What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-31 compared with 2025-04-02 · 100 added, 157 removed, 74 unchanged (78% of the section changed)

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accounting principles.

are in the early stages of implementing our plan for the development of a large-scale geothermal-powered data center campus

on which we will lease powered building lots and buildings to large enterprise information technology (IT) customers that are creating

or addressing the growing demand for AI, Cloud and High-Performance Computing (HPC) digital services.

In planning for our initial geothermal-powered

data center building lots and building, we are in discussions with several large companies that could lease all or part of the data center

campus, with the intention of cultivating long-term strategic relationships with them once they become our customers and providing them

with solutions for their data center facilities and IT infrastructure requirements.

We initially intend to provide geothermal-powered

building lots with flexibility for customers to scale for future growth.

As currently contemplated, our offerings will provide clean

energy power, flexibility, reliability and security delivered through a tailored, customer-service-focused platform that will be designed

to foster long-term relationships.

of the filing of this Report, we have completed Phase I and entered into Phase II of our data center development plans.

In the initial

phase of our project, we originally signed an option agreement in March 2023 to acquire 80 acres of commercially-zoned land in Imperial

County, California.

We believed this site would provide us an opportunity to acquire commercially-zoned land on which we could combine

nearby direct clean geothermal/solar energy with a 24/7 data center operation.

However, in July 2024, we identified and entered into

an option agreement to acquire a larger, 315-acre parcel of land that we believe provides us with significant advantages over our prior

data center development site, which include:

strategically located, industrial-zoned property with acreage for on-site switchyard, substation and additional data center buildings

options for connectivity to high-voltage transmission lines

proximity to existing and planned geothermal power plants

fiber routing distances to internet backbone and communications networks

on the main north/south transportation corridor (Hwy.

111) and gateway entrance (Sinclair Rd.) to the planned 51,000-acre Lithium

Valley development area

flood risk - outside of the 100- and 500- year flood zones in a FEMA X (Unshaded) area

late July 2024, we terminated our option agreement to acquire the 80-acre parcel in Imperial County, California as we believe the recently-optioned

property is better suited for our immediate needs.

believe 100% clean-energy-powered data centers are an important element in the ability of the U.S.

to meet its carbon neutral climate

goals and for hyperscale and enterprise IT companies to meet their shareholder and customer commitments to have an ESG-compliant, clean

digital footprint before 2030.

As a result, we believe the availability of nearby clean energy and our ability to produce geothermal

power on our site will provide us a significant competitive advantage in the marketplace.

Phase I of our development plan, which we completed in December 2023, we contracted with leading data center advisory firms to complete

site, power and connectivity assessments, feasibility studies, engineering plans and project benchmarking.

Phase I of our plan included

Engineering, Inc.

, a global professional services firm specializing in architecture, engineering, environmental and construction

services (“HDR Engineering”), to complete a site assessment, project feasibility study, and the initial shovel-ready

site development plan for our Imperial County site.

, a power engineering and energy solutions firm (“ZGlobal”), to assess all available power and transmission routes

in the immediate area of the site and to develop a plan to access power from close by geothermal and solar producers via Behind-The-Meter,

Off-Take and Power Purchase Agreements directly and through agreements with the local grid operator.

Dark Fiber, Inc.

, a provider of dark fiber connectivity to municipalities, carriers, anchor institutions, content developers,

data-center operators, and other sophisticated private network users, to develop a robust fiber-based infrastructure that will provide

multiple diverse geographic routes of connectivity to our data center site.

a construction consultancy services firm (“Linesight”), to provide cost benchmarking of initial design concepts, and

to assist with desktop pre-qualification of architect-engineering firms and construction managers.

the beginning of 2024, we started Phase II of our data center development plan.

Phase II included hiring additional staff and consultants

to complete environmental, health and safety and cyber security procedures and to develop a set of data center operating procedures to

meet hyperscale customer pre-qualification requirements.

During this phase, we also developed requests for proposals (RFPs) and contract

packages for contracting an engineering/design firm and general contractor.

In addition, we ramped up our operating staff to support

the infrastructure and building design processes and the development of building plans and the permit packages.

We also undertook and

completed utility studies, transmission planning, site layouts and substation designs.

We are currently in the process of completing our vertically-integrated,

geothermal-powered data center campus land-use plan and zone change with Imperial County Planning and Development.

We expect that land

use and conditional zone change approvals will be completed by the end of 2025 or during the first quarter of 2026.

