What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-04-09 compared with 2023-04-17 · 867 added, 748 removed, 679 unchanged (70% of the section changed)

Controls and Procedures.

and Procedures.

Controls and Procedures

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

Other Information.

Directors, Executive Officers and Corporate Governance.

Executive Officers and Corporate Governance.

and Executive Officers

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of the Board and Chief Executive Officer

Joel D, Stone

President and Chief Operations Officer

and Chief Operations Officer

Financial Officer

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

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

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

Stone has 24 years of broad-based

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

and telecommunications industries.

Prior to joining our company, Mr.

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

infrastructure teams from 2019 to 2022.

Stone led the Global Site Sourcing teams for Meta Platforms that

supported the data center infrastructure teams from 2019 to 2022.

Prior to 2019, Mr.

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

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

center operations from 2016-2018.

Stone served as Senior Vice President and Chief

Operating Officer of RagingWire Data Centers, an NTT communications company, where he was responsible for critical facilities engineering,

design, construction, and data center operations from 2016-2018.

Prior to RagingWire, Mr.

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

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

Prior to CenturyLink,

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

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

Earlier in his career,

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

Stone served as Vice President of Global Data

Center Operations for CenturyLink Communications, responsible for 58 data centers around the world and a global team of 600+ people from

Prior to CenturyLink, Mr.

Stone was Group Operations Director at Global Switch in London, one of the largest wholesale data

center providers in Europe and Asia.

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

Earlier in his career, Mr.

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

Wireless Communications.

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

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In addition, he is licensed as a Certified Public Accountant in the State of California.

Shum has been Chief Executive Officer of INVO Bioscience (NASDAQ:

INVO) since October 2019 and a member of the board

of directors of INVO Bioscience since October 2017.

Prior to INVO Bioscience, Mr.

Shun served as Chief Financial Officer of Eastside

Distilling (NASDAQ:

Shum became a director of our company on October 7, 2021.

Shum has been Chief Executive Officer of INVO Bioscience

INVO) since October 2019 and a member of the board of directors of INVO Bioscience since October 2017.

Prior to INVO Bioscience,

Shun served as Chief Financial Officer of Eastside Distilling (NASDAQ:

EAST) from October 2015 to November 2019.

Prior to joining Eastside, Mr.

Shum was an employee and a member of the

board of directors of XZERES Corp.

(OTCQB:XPWR), a global renewable energy company, from October 2008 until April 2015, where he served

in various officer roles, including Chief Operating Officer from September 2014 until April 2015, Chief Financial Officer, Principal

Accounting Officer and Secretary from April 2010 until September 2014 (under former name, Cascade Wind Corp) and Chief Executive Officer

and President from October 2008 to August 2010.

Shum also serves as the managing principal of Core Fund Management, LP and the Fund

Manager of Core Fund, LP.

He was a founder of Revere Data LLC (now part of Factset Research Systems, Inc.) and served as its Executive

Vice President for four years, heading up the product development efforts and contributing to operations, business development, and sales.

Prior to joining

Eastside, Mr.

Shum was an employee and a member of the board of directors of XZERES Corp.

(OTCQB:XPWR), a global renewable energy company,

from October 2008 until April 2015, where he served in various officer roles, including Chief Operating Officer from September 2014 until

April 2015, Chief Financial Officer, Principal Accounting Officer and Secretary from April 2010 until September 2014 (under former name,

Cascade Wind Corp) and Chief Executive Officer and President from October 2008 to August 2010.

Shum also serves as the managing principal

of Core Fund Management, LP and the Fund Manager of Core Fund, LP.

He was a founder of Revere Data LLC (now part of Factset Research

Systems, Inc.) and served as its Executive Vice President for four years, heading up the product development efforts and contributing

to operations, business development, and sales.

He spent six years as an investment research analyst and portfolio manager of D.N.B.

Capital Management, Inc.

His previous employers

include Red Chip Review and Laughlin Group of Companies.

His previous employers include Red Chip Review and Laughlin Group of Companies.

He earned a B.S.

in Finance and a B.S.

in General Management from Portland State

University in 1992.

Fontenot has spent 20 years as a self-employed IT and network specialist and in 2017 became an executive producer

of independent films.

Fontenot is a technology enthusiast and film producer that manages a 5013c foundation dedicated to (i) educating

the public on the history of video, arcade, and computer gaming - including the technical aspects and the impact of games on society;

(ii) fostering public interest in software development and gaming hardware to enable technological growth and inspire the next generation

of developers, and (iii) developing public space for action sports’ recreation - including mentoring youths and building programs

designed to help bridge the gender gap in various action sports categories as well as underserved community members.

Our chief executive officer,

Campbell, currently serves as a consultant to our company.

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

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

Management intends

to spend as much time as is necessary to exercise its fiduciary duties as officers and directors of our company.

in General Management from Portland State University in 1992.

Fontenot became a director of our company on October 7, 2021.

Fontenot has spent more than 20 years as a self-employed

IT and network specialist and in 2017 became an executive producer of independent films.

Fontenot is a technology enthusiast and

film producer that manages a 5013c foundation dedicated to (i) educating the public on the history of video, arcade, and computer gaming

- including the technical aspects and the impact of games on society;

(ii) fostering public interest in software development and gaming

hardware to enable technological growth and inspire the next generation of developers, and (iii) developing public space for action sports’

recreation - including mentoring youths and building programs designed to help bridge the gender gap in various action sports categories

as well as underserved community members.

in Certain Legal Proceedings

of our directors and executive officers have been involved in any of the following events during the past ten years:

bankruptcy petition filed by or against any business of which such person was a general partner

or executive officer either at the time of the bankruptcy or within two years prior to that

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

traffic violations and other minor offences);

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

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

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

found by a court of competent jurisdiction (in a civil action), the Securities and Exchange

Commission or the Commodity Futures Trading Commission to have violated a federal or state

securities or commodities law, where the judgment has not been reversed, suspended, or vacated;

the subject of, or a party to, any federal or state judicial or administrative order, judgment,

decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged

violation of (i) any federal or state securities or commodities law or regulation;

law or regulation respecting financial institutions or insurance companies including, but

not limited to, a temporary or permanent injunction, order of disgorgement or restitution,

civil money penalty or temporary or permanent cease- and-desist order, or removal or prohibition

or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection

with any business entity;

or being the subject of, or a party to, any sanction or order,

not subsequently reversed, suspended or vacated, of any self-regulatory organization (as

defined in Section 3(a)(26) of the Securities Exchange Act of 1934), any registered entity

(as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange,

association, entity or organization that has disciplinary authority over its members or persons

associated with a member.

bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the

time of the bankruptcy or within two years prior to that time;

conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor

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

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

or banking activities;

found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading

Commission to have violated a federal or state securities or commodities law, where the judgment has not been reversed, suspended,

the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently

reversed, suspended or vacated, relating to an alleged violation of (i) any federal or state securities or commodities law or regulation;

(ii) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or

permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease- and-desist order,

or removal or prohibition order;

or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business

or being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory

organization (as defined in Section 3(a)(26) of the Securities Exchange Act of 1934), any registered entity (as defined in Section

1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority

over its members or persons associated with a member.

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

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do not have a standing Compensation Committee.

Presently, our executive officers, who constitute our only employees, do not take salary

or other benefits from our company.

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

with our executive officers.

Presently, the salary and benefits of our executive officers are determined by our

entire board of directors.

As we continue to develop our data center and commence selling colocation services, we expect to

increase the size of our board to include independent directors who will approve the compensation arrangements with our executive officers.

also do not have a Nominating Committee as we have not adopted any procedures by which security holders may recommend nominees to our

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of this Annual Report.

16(a) Beneficial Ownership Compliance

16(a) of the Securities Exchange Act requires our executive officers and directors, and persons who own more than 10% of our common stock,

to file reports regarding ownership of, and transactions in, our securities with the Securities and Exchange Commission and to provide

us with copies of those filings.

Based solely on our review of the copies of such forms received by us, or written representations from

certain reporting persons, and without conducting any independent investigation of our own we believe that during the fiscal year ended

December 31, 2022, all filing requirements applicable to our officers, directors and greater than 10% percent beneficial owners were

complied with.

Executive Compensation.

Delinquent Section

16(a) Reports

Section 16(a) of the Exchange

Act requires our executive officers, directors and persons who beneficially own more than 10% of our common stock to file with the SEC

reports of their ownership and changes in their ownership of our common stock.

To our knowledge, based solely on review of the copies

of such reports and amendments to such reports with respect to the year ended December 31, 2023 filed with the SEC, all required Section

16 reports under the Exchange Act for our directors, executive officers and beneficial owners of greater than 10% of our common stock

were filed on a timely basis during the year ended December 31, 2023, except for (i) late Form 3 filings for Joel Stone and Dean Skupen,

(ii) late Form 4 filings for Michael Campbell, Sean Fortenot and Steven Shum, and (iii) late Schedule 13D filings for Michael Campbell

and Sean Fortenot.

As of the date of the filing of this annual report, all such Form 3, Form 4 and Schedule 13D filings have been made.

