What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-14 compared with 2023-05-15 · 71 added, 74 removed, 92 unchanged (61% of the section changed)

9 unchanged sentences

of Operations

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.

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

operation using the latest energy-efficient cooling technologies and to provide wholesale colocation services to enterprise IT and

hyperscale customers.

To implement this plan, we have optioned 80 acres of land for the initial phase of development and contracted

HDR Engineering, Inc., a data center architect and engineering firm (“HDR”) to provide master planning services that include site feasibility and a shovel-ready site development plan.

addition, we 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 contracting a network engineering firm to evaluate and engineer various paths to run

conduit for accessing close-by internet fiber networks.

June 23, 2023 we engaged HDR to complete a feasibility study and site development master

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

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 to start

construction, and that the construction could take another six to twelve months 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

22 unchanged sentences

of Operations

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

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

For the Three Months Ended June 30,

For the Six Months

Ended June 30,

Operating expenses

Professional fees

Equity-based compensation

General and administrative expenses

Operating expenses

Impairment loss

Total operating expenses

Loss from operations

1 unchanged sentence

Interest income

Gain on settlement of debt

Financing costs

3 unchanged sentences

$ (4,174,000 )

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

$ (8,100,000 )

Company had no revenues for the three and six months ended June 30, 2023 and 2022.

expenses for the three and six months ended June 30, 2023 were $154,000 and $251,000, respectively, compared to $3,568,000 and $6,987,000

for the three and six months ended June 30, 2022, respectively.

The decrease in both the three and six month June 30, 2023 operating

expenses was attributable to both the decline in our professional fees and equity-based compensation.

and Capital Resources

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

Company’s financial position as of June 30, 2023 and December 31, 2022 were as follows:

Capital Deficit

Current assets

Current liabilities

Working deficit

Working capital deficit

$ (3,765,000 )

$ (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

Company’s working capital deficit increased by $622,000 as of June 30, 2023 from $3,143,000 as of December 31, 2022.

decline was due to the use of approximately $178,000 for operating expenses and $184,000 for data center development costs, and the

increase in our accounts payable and accrued expense of approximately $268,000.

For the Six Months Ended

Net cash used in operating activities

Net cash used in investing activities

Net cash used in financing activities

Net cash provided by (used in) financing activities

Effect of exchange rate changes

Net decrease in Cash during the Period

Increase (decrease) in Cash during the Period

Cash, Beginning of Period

1 unchanged sentence

flows used in operating activities

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.

cash used in operating activities decreased by $335,000 during the six months ended June 30, 2023 from $513,000 for six months ended

June 30, 2022.

The decrease resulted from the reduction in our operating expense related to professional fees during the six months ended

June 30, 2023.

flows used in investing activity

cash used in investing activity increased by $77,000 during the six months ended June 30, 2023 from $107,000 for the six months ended

June 30, 2022.

The increase resulted from the expenditures during the six months ended June 30, 2023 for the development activities for

our data center project.

flows used in financing activities

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.

cash used in financing activities decreased by $25,000 during the six months ended June 30, 2023 as compared to $25,000 for the six months

ended June 30, 2022.

The decrease resulted from our not making any repayments of our outstanding 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

1 unchanged sentence

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

by the requisite authorities, we estimate 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.

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

which we plan 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.

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

Accounting Policies

5 unchanged sentences

of Consolidation

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

consolidated financial statements include the accounts of our company and its 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 , we first allocated the cash proceeds of the notes between

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

accordance with ASC 470-20, Debt with Conversion and Other Options , we first allocate 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.

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

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

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

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

9 unchanged sentences

Accounting Pronouncements

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.

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.

Sheet Arrangements

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

of June 30, 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