What changed in this filing

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Item 1. Financial Statements

2023-11-14 compared with 2023-08-14 · 150 added, 138 removed, 319 unchanged (47% of the section changed)

Financial Statements

the Six Months Ended June 30, 2023

the Nine Months Ended September 30, 2023

to the Condensed Consolidated Financial Statements

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

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

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

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

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

Notes to the Unaudited Condensed Consolidated Financial Statements

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statements include statements regarding, among other things:

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.

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 ;

anticipated needs for working capital;

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

September 30, 2023

December 31, 2022

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no shares issued and outstanding

Preferred stock, value

Common stock par value $ 0.001 :

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Condensed Consolidated Statements of Operations

For the three months ended June

For the six months ended June

For the three months ended

September 30,

For the nine months ended

September 30,

Operating Expenses

Professional fees

Equity-based compensation

Restricted stock grants

( 11,168,000 )

( 4,791,000 )

General and administrative expenses

Impairment loss

Operating expense

Loss from operations

( 3,568,000 )

Operating (income) expenses

( 4,020,000 )

(Loss)Income from operations

Other income (expenses)

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( 1,622,000 )

Total other expenses

( 1,113,000 )

Loss before provision for income taxes

( 4,174,000 )

Total other expense

( 1,621,000 )

(Loss) Income before provision for income taxes

Provision for income taxes

( 4,174,000 )

Net (loss) income

$ ( 514,000 )

Comprehensive loss

Foreign currency translation loss

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 loss:

$ ( 216,000 )

$ ( 4,172,000 )

Net income (loss)

$ ( 514,000 )

Foreign currency translation adjustment

Comprehensive (Loss) Income

$ ( 514,000 )

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 and Six Months Ended June 30, 2023 and 2022

the Three and Nine Months Ended September 30, 2023 and 2022

A convertible preferred stock

1 unchanged sentence

Stockholders’

Balance, January

January 1, 2023

$ ( 14,650,000 )

$ ( 3,143,000 )

Foreign currency

translation income

Balance March 31, 2023

currency translation income

March 31, 2023

( 14,849,000 )

( 3,340,000 )

Fair value of equity-based compensation

Cancellation of shares

value of equity-based compensation

( 10,000,000 )

Foreign currency

translation income

currency translation income

June 30, 2023

1 unchanged sentence

$ ( 3,532,000 )

Balance, January 1, 2022

value of equity-based compensation

September 30,2023

$ ( 15,164,000 )

$ ( 3,433,000 )

January 1, 2022

$ ( 16,831,000 )

$ ( 540,000 )

compensation on restricted stock awards

Foreign currency

translation loss

currency translation loss

( 3,926,000 )

Balance March 31, 2022

March 31, 2022

( 20,757,000 )

1 unchanged sentence

compensation on restricted stock awards

Foreign currency

translation income

currency translation income

( 4,174,000 )

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( 2,265,000 )

of stock-based compensation

( 11,500,000 )

( 11,157,000 )

( 11,168,000 )

currency translation income (loss)

income (loss)

September 30,2022

$ ( 14,431,000 )

$ ( 2,913,000 )

accompanying notes to these unaudited condensed consolidated financial statements.

Condensed Consolidated Statements of Cash Flows

the Six Months Ended June 30,

the Nine Months Ended September 30,

Cash Flows From Operating Activities

$ ( 416,000 )

Net (loss) income

$ ( 514,000 )

Adjustments to reconcile net loss to net cash used in operating activities:

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

Forfeiture of restricted stock awards

( 11,168,000 )

Equity-based compensation

Gain on settlement of accounts payable

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Cash paid for income taxes

Non-cash investing and financing activities - none

Accrued interest capitalized as data center cost

Non-cash investing and financing activities

Interest capitalized as data center cost

Stock based compensation capitalized as data center cost

accompanying notes to these Unaudited Condensed Consolidated Financial Statements.

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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 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.

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.

In 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.

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

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.

The December 31, 2022

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 nine-month

periods ended September 30, 2023 and 2022.

The results for the nine months ended September 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 a net loss of approximately $ 514,000

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.

for the nine months ended September 30, 2023, had an accumulated deficit of approximately $ 15,164,000

as of September 30, 2023 and had no

recurring revenue from operation.