Compensation.

following table sets forth all compensation awarded to, earned by or paid to the executive officers of our company during the years ended

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COMPENSATION TABLE

Name and Principal Position

Stock Awards ($)

Option Awards ($)

Non-Equity Incentive Plan Compensation ($)

Nonqualified Deferred Compensation Earnings

All Other Compensation ($)

Michael Campbell

$ 200,000 (2)

Chief Executive officer (1)

2,895,000 (1)

3,095,064 (2)

Hyuncheol Peter Kim

Chief Technology Officer

Chief Financial

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

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

In August 2022, we abandoned the chip development business plan

and Mr, Campbell and Mr.

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

and Principal Position

Option/Warrant

Awards (4) ($)

Incentive Plan Compensation ($)

Deferred Compensation Earnings

Other Compensation ($)

Executive Officer

and Chief Operating Officer (2)

amounts earned by Mr.

Campbell under his consulting agreement.

Represents amounts earned by Mr.

Kim under his consulting

Kim terminated his consulting engagement in August of 2022.

Campbell as a consultant to our company.

Campbell became an employee of our company in March

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

amounts earned by Mr.

Skupen under his consulting agreement.

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

by Michael Campbell, our Chief Executive Officer (“M1 Advisors”), and Hyuncheol Kim, pursuant to which M1 Advisors agreed

to continue to provide consulting services to our company and to cause Mr.

Campbell to serve as our Chief Executive Officer, and Mr.

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

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

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

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

common stock.

In August 2022, we terminated the chip development

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

Kim and canceled related restricted stock awards.

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

to continue serving as our Chief Executive Officer.

October 20, 2018, we entered into a consulting agreement with DSS Consulting Corporation, a corporation controlled by Dean Skupen, our

Chief Financial Officer (“DSS Consulting”), pursuant to which DSS Consulting agreed to continue to provide consulting services

to our company and to cause Mr.

the aggregate fair value computed in accordance with the provisions of the Financial Accounting Standard Board Accounting Standards

Codification Topic 718, or ASC 718.

See Note 2 to our consolidated financial statements for the year ended December 31, 2023 included

in this report regarding assumptions underlying the valuation of equity awards.

These amounts reflect the accounting cost for these

stock options and do not reflect the actual economic value that may be realized by the named executive officer upon the vesting of

the stock options, the exercise of the stock options, or the sale of the common stock underlying such stock options.

June 19, 2023, we entered into an Employment Agreement dated as of June 19, 2023 (the “Employment Agreement”) with Joel D.

Stone, our President and Chief Operating Officer.

Pursuant to the terms of the Employment Agreement, Mr.

Stone will receive (i) an annual

base salary of $250,000, which amount may be increased upon our reaching certain benchmarks described in the Employment Agreement, as

determined in our sole discretion;

(ii) an initial option grant of seven-year options to purchase 2,500,000 shares of our common stock

for a purchase price of $0.50 per share, of which the right to purchase up to 1,250,000 shares will vest in equal installments over a

period of three years and the right to purchase up to 1,250,000 shares will vest upon our completing certain milestones that are set

out in the Employment Agreement;

and (iii) the right to participate in all benefit plans offered to our senior executive officers.

Employment Agreement also provides for certain severance benefits upon a termination by us without “cause” or by Mr.

for “good reason.” In the event of a termination by us without “cause” or by Mr.

Stone for “good reason”

after the first full year of employment, Mr.

Stone will be entitled to (i) continued payment of his base salary for the lesser of six

(6) months or the remaining term of the Employment Agreement, subject to Mr.

Stone signing a timely and effective separation agreement

containing a release of all claims against us 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, Mr.

Stone will be entitled to a pro rata portion of such payment.

Employment Agreement contains customary confidentiality restrictions and work-product provisions with respect to Mr.

Stone, as well as

customary non-competition covenants and non-solicitation covenants with respect to our employees, consultants and customers.

October 20, 2018, we entered into a consulting agreement with DSS Consulting Corporation, a corporation controlled by Dean Skupen,

our Chief Financial Officer (“DSS Consulting”), pursuant to which DSS Consulting agreed to continue to provide

consulting services to our company and to cause Mr.

Skupen to serve as our Chief Financial Officer.

The agreement with DSS Consulting will continue until

terminated by either party.

Pursuant to such agreement, DSS Consulting was issued 250,000 shares of common stock in March 2019 and DSS

Consulting will be paid a monthly consulting fee in the amount of $5,000.

of our consulting agreements contains customary confidentiality restrictions and work-product provisions, as well as customary non-competition

The agreement with DSS

Consulting will continue until terminated by either party.

Pursuant to such agreement, DSS Consulting was issued 250,000 shares of

common stock in March 2019 and DSS Consulting will be paid a monthly consulting fee in the amount of $5,000.

The consulting

agreement contains customary confidentiality restrictions and work-product provisions, as well as customary non-competition

covenants and non-solicitation covenants with respect to our employees, consultants and customers.

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for issuance:

Plan category

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

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

Number of Securities Remaining Available for Future Issuance

Under Equity Compensation Plans (Excluding Securities Reflected

in Column (a))

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

Average Exercise Price of Outstanding Options, Warrants and Rights

of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))

Equity compensation plan approved by security holders

Equity compensation plans not approved by security holders

compensation plans not approved by security holders

Equity Incentive Plan

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Our stockholders also approved the Equity Plan on October

Employees, officers, directors and consultants that provide services to us or one of our subsidiaries were eligible to receive

awards under the Equity Plan.

Awards under the Equity Plan are issuable in the form of incentive or nonqualified stock options, stock

appreciation rights, stock bonuses, restricted stock, stock units and other forms of awards including cash awards.

of December 31, 2022, no equity grants had been made under the Equity Plan, and 2,500,000 shares authorized under the Equity Plan remained

available for award purposes.

On November 28 2023, our board of directors approved an increase in the number shares of common stock reserved for issuance

under the Equity Plan to 10,000,000 shares, subject to stockholder approval, which has not yet been obtained.

Employees, officers, directors

and consultants who provide services to us or one of our subsidiaries were eligible to receive awards under the Equity Plan.

the Equity Plan are issuable in the form of incentive or nonqualified stock options, stock appreciation rights, stock bonuses, restricted

stock, stock units and other forms of awards including cash awards.

of December 31, 2023, options to purchase an aggregate of 6,854,000 shares of common stock had been made under the Equity Plan, and 3,146,000

shares authorized under the Equity Plan remained available for award purposes.

The purpose of the Equity Plan is to further and promote the interests of our company and its stockholders by enabling us to attract,

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as a result of an award under the Equity Plan.

Equity Awards At Annual Period End

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

following table sets forth information relating to stock option grants made to our named executive officers during the fiscal year ended

December 31, 2023.

of Option/Warrant

Michael Campbell (2)

Michael Campbell

the aggregate fair value computed in accordance with the provisions of the Financial Accounting Standard Board Accounting Standards

Codification Topic 718, or ASC 718.

See Note 2 to our consolidated financial statements for the year ended December 31, 2023 included

in this report regarding assumptions underlying the valuation of equity awards.

These amounts reflect the accounting cost for these

stock options and do not reflect the actual economic value that may be realized by the named executive officer upon the vesting of

the stock options, the exercise of the stock options, or the sale of the common stock underlying such stock options.

Represents options/warrants granted to M1 Advisors LLC, a company controlled by Michael Campbell.

Equity Awards at Fiscal Year-End

following table sets forth outstanding equity awards to our named executive officers as of December 31, 2023.

Option/Warrants Awards

Number of Securities Underlying Unexercised Options/Warrants (#) Exercisable

Number of Securities Underlying Unexercised Options/Warrants (#) Unexercisable

Exercise Price

Expiration Date

Number of Shares or Units of Stock that have not Vested

Market Value of Shares or Units of Stock that have not Vested

Michael Campbell (1)

Michael Campbell (2)

Michael Campbell (3)

on December 6, 2023.

Represents fully-vested options/warrants granted to M1 Advisors LLC,

a company controlled by Michael Campbell.

on December 6, 2023.

One third vest on 1 st anniversary of grant date, one third

on the 2 nd anniversary of grant date and one third on the 3rd anniversary of grant

on December 6.

These options vest at various times based on the achievement of various

performance milestones.

on June 19, 2023.

These options vest at various times based on the achievement of various

performance milestones.

on June 19, 2023.

One third vest on 1 st anniversary of grant date, one third on

the 2 nd anniversary of grant date and one third on the 3rd anniversary of grant

Option Exercises

were no options exercised by any officer or director of our company during the year ended December 31, 2023.

director compensation was paid during the years ended December 31, 2022 and 2021 in the form of cash expenses, stock awards, option awards,

non-equity incentive plan compensation, pension value and nonqualified deferred compensation earnings or any other type of compensation.

We do not currently pay any cash fees to our directors, nor do we pay directors’ expenses in attending board meetings.

are not presently a party to any employment agreements.

The following discussion describes the significant elements of the expected compensation program for members of our board of directors

and its committees.

The compensation of our directors is designed to attract and retain committed and qualified directors and to align

their compensation with the long-term interests of our shareholders.

Directors who are also executive officers (each, an “Excluded

Director”) will not be entitled to receive any compensation for his or her service as a director, committee member or Chair of

our board of directors or of any committee of our board of directors.

Compensation Arrangements.

Our non-employee director compensation program is designed to attract and retain qualified individuals

to serve on our board of directors.

Our board of directors, on the recommendation of our compensation committee, will be responsible

for reviewing and approving any changes to the directors’ compensation arrangements.