In parallel, we are

completing our plans, timelines and budgets for all required county and state environmental studies and reports, which we expect to have

completed and filed for data center campus construction, onsite switchyard and electrical distribution system, and fiber, gas, water and

sewer lines that connect to the property by the end of 2025.

In addition, we are planning to have the required approvals to start the

initial construction of the data center campus and all external utility lines by the end of the second quarter 2026.

We are also planning

that we can complete and submit all design, planning and environmental reports and studies for the state environmental agencies for our

planned onsite geothermal production systems by mid-2026.

We are also in the process of completing a master services agreement with

a geothermal technology and development company that will provide advanced closed-loop geothermal production technology, sub-surface planning

and drilling, above-ground turbine and generator electricity production components and the electrical distribution system design and components.

We expect to complete this agreement before the end of June 2025 and have the designs completed for subsurface and surface components

before the end of 2025.

upon the current interest we have received from potential tenants, we expect that we will have agreements signed to lease all or a substantial part of the development

by the end of 2025 or early 2026.

are a developer of large-scale infrastructure designed to power the digital economy.

Our primary focus is the development of a “master-planned”

data center campus in a business-friendly Northwestern U.S.

Unlike traditional developments, our campus will be designed to

be onsite-powered, meaning we intend to provide our tenants with dedicated, reliable energy generated on the property.

May 2025, we formed TerraVolt Infrastructure Inc.

(“TerraVolt”), a wholly-owned subsidiary established to meet the demand

for sustainable, baseload, powered land and infrastructure solutions for large-scale data center development.

TerraVolt’s proposed

solution is a Physical Infrastructure-as-a-Service (PIaaS) platform that will integrate onsite behind-the-meter (BTM) power with construction-ready

data center building sites that include utilities and fiber connectivity.

TerraVolt plans to provide a turnkey solution with power and

utilities to hyperscalers, colocation providers, and data center developers seeking to deploy new capacity faster than with traditional

power and transmission from a local electric utility company.

We are currently focused on a location where onsite power production using

natural gas turbines and reciprocating engines is allowed under local and state building codes and where there is direct access to a

natural gas pipeline with capacity for delivery within a reasonable timeframe.

of the date of this Report, we have commenced the initial phase of our planned onsite-powered data center campus development, which is

focused on completing land-use applications, zone change requests, and supplemental site reports required by the local County Planning

and Development Department.

We anticipate securing land-use and conditional zone change approvals by year-end 2026.

Concurrently,

we are finalizing timelines and budgets for all necessary county and state environmental assessments.

These studies cover the data center

campus, the onsite power plant, electrical distribution systems, and critical utility infrastructure (water, sewer, fiber, and gas).

We expect to file these reports before the end of 2026, with the aim of securing all necessary construction approvals by the second quarter

Additionally, we expect to submit to applicable state agencies all design and environmental documentation for the onsite natural

gas power plant by mid-2026.

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

require substantial financing to complete the development and construction of the planned vertically-integrated, geothermal-powered data

require substantial financing to complete the development and construction of the planned data

center campus.

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of Operations for the years ended December 31, 2025 and 2024

following table summarizes our results of operations for the years ended December 31, 2024 and 2023.

following table summarizes our results of operations for the years ended December 31, 2025.

Operating Expenses

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General and administrative

Development cost – abandonment

Payroll and related expenses

Total operating expenses

$ (2,058,000 )

Payroll and related cost

Total operating expenses (income)

Other (expenses) income

Interest income

Financing cost

Gain on settlement of accounts payable

Loss on extinguishment of debt – related party

Loss on extinguishment of debt

Total other expenses

Financing costs

Financing costs - related party

Abandoned development project cost

Loss on extinguishment of notes payable – related party

Loss on extinguishment of convertible promissory notes

Gain from closure of foreign subsidiary

Total other expense

$ (5,443,000 )

$ (11,527,000 )

$ (6,084,000 )

the years ended December 31, 2025 and 2024, we had no revenues.

professional fees increased to $386,000 for the year ended December 31, 2024 from $344,000 for the year ended December 31, 2023.

increase of approximately $42,000 was attributable to a decrease in our consulting fees of approximately $63,000, which was offset by

an increase in our other professional fess of approximately $105,000.

equity-based compensation for the year ended December 31, 2024 was approximately $369,000 as compared to $3,032,000 for the year ended

December 31, 2023.

During the fourth quarter of 2023, we issued warrants and stock options to our directors and officers with a fair

value of $2,916,000, which was recognized as an expense upon issuance.

