against the Company and other customary terms;

provided, however, that if such termination is between the 91 st

day and the end of the first year of employment, the Executive will be entitled to a pro-rata portion of such payment.

7 – Stockholders Deficit

part of the Employment Agreement, as defined in Note 6 – Commitments and Contingencies, the executive was granted an incentive

stock option (“Incentive Option”) and a non-qualified stock option (“Non-Qual Option”) (collectively “Stock

Options”) to purchase 600,000 and 1,900,000 , respectively, shares of the Company’s common stock for $ 0.50 per share.

Stock Options are exercisable for a period of seven years from the date of grant, which was June 19, 2023 (“Grant Date”).

Incentive Option shall vest and become exercisable as follows:

(i) options to purchase up to 200,000 shares of Common Stock shall vest

and become exercisable on the first anniversary of the Grant Date;

(ii) options to purchase up to 200,000 shares of Common Stock shall

vest and become exercisable on the second anniversary of the Grant Date;

and (iii) options to purchase up to 200,000 shares of Common

Stock shall vest and become exercisable on the third anniversary of the Grant Date;

provided that the Optionee is an employee in good

standing with the Company on such applicable vesting date.

The Incentive Option Grant Date fair value of $ 600,000 was calculated using

the Black Scholes fair value option-pricing model with key input variables provided by management, as of the date of issuance:

of 339 %, the fair value of common stock $ 0.50 , estimated life of 5 years, risk-free rate of 3.99 % and dividend rate of $ 0 .

For the three

months ended June 30, 2023, the Company recorded compensation expenses of approximately $ 6,000 .

Non-Qual Option shall vest and become exercisable as follows:

Shares on each of the first two anniversaries of the Grant Date and 216,668 shares on the third anniversary of the Grant Date, provided

that the Optionee is an employee or Board member in good standing with the Company on such applicable vesting date.

remaining 1,250,000 shares based on the Company completing the following milestones:

shares upon completion of the initial site development plan and Data Center design, and submission of a complete set of plans to

Imperial County Planning and Development Department for approvals and permits.

shares upon the Company receiving permits necessary to start construction of the data center site and facilities (including but not

limited to power substation, water delivery, pumping, storage and on-site distribution systems, fiber conduit lines and communications

systems, and on-site roads, water, power and communications grid, warehousing, offices, administration, support and security buildings,

perimeter walls and security systems).

shares upon the completion of construction of a complete data center facility and receipt of an occupancy permit for such facility,

either for a Data Center facility to be built as a “build to suit” building for a hyperscale company or as a wholesale

colocation building for enterprise IT customers.

shares upon signing a build-to-suit contract or one or more contracts being signed for 50% or more of a constructed and operational

wholesale colocation facility’s capacity.

Company’s management has accounted for the Non-Qual Option 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 development phase (a) will be completed by March 31, 2024, the second development phase (b) by September 30, 2024, the

third development phase (c) by March 31, 2025 and the fourth development phase by September 30, 2025.

The estimated service period will

be adjusted for actual and expected completion date changes.

Any such change will be recognized prospectively, and the remaining deferred

compensation will be recognized over the remaining service period.

Non-Qual Option Grant Date fair value of $ 550,000 was calculated using the Black Scholes fair value option-pricing model with key input

variables provided by management, as of the date of issuance:

volatility range of 137 % to 176 %, the fair value of common stock $ 0.50 ,

estimated life range of 3.9 years to 4.5 years, risk-free rate range of 4.7 % to 5.2 % and dividend rate of $ 0 .

For the three months ended

June 30, 2023, the Company recorded compensation expenses of approximately $ 18,000 .

of June 30, 2023, the Company had 2,500,000 stock options outstanding, of which all were unvested, with weighted average remaining life,

strike price and grant date fair value of 7 years, $ 0.50 and $ 0.47 , respectively, and intrinsic value of nil.

the six months ending June 30, 2023, 84,304 warrants expired.

As of June 30, 2023, the remaining outstanding balance of warrants is 1,684,000 ,

with a weighted average exercise price of $ 1.84 , average remaining life of 0.46 years, weighed average grant date fair value of approximately

8 – Subsequent Events

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to determine if they must be reported.

The management of the Company determined there are no reportable events except for the following.

of Restricted Stock Awards

April 10, 2023, the Company completed the required paperwork for our transfer agent to cancel 10,000,000 shares of restricted stock that

was previously issued to its former Chief Technology Officer.

The management of the Company determined there are no reportable events.

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 1. Financial Statements