In consideration for serving on our board

of directors, each director (other than Excluded Directors) will be paid an annual retainer.

All directors will be reimbursed for their

reasonable out-of-pocket expenses incurred while serving as directors.

Compensation.

We did not pay any cash compensation to our directors during the year ended December 31, 2023.

However, we intend to

implement a cash compensation program for our board members in the future.

The following table sets forth the director compensation we accrued in the year ended December 31, 2023 (excluding compensation

to our executive officers set forth in the summary compensation table above).

Option/warrants

the aggregate fair value computed in accordance with the provisions of the Financial Accounting Standard Board Accounting Standards

Codification Topic 718, or ASC 718.

See Note 2 to our consolidated financial statements for the year ended December 31, 2023 included

in this report regarding assumptions underlying the valuation of equity awards.

These amounts reflect the accounting cost for these

stock options and do not reflect the actual economic value that may be realized by the named director upon the vesting of the stock

options, the exercise of the stock options, or the sale of the common stock underlying such stock options.

and Retirement Plans

we do not offer any annuity, pension or retirement benefits to be paid to any of our officers, directors or employees, in the event of

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

following table sets forth, as of April 13, 2023, the names, addresses and number of shares of common stock beneficially owned by (i)

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

following table sets forth, as of March 25, 2024, the names, addresses and number of shares of common stock beneficially owned by (i)

all persons known to our management to be beneficial owners of more than 5% of the outstanding shares of our common stock, (ii) each

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Name and Address of Beneficial Owner

Amount and Nature of Beneficial

and Nature of Beneficial Ownership

Percent of Class(1)

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Dean Skupen (3)

Steven Shum 4)

Nanosha LLC 5)

Sean Fontenot (5)

All executive officers and directors as a group

5% Stockholders:

David Unsworth (5)

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

As of April 13, 2023, there were 14,495,621 shares of common stock outstanding.

Except as indicated in the footnotes to this table, we believe that all persons named in the table have sole voting and investment power

with respect to all common stock shown as beneficially owned by them.

In accordance with the rules of the Securities and Exchange Commission

(the “Commission”), a person or entity is deemed to be the beneficial owner of common stock that can be acquired by such person

or entity within sixty (60) days upon the exercise of options or warrants or other rights to acquire common stock.

Each beneficial owner’s

percentage ownership is determined by assuming that options and warrants that are held by such person (but not those held by any other

person) and which are exercisable within sixty (60) days have been exercised.

The inclusion herein of such shares listed as beneficially

owned does not constitute an admission of beneficial ownership.

shares of common stock owned of record by M1 Advisors LLC, a company controlled by Michael Campbell.

The address of Michael Campbell

and M1 Advisors LLC is 11753 Willard Avenue, Tustin, CA 92782.

Campbell has sole voting and investment power over the shares

held by M1 Advisors LLC.

of March 27, 2004, there were 25,330,540 shares of common stock outstanding.

Except as indicated in the footnotes to this table,

we believe that all persons named in the table have sole voting and investment power with respect to all common stock shown as beneficially

owned by them.

In accordance with the rules of the Securities and Exchange Commission (the “Commission”), a person or

entity is deemed to be the beneficial owner of common stock that can be acquired by such person or entity within sixty (60) days

upon the exercise of options or warrants or other rights to acquire common stock.

Each beneficial owner’s percentage ownership

is determined by assuming that options and warrants that are held by such person (but not those held by any other person) and which

are exercisable within sixty (60) days have been exercised.

The inclusion herein of such shares listed as beneficially owned does

not constitute an admission of beneficial ownership.

Represents (i) 8,954,199 shares of common stock owned of record by M1 Advisors LLC, a company controlled by Michael Campbell, (ii) currently-exercisable

warrants to purchase 2,054,801 shares of common stock owned of record by M1 Advisors LLC, and (iii) currently-exercisable stock options

to purchase 500,000 shares of common stock owned by Michael Campbell.

The address of Michael Campbell and M1 Advisors LLC is 11753 Willard

Avenue, Tustin, CA 92782.

Campbell has sole voting and investment power over the shares held by M1 Advisors LLC.

shares of common stock owned of record by DSS Consulting Corporation, a company controlled by Dean Skupen.

DSS Consulting Corporation’s

address is 2945 Townsgate Road, Suite 200, West Lake Village CA 91361.

Skupen has sole voting and investment power over the shares

held by DSS Consulting Corporation.

3,080,000 shares of common stock issuable upon the conversion of a convertible note, and 1,540,000 shares of common stock issuable

upon the exercise of warrants, owned of record by Nanosha Investments, LLC, a company controlled by Sean Fontenot.

The address of

Nanosha Investments, LLC is 1202 Walnut Avenue, Long Beach, CA 90813.

Fontenot has sole voting and investment power over the

securities held by Nanosha Investments, LLC.

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

and Sally Cooper are the trustees of The Cooper Family Living Trust Dated 7/20/98.

The address of the trust is 452 Lakeview Way,

Emerald Hills, CA 94062.

Certain Relationships and Related Transactions, and Director Independence.

the best of our knowledge, except as set forth below, during the last fiscal year, there were no material transactions, or series of

similar transactions, or any currently proposed transactions, or series of similar transactions, to which we were or are to be a party,

in which the amount involved exceeds $120,000 or one percent of the average total assets at year end for each of the last two fiscal

years, and in which any director or executive officer, or any security holder who is known by us to own of record or beneficially more

than 5% of any class of our common stock, or any member of the immediate family of any of the foregoing persons, has an interest.

Principal Accountant Fees And Services.

address is 30 N Gould Street, Suite 12829, Sharidan, WY 82801 Mr.

Skupen has sole voting and investment power over the shares held by DSS

Consulting Corporation.

(i) 196,010 shares of common stock owned of record by Core Fund Management, LP, a company controlled by Steven Shum, (ii) 4,655 shares

of common stock owned by Steven Shum and (iii) currently-exercisable stock options to purchase 404,000 shares of common stock owned by

The address of Core Fund Management, LP is 1515 SW 5th Avenue, Suite 606, Portland, OR 97201.

Shum has sole voting and

investment power over the shares held by Core Fund Management.

(i) 8,574,386 shares of common stock owned of record by Nanosha LLC, a company controlled by Sean Fortenot, (ii) currently-exercisable

warrants to purchase 2,200,000 shares of common stock owned of record by Nanosha LLC, and (iii) currently-exercisable stock options

to purchase 750,000 shares of common stock owned by Sean Fortenot.

The address of Nanosha Investments, LLC is 1202 Walnut Avenue,

Long Beach, CA 90813.

Fontenot has sole voting and investment power over the securities held by Nanosha Investments, LLC.

Relationships and Related Transactions, and Director Independence.

“related party transaction” is any actual or proposed transaction, arrangement or relationship or series of similar transactions,

arrangements or relationships, including those involving indebtedness not in the ordinary course of business, to which we or our subsidiaries

were or are a party, or in which we or our subsidiaries were or are a participant, in which the amount involved exceeded or exceeds the

lesser of (i) $120,000 or (ii) one percent of the average of our total assets at year-end for the last two completed fiscal years and

in which any related party had or will have a direct or indirect material interest.

A “related party” includes:

person who is, or at any time during the applicable period was, one of our executive officers or one of our directors;

person who beneficially owns more than 5% of our common stock;

immediate family member of any of the foregoing;

entity in which any of the foregoing is a partner or principal or in a similar position or in which such person has a 10% or greater

beneficial ownership interest.

than compensation arrangements for our named executive officers and directors, which we describe herein, the only related party transactions

to which we were a party during the years ended December 31, 2023 and 2022, since December 31, 2023, or any currently proposed related

party transaction, are as follows.

December 11, 2023 and February 20, 2024, we entered into a series of exchange subscription agreements (each, an “Exchange Agreement”)

with 14 holders (each, a “Holder”) of our outstanding promissory notes and, in certain cases, related outstanding stock purchase

warrants, pursuant to which we and the Holders agreed to exchange their promissory notes, and, if applicable, related stock purchase

warrants, for shares of our common stock.

Pursuant to the Exchange Agreements, an aggregate of $5,417,459.50 of principal and accrued

interest under the outstanding promissory notes and, if applicable, related stock purchase warrants was exchanged for an aggregate of

10,834,919 shares of common stock (the “Exchange Shares”).

Nanosha Investments LLC, a limited liability company controlled

by Sean Fontenot, a director of our company (“Nanosha”), entered into an Exchange Agreement with us pursuant to which it

exchanged (i) a promissory note with outstanding principal and accrued interest in the aggregate amount of $4,287,193, and (ii) a warrant

for the purchase of 1,540,000 shares of common stock, for 8,574,386 of the Exchange Shares.

February 12, 2024, Nanosha made a loan to us in the amount of $1,000,000 in consideration for which we issued to Nanosha a promissory

note in the principal amount of $1,000,000 that bears interest at the rate of 10% per annum and matures on May 30, 2024 and a five-year

warrant to purchase up to 200,000 shares of common stock with an initial exercise price of $0.50 per share.

No payments have been made

on the promissory note.

Accountant Fees And Services.

aggregate fees billed for professional services rendered by RBSM LLP, our principal accountants for the years ended December 31, 2023

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For the Years ended December 31,

Audit Fees and Audit Related Fees

All Other Fees

Fees and Audit Related Fees

the above table, “audit fees” are fees billed by our company’s external auditor for services provided in auditing our

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

Exhibits, Financial Statement Schedules.

