UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2022~~2023

☐	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 000-50331

~~CALETHOS~~CalEthos, ~~INC~~Inc.

(Exact name of registrant as specified in its charter)

Nevada		98-0371433
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

11753 Willard Avenue Tustin, California		92782
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (714) 352-5315

Securities registered under Section 12(b) of the Act:

None		N/A
Title of each class		Name of each exchange on which registered

Securities registered under Section 12(g) of the Act:

Common Stock, $0.001 par value

(Title of class)

Indicate by checkmark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by checkmark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒

Indicate by checkmark whether the registrant has (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The aggregate market value of the voting and non-voting common stock, other than shares held by persons who may be deemed affiliates of ~~the~~ the registrant, as of June 30, ~~2022~~2023, the last day of the registrant’s most recently completed second fiscal quarter, was $132,~~041~~770,~~055~~711, computed by reference to the closing sales price for the registrant’s common stock on June 30, ~~2022~~2023, as reported on The OTC Pink Market.

As of ~~April~~March 1330, ~~2023~~2024 there were 1424,~~495~~330,~~621~~ 540 outstanding shares of the registrant’s common stock, par value $0.001 per share.

CalEthos, Inc.

Annual Report on Form 10-K

For the Fiscal-Year Ended December 31, ~~2022~~2023

TABLE OF CONTENTS

		Page
Cautionary Note Regarding Forward Looking Statements		ii
PART I
Item 1.	Business.	1
Item 1A.	Risk Factors.	46
Item 1B.	Unresolved Staff Comments	46
Item 2.	Properties.	4
Item 1C.	Cybersecurity	6
Item 3.	Legal Proceedings.	4
Item 2.	Properties.	6
Item 4.	Mine Safety Disclosures	4
Item 3.	Legal Proceedings.	6
Item 4.	Mine Safety Disclosures	6
PART II
Item 5.	Market for Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Market Information.	57
Item 6.	Selected Financial Data.	57
Item 7.	Management’s Discussion and Analysis of Financial Condition and Result of Operations.	58
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk.	913
Item 8.	Financial Statements and Supplementary Data.	913
Item 9.	Changes In and Disagreements with Accountants On Accounting and Financial Disclosure.	1013
Item 9A.	Controls and Procedures.	1013
Item 9B.	Other Information.	1114
PART III
Item 10.	Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(A) of the Exchange Act.	1215
Item 11.	Executive Compensation	1518
Item 12.	Security Ownership of Certain Beneficial Owners and Management	2024
Item 13.	Certain Relationships and Related Transactions and Director Independence.	2125
Item 14.	Principal Accountant Fees and Services.	2125
Part IV
Item 15.	Exhibits	2226

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The statements contained in this report with respect to our financial condition, results of operations and business that are not historical facts are “forward-looking statements”. Forward-looking statements can be identified by the use of forward-looking terminology, such as “anticipate”, “believe”, “expect”, “plan”, “intend”, “seek”, “estimate”, “project”, “could”, “may” or the negative thereof or other variations thereon, or by discussions of strategy that involve risks and uncertainties. Management wishes to caution the reader of the forward-looking statements that any such statements that are contained in this report reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties and other factors, including, but not limited to, economic, competitive, regulatory, technological, key employees, and general business factors affecting our operations, markets, growth, services, products and other factors, some of which are described in this report and some of which are discussed in our other filings with the Securities and Exchange Commission. These forward-looking statements are only estimates or predictions. No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of risks facing our company, and actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events.

