TerraVolt Holdings, Inc. 10-K

Item 1. Business. We are a data center infrastructure developer that is developing a large-scale, geothermal powered data center campus in Southern California. Our development site is located in Imperial County on the edge of California’s Lithium Valley, which is one of the world’s largest known geothermal and lithium resources. Imperial County has an abundance of geothermal energy that radiates from a shallow lava flow between the North America and Pacific tectonic plates. The potential geothermal energy that can be harvested for baseload data center power with flash, binary, and advanced closed-loop geothermal technologies is projected to be in the tens of gigawatts. Over the past three years, we have been working with Imperial County government officials, Imperial County Planning & Development, the Imperial County Board of Supervisors, Imperial Irrigation District (“IID” - the local electric utility), Imperial Valley Economic Development Corp and various established local geothermal power producers, as well as closed-loop geothermal technology companies to develop a portfolio of geothermal energy resources to power a large-scale, master-planned data center campus. In July 2024, we canceled an option to purchase an 80-acre site and optioned a new 315-acre site for our data center campus development, and we are in the process of contracting an additional 320 adjacent acres that will be used for onsite geothermal power production in the future. Combined, these properties will create our master planned, 635-acre, vertically-integrated, geothermal-powered data center campus. The overall infrastructure is planned to include a switchyard/substation to connect off-site power through the local grid and onsite geothermal power production to our data center buildings, connections for natural gas for back-up generators, and diverse fiber paths for internet connectivity, water/sewer, and other utilities and services required to build and operate data center facilities on the campus. Overall, the site is being planned to support: ● Onsite production of a gigawatt or more of geothermal power; ● A switchyard for offsite geothermal/solar/battery power connections from providers through the local grid; ● Twelve 25-acre building lots, each of which can support up to 250,000 square feet of data center buildings; and ● Connections for gas, water, sewer and fiber connectivity. We plan to offer hyperscale and data center development companies the following options: ● Powered land leases (building lots with power) ● Powered shell leases (a basic building with power) ● Build-to-suit leases (completed buildings with power based on a customer’s design) ● Co-development with data center developers (we and a data center developer will jointly build out a section of the campus) 1 We plan to lease powered building lots or powered shell buildings, or to provide build-to-suit completed buildings, to large enterprise information technology (IT) companies that are creating or addressing the growing demand for AI, Cloud and High-Performance Computing (HPC) digital services. We are currently in discussions with a number of these companies and, based upon the interest we have received thus far 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. In addition to our Southern California site, we are identifying and evaluating sites in other states that have adequate land, geothermal resources and internet connectivity that can support a one gigawatt or larger data center campus. We believe there are numerous areas in the country where advanced closed loop geothermal technology can economically harvest energy for onsite use in data centers and other energy intense industries. Data centers are highly specialized and secure buildings that house networking, storage and communications technology infrastructure, including servers, storage devices, switches, routers and fiber optic transmission equipment. They are designed to provide the space, power, cooling and network connectivity necessary to efficiently operate mission-critical IT equipment. Telecommunications carriers and internet providers typically provide network access into a data center through optical fiber connections. The demand for data center infrastructure is being driven by many factors, but most importantly by significant growth in data and increased demand for data processing and storage infrastructure. The market for data center facilities includes established “traditional” enterprises that are web-enabling their applications and business processes, as well as cloud-centric companies with sophisticated technology requirements. There are many types of data centers and service models available in the marketplace. Generally, their classification depends on whether they are owned by one or many organizations, how they fit into the topology of other data centers, what technologies they use for computing and storage, and even their energy efficiency. However, there are four main types of data centers: ● Enterprise Data Centers . These are built, owned and operated by companies requiring data storage for their own purposes and are optimized for their end users. Most often they are housed on the corporate campus of the owner. ● Managed Services Data Centers . These data centers are managed by a third party (or a managed services provider) on behalf of a company requiring data storage. The operating company leases the equipment and infrastructure instead of buying it. ● Wholesale Colocation Data Centers . In the case of colocation (“colo”) data centers, a company rents space within a data center owned by others and located off the company’s premises. The colocation data center