Financial Statement Schedules.

Articles of Incorporation (incorporated by reference to Exhibit 3.1 to our Registration Statement on Form SB-2 filed on July 5, 2002).

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

Form of OID Convertible Promissory Note due February 28, 2021 (incorporated by reference to Exhibit 10.4 to our Annual Report on Form 10-K filed on March 30, 2021).

Form of Series A Warrant (incorporated by reference to Exhibit 10.5 to our Annual Report on Form 10-K filed on March 30, 2021).

Form of OID Promissory Note dated September 15, 2021 (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed on September 21, 2021).

Form of Series A Warrant dated September 15, 2021 (incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K filed on September 21, 2021).

Warrant dated September 15, 2021 of CalEthos to Mireya Lange (incorporated by reference to Exhibit 4.5 to our Current Report on Form 8-K filed on September 21, 2021).

Registration Rights Agreement dated as of September 15, 2021 between CalEthos Inc.

and Nonosha Investments LLC (incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K filed on September 21, 2021).

Consulting Agreement dated as of October 10, 2018 between CalEthos Inc.

and DSS Consulting Corporation.

and DSS Consulting Corporation (incorporated by reference to Exhibit 10.12 to our Annual Report on Form 10-K filed on March 31, 2022).

Employment Agreement dated as of June 19, 2023 between CalEthos Inc.

and Joel Stone (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on June 27, 2023).

Form of Promissory Note dated February 12, 2024 of CalEthos Inc.

to Nanosha Investments LLC.

Warrant dated February 12, 2024 of CalEthos Inc.

issued to Nanosha Investments LLC.

Code of Conduct and Ethics of CalEthos Inc.

(incorporated by reference to Exhibit 14 to our Annual Report on Form 10-K filed on March 31, 2022).

Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.***

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to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to

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

be signed on its behalf by the undersigned, thereunto duly authorized on the 9 th day of April 2024.

Michael Campbell

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April 9, 2024

the Years Ended December 31, 2022 and 2021

to the Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm PCAOB ID 587

Consolidated Balance Sheets as of December 31, 2022 and 2021

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

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

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

Notes to the Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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have audited the accompanying consolidated balance sheets of CalEthos Inc., (the “Company”) as of December 31, 2023 and 2022,

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

two year period ended December 31, 2022, and the related notes and schedules (collectively referred to as the “consolidated financial

statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position

of the Company as of December 31, 2022 and 2021, and the consolidated results of its operations and its cash flows for each of the two

years in the period ended December 31, 2022 in conformity with accounting principles generally accepted in the United States of America.

the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity (deficit) and cash flows

for each of the years in the two-year period ended December 31, 2023, and the related notes and schedules (collectively referred to as

the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material

respects, the financial position of the Company as of December 31, 2023 and 2022, and the consolidated results of its operations and

its cash flows for each of the two years in the period ended December 31, 2023 in conformity with accounting principles generally accepted

in the United States of America.

Company’s Ability to Continue as a Going Concern

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

evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 1.

The consolidated

financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Management’s evaluation

of the events and conditions and management’s plans regarding these matters are also described in Note 1.

The consolidated financial

statements do not include any adjustments that might result from the outcome of this uncertainty.

financial statements are the responsibility of the Company’s management.

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have served as the Company’s auditor since 2018.

Balance Sheets

CalEthos, Inc.

Consolidated Balance Sheets

As of December 31,

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Total current assets

Liabilities and stockholders’ deficit

Data center costs

Liabilities and stockholders’ equity (deficit)

Current liabilities

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Total current liabilities

Commitments and contingencies (Note 7)

Stockholders’ deficit

Stockholders’ equity (deficit)

Series A convertible preferred stock, par value $ 0.001 , 3,600,000 shares authorized;

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Preferred stock value

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

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

Common stock par value $ 0.001 :

100,000,000 shares authorized;

and 24,495,621 shares issued

and outstanding

Additional paid-in capital

Other comprehensive income (loss)

Other comprehensive income

Stock subscription receivable

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( 14,650,000 )

Total stockholders’ deficit

Total stockholders’ equity (deficit)

( 3,143,000 )

Total liabilities and stockholders’ deficit

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

Statements of Operations and Comprehensive Loss

the Years Ended December 31,

Total liabilities and stockholders’ equity (deficit)

CalEthos, Inc.

Consolidated Statements of Operations and Comprehensive (Loss) Income

For the Year Ended December 31,

Operating Expenses

Professional fees

Restricted stock grants

Equity-based compensation

( 4,791,000 )

General and administrative expenses

Payroll and related expense

Impairment loss

Total operating (income) expenses

Operating expense

( 3,918,000 )

Income (loss) from operations

(Loss) income from operations

( 3,465,000 )

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Interest income

Gain on settlement of debt

Financing costs

( 1,744,000 )

Loss on extinguishment of debt

Total other expenses

( 1,165,000 )

Income (loss) before provision for income taxes

( 1,737,000 )

(Loss) income before provision for income taxes

( 4,630,000 )

Provision for income taxes

Net income (loss)

Net (loss) income

( 4,630,000 )

Net income (loss) per share, basic

Net income (loss) per share, diluted

Net (loss) income per share - Basic

Net (loss) income per share - Diluted

Weighted Average common shares outstanding - Basic

Weighted Average common shares outstanding - Diluted

Comprehensive income (loss):

Net income (loss)

Comprehensive (loss) income

Net (loss) income

( 4,630,000 )

Change in foreign currency translation

Comprehensive income (loss)

Foreign currency translation gain

Comprehensive (loss) income

$ ( 4,626,000 )

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

Statements of Changes in Stockholders’ Deficit

the Years Ended December 31, 2022 and 2021

CalEthos, Inc.

Statement of Changes in Stockholders’ Equity

For the Years Ended December 31, 2023 and 2022

Income (Loss)

Series A Convertible

Preferred Stock

Additional Paid-In

Stock Subscription

Other Comprehensive

Total Stockholders’

A convertible preferred stock

Comprehensive

Stockholders Equity

Income (Loss)

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$ ( 540,000 )

Relative fair value of warrants issued with convertible promissory note

Stock options issued for services

Stock issued for debt forgiveness

Stock issued for accrued compensation

Stocks returned

Equity-based compensation

Forfeiture of equity-based compensation

( 1,500,000 )

Stock issued on exercise of options

Stock-based compensation

Restricted common stock awards issued for compensation

Foreign currency translation loss

( 11,166,000 )

( 11,168,000 )

Foreign currency translation income

Balance, December 31, 2022

( 14,650,000 )

Stock-based compensation

Forfeiture of stock-based compensation

( 3,143,000 )

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( 3,143,000 )

Cancellation of shares equity-based compensation

( 10,000,000 )

Shares issued for extinguishment of debt

Equity-based compensation

Foreign currency translation income

( 4,630,000 )

Net income (loss)

( 4,630,000 )

Balance, December 31, 2023

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$ ( 19,280,000 )

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

Statements of Cash Flows

CalEthos, Inc.

Consolidated Statements of Cash Flows

For the Years Ended December 31,

Cash Flows From Operating Activities

Net income (loss)

Net (loss) income

$ ( 4,630,000 )

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

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

Amortization of convertible promissory note discounts

Fair value of equity-based compensation

Forfeiture of restricted stock grants

Forfeiture of restricted stock awards

( 11,168,000 )

Accretion of compensation cost for restricted stock awards

Fair value of equity-based compensation

Gain on settlement of accounts payable

Loss on extinguishment of debt

Changes in operating assets and liabilities

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Cash Flows From Investing Activities

Project development cost

( 1,730,000 )

Net Cash Used in Investing Activities

( 1,730,000 )

Cash Flows From Financing Activities

Proceeds from the issuance of convertible promissory notes

Proceeds from the issuance of notes payable

Repayments of notes payable

Proceeds from the exercise of options

Net Cash (Used in) Provided by Financing Activities

Net Cash Used in Financing Activities

Effect of exchange rate changes on cash and cash equivalents

Net (decrease) increase in Cash

Net decrease in Cash

( 1,759,000 )

Cash, Beginning of Period

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Non-cash investing and financing activities

Relative fair value of warrants issued with convertible promissory notes

Common stock issued for accrued compensation

Equity-based compensation capitalized

Common stock issued from forgiven debt

Original issue discount recorded on convertible promissory notes

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

to the Consolidated Financial Statements

For the Years Ended December 31, 2022 and 2021

For the Years Ended December 31, 2023

1 – Organization and Accounting Policies

AND ACCOUNTING POLICIES

ORGANIZATION AND ACCOUNTING POLICIES

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

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

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

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 to invest or joint venture with

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

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

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

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

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

other products or dissolve it.

Incorporation

of Korean entity

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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$ 89,000 , for 100 % ownership of AIQ.

As of July 2022, AIQ was placed into a dormant state of operations.

of Presentation

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Concern and Liquidity

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

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

as of December 31, 2022.

The Company has financed its activities principally through debt and equity financing and shareholder contributions.

Management expects to incur additional losses and cash outflows in the foreseeable future in connection with its operating activities.

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

assets and the satisfaction of liabilities in the normal course of business.