Important factors to consider in evaluating any forward-looking statements include:

● our ability to finance and complete the design and construction of our proposed data center operation; ● our ability to implement our business plan; ● our ability to attract key personnel; ● our ability to operate profitably; ● our ability to efficiently and effectively finance our operations; ● inability to achieve future sales levels or other operating results; ● inability to raise additional financing for working capital; ● inability to efficiently manage our operations; ● the inability of management to effectively implement our strategies and business plans; ● the unavailability of funds for capital expenditures and/or general working capital; ● the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require management to make estimates about matters that are inherently uncertain; ● deterioration in general or regional economic conditions; ● changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate; ● adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;

● our ability to implement our business plan;

● our ability to attract key personnel;

● our ability to operate profitably;

● our ability to efficiently and effectively finance our operations;

● inability to achieve future sales levels or other operating results;

● inability to raise additional financing for working capital;

● inability to efficiently manage our operations;

● the inability of management to effectively implement our strategies and business plans;

● the unavailability of funds for capital expenditures and/or general working capital;

● the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require management to make estimates about matters that are inherently uncertain;

● deterioration in general or regional economic conditions;

● changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate;

● adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;

These risk factors should be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. All written and oral forward looking statements made in connection with this report that are attributable to our company or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Given these uncertainties, we caution investors not to unduly rely on our forward-looking statements. We do not undertake any obligation to review or confirm analysts’ expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events, except as required by applicable law or regulation.

Notwithstanding the above, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), expressly state that the safe harbor for forward-looking statements does not apply to companies that issue penny stock. If, as now, we are considered to be an issuer of penny stock, the safe harbor for forward-looking statements may not apply to us at certain times.

Throughout this report, unless otherwise designated, the terms “we,” “us,” “our,” “the Company” and “our company” refer to CalEthos, Inc., a Nevada corporation. All amounts are in U.S. Dollars, unless otherwise indicated.

Item 1.

Business.

~~Corporate~~We ~~History~~are in the early stages of implementing our plan for the construction and ~~Recent~~operation ~~Developments~~of clean-energy-powered data centers to lease 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. 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.

WeThere ~~were~~are ~~incorporated~~many ~~pursuant~~types toof ~~the~~data ~~laws~~centers ofand ~~the~~service ~~State~~models ofavailable ~~Nevada~~in onthe ~~March~~marketplace. 20Generally, ~~2002~~their ~~under~~classification ~~the~~depends ~~name~~on ~~Integrated~~whether ~~Brand~~they are ~~Solutions~~owned ~~Inc.,~~by ~~and~~one ~~on February~~or 6,many ~~2006~~organizations, wehow ~~changed~~they ~~our~~fit ~~name~~into tothe ~~Upstream~~topology ~~Biosciences~~of ~~Inc.~~other ~~From~~data ~~2006 to December 2009~~centers, ~~our~~what ~~company~~technologies ~~operated~~they asuse afor ~~biotechnology~~computing ~~company~~and storage, and ~~from~~even ~~2010~~their ~~until~~energy ~~May~~efficiency. ~~2013~~However, ~~our~~there ~~company~~are ~~had~~four nomain ~~operating~~types ~~business.~~of data centers:

~~On May~~● ~~24,~~Enterprise ~~2013~~Data Centers. These are built, ~~our~~owned ~~then~~and ~~majority~~operated ~~stockholders~~by ~~sold~~companies and are optimized for their ~~interests~~end inusers. ~~our~~Most ~~company~~often tothey ~~RealSource~~are ~~Acquisition~~housed ~~Group,~~on ~~LLC,~~the corporate campus. ● Managed Services Data Centers. These data centers are managed by a ~~Utah~~third ~~limited liability~~party (or a managed services provider) on behalf of a company,. The company leases the equipment and ~~Chesterfield~~infrastructure ~~Faring~~instead ~~Ltd~~of buying it. ● Wholesale Colocation Data Centers. In colocation (“colo”) data centers, a ~~New~~company ~~York~~rents ~~corporation,~~space within a data center owned by others and onlocated ~~July~~off ~~11,~~company ~~2013,~~premises. weThe ~~changed~~colocation ~~our~~data ~~corporate~~center ~~name~~hosts tothe ~~RealSource Residential~~infrastructure: building, ~~Inc.~~cooling, ~~Our~~bandwidth, ~~initial~~security, ~~business~~etc., ~~strategy~~while inthe ~~2013~~company ~~was~~provides toand ~~engage~~manages inthe ~~various~~components, ~~real~~including ~~estate~~servers, ~~related~~storage, ~~businesses~~and firewalls. ~~However,~~● inCloud ~~2016~~Data ~~we disposed~~Centers. ofIn ~~all~~this off-premises form of ~~our~~data ~~real~~center, ~~estate~~data and ~~other~~applications ~~assets~~are ~~and~~hosted ~~continued~~by ~~operations~~a cloud services provider such as aAmazon Web Services (AWS), Microsoft (Azure), or IBM Cloud or other public ~~“shell”~~cloud ~~company~~provider.