Also for the years ended December 31, 2024 and 2023, the Company capitalized equity based compensation of approximately

$2,380,000 and $336,000 as data center cost.

cost – abandonment

July 24, 2024, we terminated our option agreement to acquire 80 acres of commercially-zoned land in Imperial County, California.

date, we had approximately $344,000 development cost related to that property, which we determined were not usable for our data center campus project.

professional fees decreased to $340,000 for the year ended December 31, 2025 from $386,000 for the year ended December 31, 2024.

decrease of approximately $46,000 was attributable to increases in (i) audit fees of $17,000 and geological services of $37,000,

offset by decreases in (ii) consulting services $34,000, legal services $61,000 and other professional expenses of

Equi ty -based

equity-based compensation for the year ended December 31, 2025 decreased to $80,000 from $369,000 for the year ended December 31, 2024.

During the year ended December 31, 2025, we recorded a recapture of approximately $236,000 of equity-based compensation related to the

non-performance of outstanding performance-based awards.

The time-based equity-based compensation for the year ended December 31, 2025 was $316,000,

for a net expense of $80,000.

and related expenses

and related expenses increased to $259,000 for the year ended December 31, 2024, compared to $51,000 for the year ended December 31,

For the year ended December 31, 2023, we had one employee.

Our first employee, our Chief Operating Officer, was hired in June 2023,

and our second employee, our Vice President of Data Center Development, was hired in February 2024.

For the year ended December 31, 2024,

our total payroll-related cost for our employees was approximately $1,148,000, of which approximately $889,000 was capitalized as data

center development cost.

and related expenses increased to $583,000 for the year ended December 31, 2025 from $259,000 for the year ended December 31, 2024.

increase of $324,000 related to our abandonment of our data center campus project in Imperial County, California in July 2025.

As a result of the abandonment, we did not capitalize payroll and related

during the second, third and fourth quarters of 2025, we did not capitalize payroll and related expenses.

financing cost for the year ended December 31, 2025 increased to $186,000 compared to $12,000 for the year ended December 31, 2024.

The 2024 financing cost included $2,355,000 for the amortization of debt discount related to our notes payable.

on extinguishment of debt – related party

During the year ended December 31, 2024, the Company and

the note holder agreed to convert the note payable of $1,000,000 into 500,000 shares of the Company’s common stock with a fair value

of $875,000 and exchanged two warrants, previously issued to the note holder, each for 300,000 shares of the Company’s common stock

(“Old Warrant”), for a warrant to purchase 2,258,877 shares of the Company’s common stock (“New Warrant’).

The loss on extinguishment of $2,317,000 is difference between (i) $1,755,000 for the note payable of $1,000,000 and fair value of Old

Warrant of $755,000 and (ii) $4,072,000 the fair value of the common stock of $875,000 and fair value of the New Warrant of $3,197,000.

extinguishment of debt

During the years ended December 31, 2024 and 2023, the Company extinguished convertible debentures

with the issuance of shares of the Company’s common stock.

The fair value of the common stock issued exceeds the carrying amount

of the principal and accrued interest by approximately $6,468,000 and $986,000, which was recorded as a loss on extinguishment for the

year ended December 31, 2024 and 2023, respectively.

Our convertible debentures were outstanding for the twelve months of the year ended December 31, 2025 compared to four months of the

year ended December 31, 2024.

costs – related party

financing cost – related party for the year ended December 31, 2025 decreased to $676,000 from $2,398,000 for the year ended December

The decrease of $1,722,000 was due to a decrease in interest and loan discount expense for notes payable to the related party.

on extinguishment of notes payable - related par ty

the year ended December 31, 2025, we did not have an extinguishment for our notes payable to related party.

on extinguishment of convertible promissory notes

the year ended December 31, 2025, we did not have a loss on extinguished of convertible promissory notes.

from closure of foreign subsidiary

the year ended December 31, 2025, we finalized the closure of our Korean subsidiary.

of development project cost

elected not to renew our purchase option on the existing property in Imperial County, California when it expired in July 2025.

Consequently, previously capitalized data center development costs were expensed, and we will cease capitalizing additional

data center development expenses until we can secure parcels with appropriate zoning for data center use and greater

certainty around the execution of our development plans.

At the termination of the data center development, we had

approximately $4,581,000 of capitalized development cost, which has been recorded as abandoned project costs.

and Capital Resources

working capital as of December 31, 2024 and 2023 was as follows.

working capital deficit as of December 31, 2025 and 2024 was as follows.