Company incurred a net loss of approximately $ 4,630,000 for the year ended December 31, 2023, had an accumulated deficit of approximately

$ 19,280,000 as of December 31, 2023 and had no recurring revenue from operations.

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 consolidated financial statements.

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

of assets and the satisfaction of liabilities in the normal course of business.

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

to support the Company’s cost structure.

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.

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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.

continuing COVID-19 global pandemic has caused significant disruption to the economy and financial markets globally, and the full extent

of the potential impacts of COVID-19 are not yet known.

Circumstances caused by the COVID-19 pandemic are complex, uncertain and rapidly

The impact of COVID-19 has not been significant to the Company’s results of operations, financial condition, and liquidity

and capital resources.

Although no material impairment or other effects have been identified to date, there is substantial uncertainty

in the nature and degree of its continued effects over time.

That uncertainty affects management’s accounting estimates and assumptions,

which could result in greater variability in a variety of areas that depend on these estimates and assumptions as additional events and

information become known.

The Company will continue to consider the potential impact of the COVID-19 pandemic on its business operations.

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

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 audited consolidated

financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

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

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The Company minimizes this risk by placing its cash deposits with major financial institutions.

As of December 31, 2022 and 2021, the Company had $ 1,817,000 and $ 2,797,000 in excess of the federal insurance limit, respectively.

As of December 31, 2023 and 2022, the Company had approximately $ 22,000 and $ 1,817,000 , respectively, in excess of the federal insurance

limit, respectively.

expenses are assets held by the Company, which are expected to be realized and consumed within twelve months after the reporting period.

assets consist of long-term advances paid for chip and processor design and development.

center cost is stated at cost, which includes the cost incurred to complete phase I of our data center development plan.

Phase I costs

include the option payment for the land and the cost of consulting firms to provide power and connectivity assessments, feasibility studies,

engineering plans, and project benchmarking.

Also data center cost includes internal cost such as payroll related cost and debt interest

accordance with ASC 360-10-35, the Company reviews the carrying amounts of data center cost when events or changes in circumstances indicate

the assets may not be recoverable.

If any such indication exists, the recoverable amount of the asset is estimated in order to determine

the extent of the impairment loss, if any.

Where it is not possible to estimate the recoverable amount of an individual asset, the Company

estimates the recoverable amount of the cash-generating unit to which the asset belongs.

recoverable amount is the higher of fair value less costs of disposal and value in use.

In assessing value in use, the estimated future

cash flows to be derived from continuing use of the asset or cash-generating unit are discounted to their present value using a pre-tax

discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

Fair value less

costs of disposal is the amount obtainable from the sale of an asset or cash-generating unit in an arm’s length transaction between

knowledgeable, willing parties, less the cost of disposal.

When a binding sale agreement is not available, fair value less costs of disposal

is estimated using a discounted cash flow approach with inputs and assumptions consistent with those of a market participant.

recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the cash-generating

unit is reduced to its recoverable amount.

An impairment loss is recognized immediately in net income.

of December 31, 2023, there have been no circumstances to indicate the asset may not be recoverable.

Company follows Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”)

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contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

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

with ASC 470-20, Debt with Conversion and Other Options .

These costs are classified on the balance sheet as a direct deduction

from the debt liability.

The Company amortizes these costs over the term of its debt agreements as financing cost in the consolidated

statement of operations and comprehensive loss.

connection with financing arrangements, the Company has issued warrants to purchase shares of its common stock.

The outstanding warrants

are standalone instruments that are not puttable or mandatorily redeemable by the holder and are classified as equity awards.

measures the fair value of the awards using the Black-Scholes Merton (“BSM”) option pricing model as of the measurement date.

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

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for years before 2013.

use ASC 260, “ Earnings Per Share ” for calculating the basic and diluted earnings (loss) per share.

We compute basic

earnings (loss) per share by dividing net income (loss) by the weighted average number of common shares outstanding.

Diluted earnings

(loss) per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common

shares outstanding during the period using the treasury stock method.

Dilutive potential common shares include outstanding stock options

and warrants and stock awards.

For periods with a net loss, basic and diluted loss per share is the same, in that any potential common

stock equivalents would have the effect of being anti-dilutive in the computation of net loss per share.

that could potentially dilute income (loss) per share in the future were not included in the computation of diluted income (loss) per

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

SCHEDULE OF INCOME AND LOSS PER SHARE ANTI-DILUTIVE

Restricted stock awards

Company uses ASC 260, “ Earnings Per Share ” for calculating the basic and diluted earnings (loss) per share.

computes basic earnings (loss) per share by dividing net income (loss) by the weighted average number of common shares outstanding.

earnings (loss) per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential

common shares outstanding during the period using the treasury stock method.

Dilutive potential common shares include outstanding stock

options and warrants and stock awards.

For periods with a net loss, basic and diluted loss per share is the same, in that any potential

common stock equivalents would have the effect of being anti-dilutive in the computation of net loss per share.

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

SCHEDULE OF COMPUTATION OF BASIC AND DILUTED EARNINGS (LOSS) PER SHARE

Net (loss) income

$ ( 4,630,000 )

Effect of dilutive instruments – convertible notes interest

Numerator for diluted EPS

$ ( 4,630,000 )

Denominator – for basic EPS

Effect of dilutive instruments

Convertible promissory notes and accrued interest

Series A warrants issued with convertible promissory notes

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

Restricted stock units

Warrants issued for services

Total potential future shares

Dilutive potential common shares

Denominator for diluted EPS

Basic earnings per share

Diluted earnings per share

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

ended December 31, 2023 because their inclusion would be anti-dilutive.

Common stock equivalents amounted to 13,484,743 for the year

ended December 31, 2023.

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.

2 – Related Party Transactions

PARTY TRANSACTIONS

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

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

3 – Intangible and Other Assets

AND OTHER ASSETS

December 23, 2021, AIQ entered into a Technology Development Agreement (the “Agreement”) with PICOCEL, Co., Ltd.

(the “Contractor”

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

The Agreement was expected to be completed within

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

Total payments made to PICOCEL

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

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

to cancel and terminate the Agreement.

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

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

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

(the “Contractor”

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

The Agreement was expected to be completed within 9 weeks

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

The payments are scheduled as follows:

Within 5 days after signing the contract

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

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

statement of operations.

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

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

In August 2022,

management discontinued the operations of AIQ.

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

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

or economic trends.

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

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

If the carrying value exceeds projected,

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

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

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

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

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

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

OF IMPAIRMENT LOSS

Foreign exchange loss

Impairment loss

Company and does not believe the future adoptions of any such ASU’s may be expected to cause a material impact on the Company’s consolidated financial condition or the results of its operations.

2 – Data Center Costs

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”).

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 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 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

“Purchase Shares”).

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

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

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

the Purchase Shares are issued at the Closing Date, the Company has agreed to repurchase the 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 December 31, 2023, the Company has incurred costs of approximately $ 2,262,000

for the development of the Data Center, which includes approximately $ 196,000

of capitalized interest related to the convertible promissory notes.

3 – Accounts Payable and Accrued Expenses

PAYABLE AND ACCRUED EXPENSES

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

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

8 unchanged sentences

Convertible promissory notes

Balance, end of the year

Balance, end of period

4 – Notes Payable

NOTES PAYABLE

table below summarizes the transactions as of December 31:

table below summarizes the transactions for the year ended December 31,:

OF NOTES PAYABLE

4 unchanged sentences

The principal

was due on or before August 7, 2020.

was due on or before March 11, 2022.

During any event of default under the note, the interest rate shall increase to 10 % per annum.

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 December 31, 2022.

principal and interest are past due, therefore in default.

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

$ 3,000 of default interest.

February 19, 2021, the Company issued a promissory note in the principal amount of $ 25,000 .

The interest on the unpaid principal balance

accrued at a rate of 10 % per annum.

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

If the Company fails to pay the balance of this note in full on the due date or fails to make any payment due within 15 days

of the due date, any unpaid principal shall accrue interest at the rate of 15 % per annum during the default (default interest).

of default include failure to make any payment including accrued interest when due, voluntary, or involuntary petition of bankruptcy,

appointment of a receiver, custodian, trustee or similar party to take possession of the Company’s assets or property, or assignment

made by the Company for the benefit of creditors.

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

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

The interest on the unpaid principal balance

accrued at a rate of 10 % per annum.

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

If the Company fails to pay the balance of this note in full on the date or fails to make any payments due within 15 days of

the due date, any unpaid principal shall accrue interest at the rate of 15 % per annum during the default.

Events of default include failure

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 December 31, 2022.

The note principal and

interest are past due, therefore in default.

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

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

The interest on the unpaid principal balance accrues

at a rate of 10 % per annum.

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

If the Company fails to pay the balance of this note in full on the date or fails to make any payments due within 15 days of the due

date, any unpaid principal shall accrue interest at the rate of 15 % per annum during the default (default interest).

Events of default

include failure to make any payment including accrued interest when due, voluntary, or involuntary petition of bankruptcy, appointment

The principal and interest amount outstanding under this note was $ 11,000 and $ 4,000 , respectively,

as of December 31, 2023.

April 22, 2021, the Company issued a promissory note in the principal amount of $ 50,000 (“2021 Note”).

The interest on the

unpaid principal balance 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, 2022 .