hosts the infrastructure: building, cooling, bandwidth, security, etc., while the company provides and manages the components, including servers, storage and firewalls. ● Cloud Data Centers . In this off-premises form of data center, data and applications are hosted by a cloud services provider, such as Amazon Web Services (AWS), Microsoft (Azure), or IBM Cloud or other public cloud provider. We are developing our business model to compete in the data center infrastructure development segment of the data center industry, which is focused on providing ready-to-build-on data center campuses to companies that provide the processing, networking and storage of data. With the move to treat data as an asset, the data services market is expected to experience significant growth over the next decade. Industry automation and digital businesses are expanding, and these businesses are expected to require huge amounts of data for their businesses. North America is the most advanced region globally and we believe ready-to-build-on data center platforms are in high demand. In developing our master-planned, geothermal-powered data center campus, we have had numerous discussions with several large companies that could lease all or part of our data center campus, with the intention of cultivating long-term strategic relationships with these companies once they become our tenants 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 ready-to-build-on platform will provide clean-energy power, flexibility, reliability and security delivered through a tailored, customer-service-focused offering that will be designed to foster long-term relationships. Our plan is to focus on technology and large cloud computing customers that are expanding their services rapidly in the public and private cloud environments to provide them with clean-energy-powered solutions that address their current and future needs. We expect that our clean energy, geothermal-powered building platform design will allow us to offer power resiliency, and the opportunity for expansion as the needs of our customers grow. 2 Plan of Operations As of the date of filing of this Report, we are 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. Closed-loop geothermal systems (also known as “advanced geothermal systems” or “AGS”) are a type of engineered geothermal energy system containing subsurface working fluid that is heated in a hot rock reservoir without direct contact with rock pores and fractures. Instead, the subsurface working fluid stays inside a closed loop of deeply buried pipes that conduct Earth’s heat. Closed-loop geothermal systems are one of the prominent categories of next-generation geothermal systems in development today. The advantages of closed-loop geothermal technologies include: ● No need for a geofluid (water, geothermal brine, etc.) ● No need for the hot rock to be permeable or porous ● All the introduced working fluids can be recirculated with zero loss ● No fracking or stimulation is required to establish the engineered geothermal reservoir. These advantages mean closed-loop geothermal systems can be placed anywhere in the world as a source of carbon-free, baseload energy, with no impact to natural water resources and significantly reduced risk of induced seismicity. In July 2024, we contracted to purchase 315-acres of land and are planning to option an additional 320-acres in the next couple of months. We believe the site we have chosen to develop is a unique location that will provide us with a rare opportunity to vertically integrate clean, onsite, baseload geothermal energy with a 24/7 data center operation. We 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 climate commitments to have a compliant, clean digital footprint. As a result, we believe the availability of nearby clean geothermal energy for our Imperial County site will provide us with a significant competitive advantage in the marketplace. 3 Since mid-2022, we have contracted with leading data center and energy advisory firms to complete site, power and connectivity assessments, feasibility studies, engineering plans, master-planned development and design, and project benchmarking. These have included engaging: ● HDR 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 master planned data center campus. ● ZGlobal, Inc., 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. ● American 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. ● Linesight, 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. Based on the project assessment, feasibility and initial shovel-ready site plans that have been developed by HDR Engineering, and the benchmarking of the project by Linesight against 25 other large data center developments in the U.S. over the last 24 months, we plan to develop our 635-acre site in Imperial County, California to support up to three million square feet of data center facilities that utilize 2 gigawatts or more of baseload geothermal power. Our site will be zoned medium-industrial that is approved for geothermal power production and data center use. As we move through the development process, we will continue to refine and finalize the courses of action needed to implement our business plan and operations. As a result, our management has not fully determined our actual short-term or long-term capital requirements for our initial project, which management expects to be substantial. The Data Center Industry Demand for data centers is intense for both more facilities and greater power availability. Based on several reports from CBRE, JLL and other research firms, the data center industry is forecasting that data center capacity will triple within the next five years. In the