What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-04-02 compared with 2024-04-09 · 208 added, 200 removed, 23 unchanged (95% of the section changed)

1 unchanged sentence

following discussion should be read in conjunction with our audited financial statements and the related notes that appear elsewhere

in this Annual report.

in this Report.

The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs.

actual results could differ materially from those discussed in the forward looking statements.

Factors that could cause or contribute

to such differences include those discussed below and elsewhere in this Annual Report.

results could differ materially from those discussed in the forward looking statements.

Factors that could cause or contribute to such

differences include those discussed below and elsewhere in this Report.

audited financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted

accounting principles.

of Operations

is the intention of our board of directors for our company to pursue the development of the 80 acres of land in Imperial County, California

that we recently put under an exclusive option agreement and develop it for a large-scale, 100% geothermal/solar-powered, certifiable

clean energy, data center operation that will utilize immersion and liquid cooled and conventional energy efficient data center systems

and provide colocation services to enterprise IT customers.

implement our plan, we have optioned the land and hired an experienced data center builder and operator and we are now in the process

of acquiring the other principal ingredients needed for our data center operation – clean energy and fiber connectivity.

end, over the next couple of months, we plan to finish negotiations with local geothermal and solar power producers to deliver clean

energy for our operation, and to complete agreements with multiple communication providers for access to their close-by long-haul and

dark fiber communication networks for connectivity.

are also in the process of developing partnerships with leading-edge containerized and modular immersion and liquid cooled data center

system providers whose systems we will offer for rent to our customers.

We believe that, when construction of our data center is complete,

the principal differentiators of our data center operations in the marketplace are expected to

be that we are powered by 100% certified clean energy and that we provide leading-edge immersion and liquid cooled energy-efficient data

center systems that will support the ever-increasing power and cooling needs of high-performance enterprise IT computer systems.

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

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

The failure to

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

plans, any commercialization efforts or other operations.

We may not be able to secure financing on favorable terms, or at all, to meet

our future capital needs.

In addition, even if we are able to obtain sufficient funding to commence our business operations, we may need

to pursue additional financing in the future to make expenditures and/or investments to support the growth of our business and may require

additional capital to pursue our business objectives and respond to new competitive pressures, pay extraordinary expenses or fund our

growth, including through acquisitions.

Additional funds, however, may not be available when we need them on terms that are acceptable

to us, or at all.

If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability

to commence our proposed business operations, to continue to grow and support our business and to respond to business challenges could

be significantly limited.

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.

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

center campus.

A failure to obtain this necessary capital when required on acceptable terms, or at all, could force us to delay, limit,

reduce or terminate our development plans, any commercialization efforts and any other operations.

We may not be able to secure financing

on favorable terms, or at all, to meet our future capital needs.

In addition, even if we are able to obtain sufficient funding to commence

our business operations, we may need to pursue additional financing in the future to make expenditures and/or investments to support

the growth of our business.

In addition, we may require additional capital to pursue our business objectives and respond to new competitive

pressures, pay extraordinary expenses or fund our growth, including through acquisitions.

Additional funding, however, may not be available

when required on terms that are acceptable to us, or at all.

If we are unable to obtain adequate financing or financing on terms satisfactory

to us when it is required, our ability to commence and grow our proposed business operations, to support our business and to respond

to business challenges could be significantly limited.

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

2 unchanged sentences

of Operations for the years ended December 31, 2024 and 2023

following summary should be read in conjunction with our audited financial statements for the years ended December 31, 2023 and 2022.

the years ended

compensation (gain)

and related cost

and administrative

operating expenses (income)

income from operations

on settlement of payable

on extinguishment of debt

other expense

(loss) income

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

Operating Expenses

Professional fees

Equity-based compensation

General and administrative

Development cost – abandonment

Payroll and related expenses

Total operating expenses

$ (2,058,000 )

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

$ (11,183,000 )

$ (1,165,000 )

the years ended December 31, 2024 and 2023, we had no revenues.

professional fees decreased from $667,000 for the year ended December 31, 2022 to $344,000 for the year ended December 31, 2023,

representing a decrease of approximately $323,000.

Our professional fees of $344,000 is net of data center capitalized cost of

approximately $80,000.

Therefore, the actual professional fees incurred for the year ended December 31, 2023, was approximately

$424,000, a decrease of approximately $243,000.