If the Company fails to pay the balance of this note in full on the date or fails to make any payments due

within 15 days of the due date, any unpaid principal shall accrue interest at the rate of 15 % per annum during the default.

default include failure to make any payment including accrued interest when due, voluntary, or involuntary petition of bankruptcy, appointment

of a receiver, custodian, trustee or similar party to take possession of the Company’s assets or property, or assignment made by

the Company for the benefit of creditors.

The principal amount was settled in full on November 29, 2022.

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

The principal and interest amount outstanding under this note was $ 11,000 and $ 7,000 , respectively,

December 31, 2023.

December 2023, the Company offer the 2021 Note holder to convert, without a time limit, the principal and interest into the Company’s

common stock at a price of $ 0.96 per share.

The holder agreed to convert the principal and interest of approximately $ 50,000 and $ 17,000 ,

respectively, (total $ 67,000 ) for 196,010 shares of the Company’s common stock with a fair market value of approximately $ 188,000

as of the date of conversions.

As the terms of the conversion the Holders did not provide any concession to the Company and there was

not an inducement to Holders to convert, because the offer did not have a time limit, the Company has accounted for the conversion in

accordance with ASC 470-50-40-4.

The difference between the fair value of the consideration paid of approximately $ 188,000 and the liability

of $ 67,000 was approximately $ 121,000 , which was accounted for a loss on liability settlement.

The loss on settlement was recorded as

loss on extinguishment of debt on the statement of operations for the year ended December 31, 2023.

expense on these notes payable amounted to $ 9,000 and $ 14,000 for the years ended December 31, 2023 and 2022, respectively.

5 – Convertible Promissory Notes

PROMISSORY NOTES

2021, the Company issued two convertible promissory notes amounting to $ 55,000 and $ 3,850,000 (the “Notes”), respectively.

The total aggregate proceeds were $ 3,550,000 due to a $ 355,000 aggregate original issue discount.

The Notes are non-interest bearing

with the principal due and payable on March 1, 2022 and August 31, 2022 , respectively.

Any amount of unpaid principal on the date of

maturity will accrue interest at rate of 10 % per annum (default interest).

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

principal amount and all accrued interest are convertible into shares of the Company’s common stock, as of the date of issuance,

at a rate of $ 1.00 and $ 1.25 per share (“Conversion Rate”), respectively.

The Conversion Rate is adjustable if, at any time

when any principal amount of the Notes remains unpaid or unconverted, the Company issues or sells any shares of the Company’s common

stock for no consideration or for a consideration per share (before deduction of reasonable expenses or commissions or underwriting discounts

or allowances in connection therewith), which is less than the Conversion Rate in effect on the date of such issuance (or deemed issuance)

of such shares of common stock (a “Dilutive Issuance”).

Immediately upon a Dilutive Issuance, the Conversion Rate will be

reduced to the amount of the consideration per share received by the Company in such Dilutive Issuance.

Events of default include failure

to issue conversion shares, the occurrence of a breach or default under any other agreement, any money judgment, writ, or similar process

entered or filed against the Company or any of its property or other assets for more than $ 100,000 , bankruptcy filing, application for

the appointment of a custodian, trustee or receiver, insolvency, the Company’s common stock delisted, or dissolution, winding up,

or termination of the business of the Company .

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

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

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 $ 0 , 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 approximately $ 1,526,000 and $ 524,000 for the years ended December 31, 2022

and 2021, respectively.

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

CONVERTIBLE PROMISSORY NOTES

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

OF CONVERTIBLE PROMISSORY NOTES

Balance, beginning of year

( 4,272,000 )

Balance, end of year

3 unchanged sentences

Net carrying amount

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

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

OF POTENTIAL FUTURE SHARES ISSUANCE OF CONVERSION NOTES

Conversion price per share

Potential future shares

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

and 2021, respectively.

effective interest rate used to amortize the debt discount for the year ended December 31, 2022 ranged from 4.76 % to 64.60 %.

December 2023, the Company offered each of the Convertible Promissory Note holders (“Holders”) to convert, without a

time limit, the principal and interest into the Company’s common stock at a price ranging from $ 0.51

As of December 31, 2023 approximately five of the Holders agreed to convert principal and interest of approximately,

and $ 634,000 ,

respectively, (total $ 4,906,000 )

for 9,656,019

shares of the Company’s common stock with a fair market value of approximately $ 5,771,000

as of the date of conversions.

As the terms of the conversion was not in accordance with the original conversion feature, the

Holders did not provide any concession to the Company and there was not an inducement to Holders to convert, because the offer did

not have a time limit, the Company has accounted for the conversion in accordance with ASC 470-50-40-4.

difference between the fair value of the consideration paid of approximately $ 5,771,000

and the liability of $ 4,906,000

was approximately $ 865,000 ,

which was accounted for as a loss on liability settlement.

The loss on settlement was recorded as loss on extinguishment of

debt on the statement of operations for the year ended December 31, 2023.

expense on default convertible promissory notes amounted to $ 439,000 and $ 204,000 for the year ended December 31, 2023, respectively,

of which $ 214,000 and nil was capitalized as data center cost, respectively.

6 – Commitments and Contingencies

AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

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, except as follows.

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

CalEthos Inc, Michael Campbell and Does 1-25 (Case No.

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

and other wage-related claims.

In the complaint, the plaintiff claimed he worked under a consulting agreement as Vice President of Brand

Management of our company and was to be paid $ 4,000 per month and to receive an option to purchase 50,000 shares of our common stock

that was to vest quarterly over the term of the agreement.

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

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

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

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

The plaintiff

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

of $ 450,000 .

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

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

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

Such payment was made on June 23, 2022.

Company is authorized to issue 200,000,000 shares of which 100,000,000 shares shall be preferred stock, par value $ 0.001 per share, and

100,000,000 shares shall be common stock, par value $ 0.001 per share.

A Convertible Preferred Stock

Series A Convertible Preferred Stock (“Series A”) is convertible into shares of the Company’s common stock at the rate

of $ 1.38 per share, subject to adjustments based on the Company’s future sales of financial instruments at a value less than $ 1.38

The holders of the Series A have the right to convert any time after the date of issuance.

With the issuance of the convertible

promissory notes, as explained in Note 5 above, the Series A’s conversion rate adjusted to $ 1.00 per share.

In accordance with

ASC 470, the Company has calculated the effect of the conversion rate adjustment, which was approximately $ 36,000 .

The conversion rate

adjustment has been treated as a deemed dividend, which has been presented in the Statement of Changes in Stockholders’ Deficit.

Series A is mandatorily convertible upon (i) the closing of the sale of shares of the Company’s common stock to the public in an

underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, resulting

in at least $ 10,000,000 of gross proceeds to the Company, (ii) the close of business on the sixtieth consecutive day on which the closing

price of the Company’s common stock on the OTC Markets is at least $2.80 per share, subject to appropriate adjustment in the event

of any stock dividend, stock split, stock combination or other similar recapitalization with respect to the common stock, or (iii) the

affirmative vote of the holders of at least 66⅔% of the outstanding shares of Series A, given at a meeting of such stockholders

duly called for that purpose or pursuant to a written consent of stockholders all outstanding shares of Series A shall automatically

be converted into shares of the Company’s common stock, at the then effective conversion rate .

any matter presented to the stockholders of the Company for their action or consideration at any meeting of stockholders of the Company

(or by written consent of stockholders in lieu of meeting), each holder of outstanding shares of Series A shall be entitled to cast the

number of votes equal to the number of whole shares of common stock into which the shares of Series A held by such holder are convertible

as of the record date for determining stockholders entitled to vote on such matter.

Except as provided by law or by the other provisions

of the Articles of Incorporation, holders of Series A shall vote together with the holders of common stock as a single class.

and after the date of the issuance of any shares of Series A, a cumulative dividend on each outstanding share of Series A Preferred Stock

shall accrue at a rate per annum equal to ten percent of the Series A original issue price.

Accrued dividends on the Series A shall be

paid in shares of the Company’s common stock, such shares to be valued for such purpose at the applicable series A conversion price.

February 11, 2020, the Company converted 85,975 shares of Series A into a Convertible Promissory Notes in the principal amount approximately

January 2021, the Company’s President and a member of the Board of Directors, resigned as an officer and director of the Company

(“Termination Agreement”).

Part of the Termination Agreement stipulates the return of 3,674,330 shares of the Company’s

common stock (“Cancelled Shares”).

The Cancelled Shares were returned and cancelled on April 20, 2021.

March 2021, the Company’s Chief Executive Officer (“CEO’) agreed to forgive approximately $ 68,000 due to him, which

was treated as contributed paid in capital.

March 2021, the Company’s Chief Financial Officer agreed to reduce the amounts due to him from approximately $ 128,000 to $ 30,000 .

For the reduction of $ 98,000 , the Company will issue 75,000 shares of common stock.

The remaining liability of $ 30,000 will be paid in

September 2021, the Company entered into a release agreement with one of its consultants.

As part of the separation payment, the Company

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

Common Stock Awards

August 17, 2021, the Company entered into Restricted Share Award Agreements (the “Award Agreements”) with two consultants

pursuant to which the Company issued to the consultants shares of common stock of the Company in exchange for their future services.

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

written notice of termination.

The two consultants who entered into these agreements include:

consultant who was granted 10,000,000 restricted share awards.

entity, which is owned by the Company’s CEO and majority shareholder, was granted 1,500,000 restricted share awards.