fourth quarter of 2024, every data center under construction was pre-leased from two to five years in advance of occupancy. It is widely acknowledged that the key constraint for the growth of data centers is the availability of power. To illustrate the power demand, today’s data center developments start in increments of 100MW, while mega-campuses of 1GW or more are currently in construction. According to a recent report by Bloom Energy, the “ 2025 Data Center Power Report ”, demand for power in the U.S. is growing at an unprecedented rate after 20 years of flat demand. U.S. power needs are projected to rise by 83 terawatt-hours (TWh) in 2025 – the equivalent to powering an additional 7.7 million homes. According to such report, data centers are the largest driver of this growth. The U.S. is expected to see the highest share of new data centers outside of China. Since 2020, the U.S. colocation data center market alone has doubled, driven by digitization, cloud and AI. To power this increase, it was reported that by 2030, data centers could require 8%-12% of the total U.S. power demand compared to 3%-4% today. The U.S. grid has not been able to keep pace with this demand. While utilities can likely generate sufficient power to meet data center needs, they face bottlenecks with transporting that power via transmission and distribution infrastructure. As a result, grid interconnection takes longer, there is more congestion on the network, and capacity is increasingly expensive. If the U.S. continues to build high-voltage transmission infrastructure at its current rate, it is estimated that it will take at least 80 years to deliver the power that is needed over the next decade. Bloom Energy believes new data center projects will struggle to get timely access to power. In the U.S., 55 GW of data center IT capacity is expected to come online in the next five years. The industry is already seeing data center IT capacity buildout ramp up with ~20 GW of capacity announced so far for 2025, and it is expected to continue growing. Bloom Energy expects that at least another 35 GW of data center capacity will be announced within the next five years to meet projected data center demand. 4 In addition, the environmental impact of power generation and use is expected to become more stringent. Sustainability regulations are expected to become more difficult to meet, and it is expected that the use of renewable energy credits (RECs) to offset carbon footprints of conventional data center power sources will no longer qualify. Today, less than 5% of the energy directly powering data centers is clean. According to the 2024 United States Data Center Energy Usage Report “ Energy Analysis and Environmental Impacts Division, Lawrence Berkeley National Laboratory ,” energy consumption by U.S. data centers has been on the rise and reached 280 terawatt hours (TWh) in 2024 accounting for an estimated 5% to 6% of the nation’s total electricity usage. Projections for data center energy consumption by 2028 range from 325 TWh to 580 TWh. This annual usage would correspond to a power demand for data centers of between 74 GW and 132 GW, which equates to 6.7% to 12.0% of the anticipated total U.S. electricity consumption for 2028. According to a report by P & S Intelligence, a market research firm, the data center industry is large and on pace to grow rapidly, from $282 billion in 2024 to over $602 billion in 2030. The industry is not only large, but also very profitable. According to the Dgtl Infra report “ Data Center REITs, Stocks and ETFs: Investing in 2024 ”, in February 2024, the principal data center developer/operator companies averaged EBITDA margins of 50% or more on lease revenues. Those that are publicly traded were valued at an average of 25 times EBITDA. According to a February 2025 report by PwC (Pricewaterhouse Coopers LLP) on the “ Economic Contributions of Data Centers in the United States ,” data centers have become vital to the modern economy, underpinning digitalization, facilitating data driven decision-making, and supporting a broad spectrum of industries and services. Their role in storing, processing and managing data is essential for organizational success in the digital age. According to the PwC report, the total annual contribution of the data center industry to national employment - encompassing direct, indirect and induced effects from data center construction and operations - has increased from 2 .9 million jobs in 2017 to 4 .7 million jobs in 2023, marking a 60 percent rise over this period. The industry’s growth has notably surpassed that of the overall U. S. economy in recent years. From 2017 to 2023, direct employment in the U. S. data center industry expanded by over 50 percent, compared to 10 percent growth in employment for the United States overall during the same timeframe. According to PwC, the industry’s total annual contribution to national labor income surged from $209 billion in 2017 to $404 billion in 2023, reflecting a 93 percent increase. The increase in labor income has outpaced the increase in employment, suggesting that the U. S. data center industry supports higher earning jobs at the national level. Additionally, its annual contribution to U. S. value added, or gross domestic product (GDP), rose from $355 billion in 2017 to $727 billion in 2023, marking a 105% increase. Over this same period, the U. S. GDP grew by only 41 percent. Geothermal Energy According to a December 2024 IEA (International Energy Agency) report “ The Future of Geothermal Energy,” technology breakthroughs are unlocking huge potential for geothermal energy. New geothermal harvesting technologies are enabling access to previously untapped