Current assets

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Working capital deficit

working capital deficit decreased from a $704,000 deficit as of December 31, 2023 to a deficit of $218,000 as of December 31, 2024 for

a decrease of $486,000.

The decrease in our working capital deficit was due to a $22,000 decrease in our cash and cash equivalents, which

was offset by a decrease of $167,000 in our accounts payable and accrued expenses and a decrease of $341,000 in convertible promissory

For the years ended December 31,

$ (2,800,000 )

working capital deficit increased from a $219,000 deficit as of December 31, 2024 to a deficit of $2,800,000 as of December 31, 2025

for an increase of $2,582,000.

The increase in our working capital deficit was due to increases in (i) $1,581,000 of convertible debentures,

(ii) $728,000 of notes payable related parties and (iii) $271,000 of accounts payable.

Flows, for the years ended December 31,

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by financing activities

Net cash provided by financing activity

Effect of exchange rate changes

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Flows from Operations

used in operating activities increased to approximately $859,000 for the year ended December 31, 2024 from approximately $35,000 for

the year ended December 31, 2023, which was predominantly related to the increase in our expenditures for filing fees, legal fees, transfer

agent fees and consulting fees paid during the period.

used in operating activities decreased to approximately $750,000 for the year ended December 31, 2025 from approximately $859,000

for the year ended December 31, 2024, which was predominantly related to the increase in our payroll and related expenses that was offset in part by a decrease in professional fees.

Flows from Investing

cash used in investing activities increased to approximately $1,467,000 for the year ended December 31, 2024 from approximately $1,730,000

cash used in investing activities decreased to approximately $464,000 for the year ended December 31, 2025 from approximately $1,467,000

for the year ended December 31, 2024.

The primary use of cash was for expenditures for the development of our data center campus.

The primary use of cash was for expenditures for the development of our data center campus, which

was suspended during the quarter ended June 30, 2025.

Flows from Financing

cash provided by financing activities increased to approximately $2,305,000 for the year ended December 31, 2024 from approximately nil

for the year ended December 31, 2023.

The increase of $2,305,000 was due to the issuance of a promissory note in the principal amount

of $1,000,000 and the issuance of convertible debentures in the principal amount of $1,410,000 less $106,000 of cash paid for expenses

related to the issuance.

cash provided by financing activities decreased to $1,215,000 for the year ended December 31, 2025 from approximately $2,305,000 for

the year ended December 31, 2024.

The cash provided of $1,215,000 was funded by one of our shareholders, who is also a member of our board.

and Material Cash Requirements

though we experienced negative cash flows from operations of approximately $859,000 for the year ended December 31, 2024, as a result

of our private placement of a promissory note and convertible debentures in the principal amounts of $1,000,000 and $1,410,000, respectively,

we had cash and cash equivalents of approximately $286,000 at December 31, 2024.

As of December 31, 2024, we had approximately $1,410,000

of convertible debentures with maturity dates on December 31, 2026.

is anticipated that we will incur expenses in the implementation of our business plan described above, and such expenses will require

substantial financing to complete the development of the property for a data center operation and to achieve our goals.

have only limited capital with which to pay these anticipated expenses.

To fund our business plan going forward, we intend to raise funds

from investors by issuing common stock, preferred stock and/or debt securities.

We are currently in discussions with several potential

funding sources.

However, there can be no assurance we will be able to successfully raise additional funds when required, if at all.

though we experienced negative cash flows from operations of approximately $750,000 for the year ended December 31, 2025, as a

result of the funding from one of our shareholders, we had cash and cash equivalents of approximately $287,000

at December 31, 2025.

As of December 31, 2025, we had approximately $1,635,000 of convertible debentures with maturity dates of

December 31, 2026 and $1,000,000 of notes payable related party with maturity dates of June 30, 2026.

is anticipated that we will incur expenses in the implementation of our business plan described above, and such expenses will

require substantial financing to complete the development of the property for a data center operation and to achieve our goals.

currently have only limited capital with which to pay these anticipated expenses.

To repay our short-term indebtedness and to fund

our business plan going forward, we intend to raise funds from investors by issuing common stock, preferred stock and/or debt

We are currently in discussions with several potential funding sources.

However, there can be no assurance we will be

able to successfully raise additional funds when required, if at all.

failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate

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

What changed 10-K

Item 7. Management’s Discussion and Analysis