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

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

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

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

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

manner had the Company paid in cash.

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

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

Company issued restricted stock grants totaling 10,000,000

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

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

The value was $ 1.93

per share on the date of issuance (“Grant Date”) for an aggregate fair value of $ 22,195,000

stock-based award compensation was recorded as an increase in deferred compensation expense, common stock, and additional paid-in capital

in the Company’s books at the time of the grant.

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

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

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

The Grant Shares issued in connection with his consulting

agreement were canceled.

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

required for the Company to cancel the Grant Shares;

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

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

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

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

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

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

OF COMPANY RESTRICTED STOCK AWARDS

Grant date fair value

( 11,168,000 )

( 1,500,000 )

( 11,027,000 )

Balance as of December 31, 2022

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

OF RESTRICTED STOCK GRANT COMPENSATION EXPENSE

2022 Accretion expense

Reversal of 2021 accretion expense

( 4,791,000 )

Reversal of 2022 accretion expense

( 6,377,000 )

Restricted stock grant compensation

$ ( 4,791,000 )

of Stock Options and Warrants

February 2021, the Company signed a new consulting agreement that granted one of its shareholders an option to purchase 750,000 shares

of the Company’s common stock at $ 0.001 per share for the consultancy work provided from August 2020 to February 2021.

were fully vested on the date of issuance.

The fair value of the options was approximately $ 52,000 , as of the grant date, of which approximately

$ 38,000 was expensed and accrued during the year ended December 31, 2020 and $ 14,000 was expensed for the year ended December 31, 2021.

May 2021, the Company signed a letter of understanding that granted one of its shareholders an option to purchase 300,000 shares of the

Company’s common stock at $ 0.001 per share for the consultancy work provided during the Company’s restructuring phase from

February 17, 2021 through April 30, 2021.

The options were fully vested on the date of issuance.

The fair value of the options was approximately

$ 561,000 , as of grant date, which was expensed during the year ended December 31, 2021.

May 2021, an option holder exercised three options for 385,000 , 750,000 and 300,000 shares of the Company’s common stock at an

exercise price of $ 0.001 for each option, for total proceeds of approximately $ 2,000 .

table below summarizes the Company’s stock option activities for the years ended December 31, 2022 and 2021 (all share and per

share data reflects the reverse stock split):

OF STOCK OPTION ACTIVITIES

Balance, January 1, 2021

( 1,435,000 )

Balance, December 31, 2021

Balance, December 31, 2022

Vested and exercisable, December 31, 2022

Unvested, December 31, 2022

September 15, 2021, the Company issued warrants to purchase 100,000 shares of the Company’s common stock.

For the year ended December

31, 2021, the compensation expense, classified as professional fees in the consolidated statement of operations and comprehensive loss,

was $ 195,000 , which was calculated using the Black Scholes fair value option-pricing model with key input variables provided by management,

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” or “COO”).

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

STOCKHOLDERS DEFICIT

2023 – Stock Options

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 $ 300,000

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 of 359 %, fair value of common stock $ 1.95 , estimated life of 3 years, risk free rate of 0.43 %

volatility 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 .

table below summarizes the Company’s warrant activities for the years ended December 31, 2022 and 2021 (all share and per share

data reflects the reverse stock split):

OF WARRANTS ACTIVITY

For the year ended December 31, 2023, approximately $ 98,000

Of the amount earned of $ 98,000

approximately $ 74,000

was capitalized as date center cost and the remaining $ 24,000

was expensed as stock-based compensation.

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 $ 875,000

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 %

the fair value of common stock $ 0.50 ,

estimated life range of 3.9

years, risk-free rate range of 3.99 %

and dividend rate of $ 0 .

The calculated compensation for the year ended December 31, 2023 was approximately $ 279,000

of which $ 209,000

was capitalized as data center development cost

and the remaining $ 70,000 was expensed as stock-based compensation.

2023 Stock Options

December 2023, the Board of Directors approved the issuance of stock options to the directors for the purchase of 500,000 , 750,000

of the Company’s common stock, for a total of 1,654,000

shares, to the three directors (“Directors Options”) for an exercise price of $ 0.54 ,

which was the fair market value of the Company’s common stock on the date of issuance.

The Director Options vested on December

31, 2023 and expire on December 29, 2030.

Director Options grant date fair value of approximately $ 860,000 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 of 224.03 %, the fair value of common stock

$ 0.54 , estimated life of 3.5 years, risk-free rate of 4.12 % and dividend rate of $ 0 .

The Director Options grant date fair value of $ 860,000

was included in the equity-based compensation in the Statement of Operations for the year ended December 31, 2023.

December 2023, the Board of Directors approved the issuance of stock options to the Company’s CEO and COO for the purchase of 1,000,000

and 1,000,000 , respectively (“2023 Executive Options”) for an exercise price of $ 0.54 , which was the fair market value of

the Company’s common stock on the date of issuance.

The 2023 Executive Options vest, as follows:

both the CEO and COO 1,000,000 options vest and become exercisable as follows:

shares on each of December 6, 2024, 2025 and 2026 for a total of 500,000 shares, upon vesting the options have life of seven years.

remaining 500,000 shares based on the Company completing the following milestones (upon vesting the options have a life of seven

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

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 the signing of 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 2023 Executive Options in accordance with ASC 718 – Stock Compensation (“ASC

ASC 718 requires the Company to estimate the service period over which the compensation cost will be recognized.

has estimated that the first development phase (a) will be completed by October 30, 2024, the second development phase (b) by February

2025, the third development phase (c) by April 1, 2025 and the fourth development phase (d) by September 1, 2026.

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.

2023 Executive Options grant date fair value of $ 1,060,000

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 232.67 %

the fair value of common stock $ 0.50 ,

estimated life range of 4.5

years to 4.77

years, risk-free rate of 4.12 %

and dividend rate of $ 0 .

For the year ended December 31, 2023, the Company recorded compensation expenses of approximately $ 59,000 ,

of which approximately $ 21,000

was expensed as compensation expense and approximately

was capitalized as data center cost.

December 2023, the Board of Directors approved the issuance of stock options to two consultants, an executive advisor and data

center development advisor, for the purchase of 350,000

and 350,000 ,

for each consultant (collectively “2023 Consultant Options”) for an exercise price of $ 0.54 ,

which was the fair market value of the Company’s common stock on the date of issuance.

The 350,000 options for data center development consultant vest, as

shares on each of December 6, 2024, 2025 2026 and 2027 for a total of 175,000

shares, upon vesting the options have life of seven years.

remaining 175,000 shares based on the Company completing the following milestones (upon vesting the options have a life of seven

upon completion of the initial site development plan and Data Center design and 100% Construction Documents.

upon the Award of a GMP contract to a construction manager/company

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 onsite distribution

systems, fiber conduit lines and communications systems, and on-site roads, water, power and communications grid, buildings, perimeter

walls and security systems).

35,000 upon the completion of all Network Ready meet me rooms in the first data

shares upon the completion of construction of a customer-ready data center

facility and receipt of an conditional occupancy permit for a Data Center facility.

Company’s management has accounted for the data center development consultant options 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 October 1, 2024, the second development

phase (b) by December 31, 2024, the third development phase (c) by April 1, 2025, and the fourth and fifth development phases (d) and

(e) by September 1, 2026.

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.

data center development consultant options grant date fair value of $ 189,000

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 322.83 %,

the fair value of common stock $ 0.50 ,

estimated life of 5.5

years, risk-free rate of 4.12 %

and dividend rate of $ 0 .

For the year ended December 31, 2023, the Company recorded compensation expenses of approximately $ 7,000 ,

which was capitalized as data center cost.

The 350,000 options for executive advisor,

70,000 upon completion of the initial site development plan and data center design

and 100% construction documents.

35,000 upon the award of a GMP contract to a construction manager/company.

options upon the Company receiving the permits necessary to start construction

of the data center site and facilities.

options upon the completion of a network-ready meeting room in the first

140,000 options upon the completion of construction of a customer-ready data center

facility and receipt of a conditional occupancy permit for a data center facility.

Company’s management has accounted for the executive advisors options in accordance with ASC 718 – Stock Compensation (“ASC

ASC 718 requires the Company to estimate the service period over which the compensation cost will be recognized.

has estimated that the first development phase (a) will be completed by October 1, 2024, the second development phase (b) by December

31, 2024, the third development phase (c) by April 1, 2025, and the fourth and fifth development phases (d) and (e) by September 1, 2026.

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.

data center development consultant options grant date fair value of $ 182,000

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 of 224.03 %,

the fair value of common stock $ 0.50 ,

estimated life of 3.5

years, risk-free rate of 4.127 %

and dividend rate of $ 0 .

For the year ended December 31, 2023, the Company recorded compensation expenses of approximately $ 8,000 ,

which was capitalized as data center cost.