The decrease of approximately $243,000 was attributable to a $141,000 reduction in

the use of outside contractors, a $110,000 reduction in legal fees, and a $17,000 reduction in the overhead cost of our South

Korean subsidiary, for a total of $268,000.

These reductions were offset by an approximate $21,000 increase in audit fees and a $4,000 increase in other

expenses for a total of $25,000.

compensation (gain)

equity-based compensation for the year ended December 31, 2023 is attributable to the stock options and warrants issued to our

officers, directors and consultants during the year ended December 31, 2023 for a total expense of $3,032,000.

with respect to such equity-based compensation is set forth in Note 7 to our audited financial statements for the year ended

December 31, 2023 included elsewhere in this Report.

equity-based gain in the year ended December 31, 2022 was attributable to equity-based compensation expense of approximately $6,377,000,

which was offset by forfeitures of equity-based compensation of approximately $11,168,000.

impairment loss of $154,000 in the year ended December 31, 2022 was due to the impairment of intangibles and other assets as a result

of the suspension of our South Korean subsidiary’s operations.

and administrative expenses

general and administrative expenses decreased from $52,000 in the year ended December 31, 2022 to $38,000 in the year ended December

31, 2023, representing a decrease of approximately $14,000.

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.

and related expenses

the year ended December 31, 2022, we did not have employees.

Our first employee, our Chief Operating Officer,

was hired in March of 2023.

The total payroll-related cost for this employee was approximately $226,000 for the year ended December 31, 2023,

of which approximately $175,000 was capitalized as data center cost.

financing cost for the year ended December 31, 2023, represented interest expense of approximately $252,000.

The total interest expense

for the year ended December 31, 2023 was approximately $448,000, of which approximately $196,000 was capitalized as data center

development cost.

Our financing cost for the year ended December 31, 2022 represented interest expense of $218,000 and debt

discount amortization of $1,526,000, of which full amortized during the year ended December 31, 2022.

The increase in interest expense

of $230,000 for the year ended December 31, 2023 was attributed to certain convertible promissory notes going into

default during the year ended December 31, 2023.

on settlement of payable

the year ended December 31, 2023, we entered into an agreement with a vendor to reduce the payable by approximately $23,000.

on extinguishment of debt

December 2023, we requested the holders of our outstanding convertible promissory notes to convert such promissory notes into shares of our common stock.

The book value of the promissory notes and accrued

interest was approximately $4,906,000, and the fair value of the common stock was approximately $5,771,000, resulting in a loss on

settlement of approximately $865,000.

Also, the holder of a $50,000 promissory note agreed to convert the principal and accrued

interest of $67,000 into shares of our common stock with a fair value of $188,000, resulting in a loss on settlement

of approximately $121,000.

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.

financing cost for the year ended December 31, 2024 increased to $2,410,000 compared to $252,000 for the year ended December 31, 2023.

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.

and Capital Resources

financial position as of December 31 in each of the years indicated was as follows:

of December 31,

$ (3,143,000 )

working capital decreased from a $3,143,000 deficit as of December 31, 2022 to a deficit of $704,000 as of December 31, 2023 for

a total change of $2,439,000.

The decline in our working capital was due to (i) a decrease in the book basis of our convertible

promissory notes, for the December 2023 conversion and (ii) the decrease in our cash and cash equivalents, which was used for the data

center development.

the years ended

cash used in operating activities

cash used in investing activities

cash provided by financing activities

of exchange rate changes

in cash during the period

beginning of period

end of period

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

Current assets

Current liabilities

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,

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by financing activities

Effect of exchange rate changes

Change in cash and cash equivalents during the period

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Flows from Operations

used in operating activities decreased to approximately $35,000 in 2023 from approximately $820,000 in 2022, which was predominantly

related to the reduction in our expenditures for filing fees, legal fees, transfer agent fees and consulting fees paid during the year.

flow from investing

cash used for investing activities was approximately $1,730,000 for the year ended December 31, 2023.

The primary use of cash

was for expenditures for the development of our data center.

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.

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

for the year ended December 31, 2023.

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

Flows from Financing

the year ended December 31, 2023, we had no financing activities.

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.

and Material Cash Requirements

Promissory Notes

of December 31, 2023, we had approximately $456,000 outstanding related to our convertible promissory notes and accrued interest.

In February 2024, the total of $456,000 was converted into shares of our common stock.

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

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.

The failure to

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

plans, any commercialization efforts or other operations.