resources, while cost reductions and innovative financing models are paving the way for increasing the role of geothermal energy in energy systems around the world. Additionally, techniques developed by the oil and gas industry – including a strong understanding of the subsurface, drilling and completing wells, predicting fluid flows and managing large-scale projects – can rapidly drive down costs and help tap geothermal resources deeper in the ground. Advances in technology are opening new horizons for geothermal energy, which is expected to make it an attractive option for countries and companies all around the world. These techniques include horizontal drilling and hydraulic fracturing honed through oil and gas developments in North America. If geothermal can follow in the footsteps of innovation success stories such as solar photovoltaic (PV), wind, EVs and batteries, it can become a cornerstone of tomorrow’s electricity and heat systems as a dispatchable and clean source of energy. For the moment, geothermal meets less than 1% of global energy demand and its use is concentrated in a few countries with easily accessible and high-quality resources, including the United States, Iceland, Indonesia, Turkey, Kenya and Italy. 5 According to the IEA report, with continued technology improvements and reductions in project costs, geothermal could meet up to 15% of global electricity demand growth by 2050. This would mean the cost-effective deployment of as much as 800 GW of geothermal power capacity worldwide, producing almost 6,000 terawatt-hours per year, which is equivalent to the current electricity demand today of the United States and India combined. Geothermal is a versatile, clean and secure energy source that can provide around-the-clock electricity generation, heat production and storage. As the energy source is continuous, geothermal power plants can operate at their maximum capacity throughout the day and year. On average, global geothermal capacity had a utilization rate over 75% in 2023, compared with less than 30% for wind power and less than 15% for solar PV. In addition, geothermal power plants can operate flexibly in ways that contribute to the stability of electricity grids, ensuring demand can be met at all times and supporting the integration of variable renewables such as solar PV and wind. According to the IEA report, investment in geothermal is growing. Governments, oil and gas companies and utilities are among those looking for investment opportunities in geothermal. If deep cost reductions for next-generation geothermal can be delivered, total investment in geothermal could reach $1 trillion cumulatively by 2035 and $2.5 trillion by 2050. At its peak, geothermal investment could reach $140 billion per year, which is higher than current investment in onshore wind power globally. As a dispatchable source of clean power, geothermal is also attracting interest from stakeholders beyond the energy industry, including technology companies looking to meet the fast-growing demand for electricity in data centers. Competition The competition in the data center industry is primarily driven by the increasing presence of small- and large-scale service providers globally, and we will compete with numerous data center developers, and public and private owners and operators of technology-related real estate and data centers. The key participants in the data center market with which we will compete are infrastructure developers, such as Tract, ScaleUp, Stream, Quantum Loophole and Cloverleaf Infrastructure, and data center companies such as Digital Realty, Equinix, CyrusOne, QTS, Vantage and Compass, among many others. In addition, we may face competition from other new entrants into the data center market. Many of our current and potential competitors may have significant advantages over us, including greater name recognition, longer operating histories, pre-existing relationships with current or potential customers, significantly greater financial, marketing and other resources, ownership of more data centers and data centers that are more broadly distributed geographically, access to less expensive power, and more robust interconnected hubs in certain geographic markets. All of these potential advantages could allow competitors to respond more quickly to new or changing opportunities. In addition, once we are operational, if our competitors offer space, power and/or interconnection services at rates below current market rates, or below the rates we are then charging our customers, we may lose potential customers or be pressured to reduce our rental rates below those we are then charging or have modelled in order to retain customers when our customers’ leases expire. As a new entrant into the data center marketplace, we will compete against the larger, more established and better capitalized companies that today control the majority of market share. We believe our principal advantages will be our location, which provides us with access to an abundance of reasonably-priced onsite baseload geothermal energy to power a 24/7 data center operation, low-latency internet connectivity to major market hubs, and our proximity to the Southern California market and the multitudes of companies utilizing high-performance computing that want close-by data center space. As a developer of data center infrastructure, we also compete for the services of key third-party service providers, including engineers and contractors with expertise in the development of onsite power production and data centers. The competition for the services of specialized contractors and other third-party providers required for the development of onsite power production data centers is intense, increasing the cost of engaging such providers and the risk of delays in completing our development projects. 