OF STOCK OPTION ACTIVITIES

Number of Shares

Weighted Average Strike Price/Share

3 unchanged sentences

Balance, December 31, 2022

Vested and exercisable, December 31, 2021

Unvested, December 31, 2021

Balance, January 1, 2022

Balance, December 31, 2023

1 unchanged sentence

Unvested, December 31, 2023

following table sets forth the weighted-average assumptions used to estimate the fair value of warrants granted for the year ended December

OF FAIR VALUE OF WARRANTS

Expected life (in years)

Risk-free interest rate

0.27 % - 0.42 %

Expected volatility

Dividend yield

$ 0.10 – 1.95

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

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

SCHEDULE OF EARNINGS

PER SHARE BASIC AND DILUTED

Net income (loss)

$ ( 6,749,000 )

Effect of dilutive instruments

Convertible notes interest expense

Numerator for diluted EPS

( 6,749,000 )

Denominator - for basic EPS

Effect of dilutive instruments

Restricted stock awards

Convertible notes

Dilutive potential common shares

Denominator for diluted EPS

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

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

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

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

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

10 – Deferred Tax Assets and Income Tax Provision

TAX ASSETS AND INCOME TAX PROVISION

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

November 2023, the Company issued two warrants to purchase 2,000,000 and 3,545,801 (“2023 Warrants”) to two of the Company’s

The 2023 Warrants have an exercise price of $ 0.54 , which was the fair value of the Company’s common stock on the date

The 2023 Warrants vested on December 31, 2023 and expire on December 31,2028.

The 2023 Warrants grant date fair value of

approximately $ 2,056,000 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 of 123.0 %, the fair value of common stock $ 0.54 , estimated life of 2.5 years, risk-free

rate of 4.33 % and dividend rate of $ 0 .

The 2023 Warrants’ grant date fair value of $ 2,056,000 was included in the equity-based

compensation in the Statement of Operations for the year ended December 31, 2023.

the year ended December 31, 2023, 100,804 warrants expired, and 1,567,500 warrants were forfeited with conversion of the associated Convertible

Promissory Notes (see Note 5).

OF WARRANTS ACTIVITY

Average Strike Price/Share

Average Remaining Contractual Term (Years)

Average Grant Date Fair Value/Share

January 1, 2022

December 31, 2022

December 31, 2023

and exercisable, December 31, 2022

December 31, 2023

8 – Income Taxes

the period ended December 31, 2023, the Company generated a current income tax provision of Nil .

Additionally, no

deferred income taxes have been recorded due to the uncertainty of the realization of any tax assets.

On December 31, 2023, the

Company has net operating loss (“NOL”) carryforwards for Federal income tax purpose of $ 6,295,000

and for state income tax purpose of $ 6,288,000

that may be offset against future taxable income.

No tax benefit has been reported with respect to these net operating loss carry-forwards

in the accompanying financial statements because the Company believes that the realization of the Company’s net deferred tax assets

of approximately $ 1,708,000 was not considered more likely than not and accordingly, the potential tax benefits of the net operating

loss carry-forwards are fully offset by a full valuation allowance.

Federal NOL’s have an indefinite carryover period and state

NOL’s begin to expire in 2037 if not utilized by then.

tax assets consist primarily of the tax effect of NOL carry-forwards.

The Company has provided a full valuation allowance on the deferred

tax assets because of the uncertainty regarding its realization.

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

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

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

OF COMPONENTS OF DEFERRED TAX ASSETS

Net deferred tax assets – Non-current:

For federal purposes, there is an unlimited carryforward period, and for state

purposes, the net operating losses begin to expire in 2037 if not utilized by then.

income tax (benefit)/expense attributable to loss consisted of the following, for the year ended December 31:

OF INCOME TAX (BENEFIT) EXPENSE

Current provision for income taxes:

Total current income tax

Deferred tax expense:

Total deferred tax

Total income tax

reconciliation of the federal statutory income tax rate to the Company’s effective income tax rate is as follows:

SCHEDULE OF RECONCILIATION OF INCOME TAX

Taxes calculated at federal rate

Permanent differences

State tax, net of federal impact

Return to provision

Change in valuation allowance

Provision for income taxes

tax effects, rounded to thousands, of temporary differences that give rise to significant portions of the deferred tax assets at December

31, are presented below:

SCHEDULE OF COMPONENTS OF DEFERRED TAX ASSETS

Deferred tax assets

Net operating loss carryforwards

Stock based compensation

Intangible assets

Impairment loss

Interest expense limitations

Stock-based compensation

Expected income tax benefit from NOL carry-forwards

Less valuation allowance

Total deferred tax assets

Deferred tax liability

Total deferred tax liability

Net deferred tax assets

Valuation allowance

( 2,153,000 )

( 1,709,000 )

Deferred tax assets, net of valuation allowance

Tax Provision in the Statements of Operations

reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income taxes

is as follows for the years ended December 31:

OF RECONCILIATION OF INCOME TAX

Federal statutory income tax rate

Change in valuation allowance on net operating loss carry-forwards

Effective income tax rate

Net deferred tax

tax assets and liabilities are computed by applying the federal and state income tax rates in effect to the gross amounts of temporary

differences and other tax attributes, such as net operating loss carryforwards.

In assessing if the deferred tax assets will be realized,

the Company considers whether it is more likely than not that some or all of these deferred tax assets will be realized.

realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which these deductible

temporary differences reverse.

financial reporting purposes, the Company has incurred a loss in each period since its inception.

Based on all available evidence, including

the Company’s history of losses, management believes it is more likely than not that the net deferred tax assets will not be fully

Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets on December 31, 2023,

During the years ended December 31, 2023, and 2022, the valuation allowance increased (decreased) by $ 444,000 and $ ( 782,000 ) ,

respectively.

The increase was mostly attributable to the increase in our net operating loss carryforwards.

The total valuation allowance

results from the Company’s estimate of its inability to recover its net deferred tax assets.

December 31, 2023, the Company has federal and state net operating loss carryforwards, which are available to offset future taxable income,

of approximately $ 6,295,000 which for federal purposes has an unlimited carryforward period and $ 6,330,000 which for state purposes begins

to expire in 2037.

These carryforwards may be subject to an annual limitation under Section 382 and 383 of the Internal Revenue Code

of 1986, and similar state provisions if the Company experienced one or more ownership changes that would limit the amount of NOL and

tax credit carryforwards that can be utilized to offset future taxable income and tax, respectively.

In general, an ownership change,

as defined by Sections 382 and 383, results from transactions increasing ownership of certain stockholders or public groups in the stock

of the corporation by more than 50 percentage points over a three-year period.

The Company has not completed an IRC Section 382/383 analysis.

If a change in ownership were to have occurred, NOL and tax credit carryforwards could be eliminated or restricted.

If eliminated, the

related asset would be removed from the deferred tax asset schedule with a corresponding reduction in the valuation allowance.

the existence of the valuation allowance, limitations created by future ownership changes, if any, will not impact the Company’s

effective tax rate.

Company files income tax returns in the United States and the state of California.

The statute of limitation is 3 and 4 years for Federal

and California, respectively.

The first year that remains open is tax year ended December 31, 2020 and December 31, 2019 for Federal

and California, respectively.

As of December 31, 2023 and 2022, there are no unrecognized tax benefits, and there are no significant

accruals for interest related to unrecognized tax benefits or tax penalties.

Company is in the process of analyzing its NOL and has not determined if the company has had any change of control issues that could

limit the future use of NOL.

The NOL carryforwards that were generated after 2017 of approximately $ 6,338,000 may only be used to offset

80 % of future taxable income and are carried forward indefinitely.

9 – Subsequent Events

SUBSEQUENT EVENTS

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

to determine if they must be reported.

The management of the Company determined the following reportable events:

of Land for Building a Data Center

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

(the “Option”) for $ 3,360,000

(“Purchase Price”).

The Option expires

in September 2024.

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

on the signing of the Option.

The Company is

required to deposit an additional $ 84,000

into an escrow (“Escrow Funds”).

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

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

“Purchase Shares”).

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

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

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

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

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

However, if the Company’s common stock trades

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

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

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

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

effective date of employment was March 28, 2023.

The salary is $ 250,000

per year, with an increase to $ 300,000

annually, immediately once permits have been

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

annually, upon the data center being operational

and contracted for 25 %

of the planned 100MW colocation capacity.

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

shares that will be provided in an employee option

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

The stock grant will be included in a pending employment agreement

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

of Restricted Stock Awards

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

shares of restricted stock that was previously issued to Mr.

Kim as our former CTO.

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

if they must be reported.

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

January and February 2024, the remaining convertible promissory notes principal balance and accrued interest of $ 341,000 and $ 115,000 ,

respectively were converted into 884,942 shares of the Company’s common stock.

In February 2024, the Company issued 100,000 shares of the Company’s

common stock to an individual who held a promissory note issued on August 31, 2018 by M1 Advisors LLC.

In February 2024, issued a promissory note in the principal amount of $ 1,000,000

that bears interest at the rate of 10 % per annum and matures on May 30, 2024 and a five -year warrant to purchase up to 200,000 shares

of common stock with an initial exercise price of $ 0.50 per share.

In February 2024, the Company hired a consulting firm

to develop an environmental health and safety program compliant with ISO 45001 requirements for an estimated fee of $ 200,000 .

On March 1, 2024, the Company hired an individual

as vice president of data center development with an annual salary of $ 225,000 .

The salary increases to $ 240,000 and $ 250,000 on the

1st and 2nd anniversary dates, respectively.

Also, the individual is eligible for an annual bonus of up to 25%, 35%, and 40% of the annual

salary for the 1st, 2nd, and 3 rd calendar years, respectively.

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

What changed 10-K

Item 9A. Controls and Procedures