We may not be able to secure financing on favorable terms, or at all, to meet

our future capital needs.

In addition, even if we are able to obtain sufficient funding to commence our business operations, we may need

to pursue additional financing in the future to make expenditures and/or investments to support the growth of our business and may require

additional capital to pursue our business objectives and respond to new competitive pressures, pay extraordinary expenses or fund our

growth, including through acquisitions.

Additional funds, however, may not be available when we need them on terms that are acceptable

to us, or at all.

If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability

to commence our proposed business operations, to continue to grow and support our business and to respond to business challenges could

be significantly limited.

currently 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.

audited financial statements included in this Report have been prepared on a going concern basis, which implies that our company will

continue to realize its assets and discharge its liabilities and commitments in the normal course of business.

We are presently in the

development stage and, apart from our cash balances, have only limited assets.

Our company has not generated revenues in the last two

fiscal years, has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future.

The continuation of our company as a going concern is dependent upon:

(i) continued financial support from our shareholders;

ability of our company to continue raising necessary debt or equity financing to achieve its operating objectives;

and (iii) our ability

to acquire assets and establish a business or merge or otherwise acquire business opportunities.

independent auditors included an explanatory paragraph in their report on our financial statements for the year ended December 31, 2023

regarding concerns about our ability to continue as a going concern.

In addition, our financial statements contain further note disclosures

in this regard.

The implementation of our business plan is dependent upon our ability to continue raising sufficient new capital from

equity or debt markets in order to fund our on-going operating losses and real estate acquisition activities.

The issuance of additional

equity securities could result in a significant dilution in the equity interests of our current stockholders.

of Critical Accounting Policies

preparation of financial statements in conformity with United States generally accepted accounting principles requires management to

make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures of our company.

Although these estimates are based on management’s knowledge of current events and actions that our company may undertake in the

future, actual results may differ from such estimates.

of Consolidation

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

material intercompany transactions and balances have been eliminated in consolidation.

Currency Translation

financial statements of our foreign subsidiary, for which the functional currency is the local currency, are translated into U.S.

using the exchange rate at the consolidated balance sheet date for assets and liabilities and a weighted-average exchange rate during

the year for revenue, expenses, gains and losses.

Translation adjustments are recorded as other comprehensive income (loss) within shareholders’

equity (deficit).

Gains or losses from foreign currency transactions are recognized in the consolidated statements of operations.

and Debt Discounts

accordance with ASC 470-20, Debt with Conversion and Other Options , we first allocate the cash proceeds of the notes between the

notes and any warrants on a relative fair value basis.

Proceeds are then allocated to the conversion feature.

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

with ASC 470-20.

These costs are classified on the balance sheet as a direct deduction from the debt liability.

We amortize these costs

over the term of our debt agreements as financing cost in the consolidated statement of operations and comprehensive loss.

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

based method.

Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over

the service period, which is usually the vesting period.

This guidance establishes standards for the accounting for transactions in which

an entity exchanges it equity instruments for goods or services.

It also addresses transactions in which an entity incurs liabilities

in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by

the issuance of those equity instruments.

use the fair value method for equity instruments granted to non-employees and use the BSM model for measuring the fair value of options.

The stock based fair value compensation is determined as of the date of the grant (measurement date) and is recognized over the vesting

Accounting Pronouncements

management reviewed all recently-issued accounting standard updates (“ASU’s”) not yet adopted by our company and does

not believe the future adoptions of any such ASU’s may be expected to cause a material impact on our consolidated

financial condition or the results of our operations.

Sheet Arrangements

have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial

condition, changes in financial position, revenues and expenses, results of operations, liquidity, capital expenditures or capital resources

that are material to stockholders.

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.

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

our development plans, any commercialization efforts or other operations.

We may not be able to secure financing on favorable terms,

or at all, to meet our future capital needs.

In addition, even if we are able to obtain sufficient funding to commence our business operations,

we may need to pursue additional financing in the future to make expenditures and/or investments to support the growth of our business

and may require additional capital to pursue our business objectives and respond to new competitive pressures, pay extraordinary expenses

or fund our growth, including through acquisitions.

Additional funds, however, may not be available when we need them on terms that are

acceptable to us, or at all.

If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it,

our ability to commence our proposed business operations, to continue to grow and support our business and to respond to business challenges

could be significantly limited.

and Qualitative Disclosures About Market Risk.

5 unchanged sentences

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