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

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Company is subject to a number of risks similar to those of other similar stage companies, including dependence on key individuals;

development, marketing and branding of products;

uncertainty of product development and generation of revenues;

development, marketing and branding of services;

the uncertainty of product development and generation of revenues;

dependence on outside

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Ultimately, the attainment of profitable operations

is dependent on future events, including obtaining adequate financing to fund its operations and generating a level of revenues adequate

is dependent on future events, including obtaining adequate financing to fund the Company’s operations and generating a level of revenues adequate

to support the Company’s cost structure.

Company will need to raise debt or equity financing in the future in order to continue its operations and achieve its growth targets.

However, there can be no assurance that such financing will be available in sufficient amounts and on acceptable terms, when and if needed,

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 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.

Company will need to raise debt or equity financing in the future in order to continue its operations and achieve its growth

However, there can be no assurance that such financing will be available in sufficient amounts and on acceptable terms,

when and if needed, or at all.

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 the development of the Company’s 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 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

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

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

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

Common share equivalents amounted to

as of June 30, 2023.

14,495,621 as of September 30, 2023.

Accounting Pronouncements

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2 – Data Center Costs

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”).

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, which has been recognized as other assets in the condensed consolidated balance sheet.

The Company is

required to deposit an additional $ 84,000

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.

The Company paid a non-refundable

deposit of $ 84,000 on the signing of the Option, which has been recognized as other assets in the condensed consolidated balance sheet.

The Company is required to deposit an additional $ 84,000 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

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

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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 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.

the Purchase Shares are issued at the Closing Date, the Company has agreed to repurchase the Purchase 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 share for 10 consecutive days, the Holder has the option

for the Company to repurchase the Purchase Shares for $2.00 per share.

of September 30, 2023, the Company has incurred costs of approximately $ 1,232,000

for the development of the Data Center and has capitalized approximately $ 113,000

of interest expense related to the convertible promissory notes.

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

1 unchanged sentence

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 .

completed this development phase in October 2023 with an estimated cost of approximately $ 525,000 .

3 – Accounts Payable and Accrued Expenses

2 unchanged sentences

OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES

September 30,

Accounts payable

4 unchanged sentences

OF ACCRUED INTEREST

September 30,

Notes payable

Convertible promissory notes

Balance, end of the year

4 – Notes Payable

Balance, end of period

4 – Notes Payable

1 unchanged sentence

OF NOTES PAYABLE

September 30,

Balance, beginning of the year

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The principal and interest amount outstanding under this note was $ 11,000 and $ 5,000 , respectively,

as of June 30, 2023.

as of September 30, 2023.

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

2 unchanged sentences

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.

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 and interest amount outstanding under this note was $ 50,000 and $ 18,000 , 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.

September 30, 2023.

expense on these notes payable amounted to $ 9,000 and $ 9,000 for the nine months ended September 30, 2023 and September 30, 2022, respectively.

5 – Convertible Promissory Notes

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OF CONVERTIBLE PROMISSORY NOTES

September 30,

Balance, beginning of year

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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 %.

effective interest rate used to amortize the debt discount for the nine months ended September 30, 2023 and 2022 ranged from 4.76 % to

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

OF POTENTIAL FUTURE SHARES ISSUANCE OF CONVERSION NOTES

September 30,

Conversion price per share

Potential future share

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.

expense on default convertible promissory notes amounted to $ 343,000 for the nine months ended September 30, 2023, of which $ 113,000

was capitalized as data center cost.

6 – Commitments and Contingencies

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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 .

months ended September 30, 2023, approximately $ 221,000 was earned.

Of the amount earned of $ 221,000 approximately $ 166,000 was capitalized

as date center cost and the remaining $ 55,000 was expensed as stock-based compensation.

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

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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

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

of September 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 nine months ending September 30, 2023, 89,804 warrants expired.

As of September 30, 2023, the remaining outstanding balance of warrants

was 1,678,500 , with a weighted average exercise price of $ 1.86 , average remaining life of 0.39 years, weighed average grant date fair

value of approximately $ 0.47 .

8 – Subsequent Events

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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