6 Finally, we face competition from real estate developers in our sector and in other industries for the acquisition of additional properties suitable for power production and data center developments. Such competition may reduce the number of properties available for acquisition or development, increase the price of these properties and reduce the demand for data center space in the markets we seek to serve. Intellectual Property Currently, our intellectual property consists of the feasibility, assessment, industry benchmarking and shovel-ready site development plans that have been completed for us by industry leading consulting firms over the last two plus years. Our intellectual property portfolio will grow as we complete the development of our onsite geothermal power production systems that will be vertically integrated with our ready-to-build-on, clean-energy powered data center campus. We intend to rely on a combination of patent, copyright, trademark and trade secret laws in the United States and other jurisdictions, as well as contractual protections, to protect our proprietary technology, methods and offerings. However, as of the date of this Report, we do not have any patents or registered trademarks. We cannot provide any assurance that our proprietary rights with respect to our onsite geothermal power production systems vertically-integrated with our ready-to-build-on, clean-energy powered data center campus, and the services we will offer will be viable or have value in the future since the validity, enforceability and type of protection of proprietary rights in these industries are uncertain and continuingly evolving. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our design, systems and services or to obtain and use information that we regard as proprietary. Policing unauthorized use of our designs and services is difficult, and while we are unable to determine the extent to which piracy of our designs, systems and services will exist, intellectual piracy can be expected to be a persistent problem. In addition, the laws of some foreign countries do not protect proprietary rights to as great an extent as do the laws of the United States, and effective copyright, trademark, trade secret and patent protection may not be available in those jurisdictions. Our means of protecting our proprietary rights may not be adequate to protect us from the infringement or misappropriation of such rights by others. Further, in recent years, there has been significant litigation in the United States involving patents and other intellectual property rights in the data center design, systems and service offerings and Internet-related data management industries. We can become subject to intellectual property infringement claims as the number of our competitors grows and our services overlap with competitive offerings. These claims, even if not meritorious, could be expensive to defend and could divert management’s attention from operating our business. If we become liable to third parties for infringing their intellectual property rights, we could be required to pay a substantial award of damages and to develop non-infringing design, systems and service offerings, obtain a license or cease providing the services that contain the infringing intellectual property. We may be unable to develop non-infringing data center design, systems and service offerings or obtain a license on commercially reasonable terms, if at all. Employees We currently have three full-time employees, two of whom are our executive officers. None of our employees is represented by a collective bargaining agreement, and we have never experienced any work stoppage. We believe we have good relations with our employees. Corporate History and Recent Developments We were incorporated pursuant to the laws of the State of Nevada on March 20, 2002 under the name Integrated Brand Solutions Inc., and on February 6, 2006, we changed our name to Upstream Biosciences Inc. From 2006 to December 2009, our company operated as a biotechnology company, and from 2010 until May 2013, our company had no operating business. On July 11, 2013, we changed our corporate name to RealSource Residential, Inc. Our initial business strategy in 2013 was to engage in various real estate related businesses. However, in 2016 we disposed of all of our real estate and other assets and continued operations as a public “shell” company. On December 20, 2018, we changed our corporate name from RealSource Residential, Inc. to CalEthos, Inc. 7 In early 2021, we determined there was a sizable opportunity to develop and manufacture high-performance computer systems for the cryptocurrency mining industry. In August 2021, in connection with a $3.5 million capital raise, our board of directors determined that we were no longer a shell company, as defined in Rule 12b-2 of the Exchange Act. During the development of our computer chip and system in Korea, we had also developed a plan to build a large-scale, clean-energy powered, containerized, immersion-cooled data center operation in Southern California to support the use of the systems we were developing for our company and for others. However, following the decline of the bitcoin market in early 2022, we decided to abandon our chip and system development efforts and we determined that we could develop a profitable business by offering wholesale data center colocation services to a larger customer base of hyperscale and enterprise IT companies. Item 1A. Risk Factors. We are a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.