OnWe ~~September~~are ~~12,~~developing ~~2018,~~our M1business ~~Advisors,~~model ~~LLC,~~to acompete ~~Delaware~~in ~~limited~~the ~~liability~~wholesale ~~company~~colocation ~~controlled~~segment byof ~~Michael~~the ~~Campbell,~~data ~~our~~center ~~current~~services ~~Chief~~industry, ~~Executive Officer~~which ~~and~~is afocused on ~~director~~providing ofdata ~~our~~center ~~company~~space ~~(“M1~~to ~~Advisors”),~~companies ~~acquired~~that aprovide ~~controlling~~the ~~interest in our company~~processing, networking and onstorage ~~December~~of ~~20, 2018,~~data. weWith ~~filed~~the amove ~~Certificate of Amendment~~ to ~~our~~treat ~~Articles~~data as ofan ~~Incorporation~~asset, ~~with~~ the ~~Secretary~~data ofservices ~~State~~market ofis ~~the~~expected ~~State~~to ofexperience ~~Nevada~~significant togrowth ~~(i) change~~over ~~our~~the ~~corporate~~next ~~name~~decade. ~~from~~Industry ~~“RealSource~~automation ~~Residential,~~and ~~Inc.”~~digital businesses toare ~~“CalEthos~~expanding, ~~Inc.”~~ and ~~(ii)~~these businesses are expected to ~~increased~~require ~~our~~huge ~~authorized shares~~amounts of ~~common~~data ~~stock~~for ~~from~~their ~~4,000,000~~businesses. ~~shares~~North toAmerica ~~100,000,000~~is ~~shares.~~the most ~~This~~advanced ~~amendment~~region ~~became~~globally ~~effective~~and ~~immediately~~data ~~upon~~center ~~filing~~services onare ~~December 20,~~in ~~2018~~high demand.

Our intention in acquiring the public company was to use it as a financing and acquisition vehicle for building a chain of large-format cannabis retail superstores to serve the needs of the rapidly-growing Southern California market. Over the subsequent two-year period, management assembled a number of acquisitions for retail licenses, store leases and display agreements with numerous cannabis brands as part of executing its business plan. However, once the COVID 19 pandemic lockdowns hit in early 2020 and Federal legalization of cannabis did not materialize after the 2020 elections, funding for cannabis-related businesses became less available and by the end of 2020, we concluded it would be better to pursue other business opportunities for our public company. After months of research, we determined there was a sizable opportunity to develop and manufacture high-performance computer systems for the cryptocurrency mining industry. In March 2021, we created a new business plan to develop a five nanometer ASIC chip and bitcoin mining computer system in South Korea utilizing Samsung technology and foundry capacity.

On November 5, 2021, we incorporated AIQ System Inc. (“AIQ”), as a wholly-owned subsidiary in Seoul, Republic of Korea to support our product development efforts and to manage all of our computer chip and system development teams and activities. During the subsequent eight months ended June 30, 2022, the bitcoin market went into decline, and we decided to abandon our chip and system development efforts and to discontinue the operations of AIQ as of July 1, 2022.

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. After the bitcoin market bottomed out in June 2022, we determined that we could develop a profitable business by offering data center colocation services to a larger customer base of enterprise companies.

As of July 1, 2022, we commenced our current operating plan to focus solely on the development and construction of clean-energy powered data centers that will utilize immersion and liquid-cooled and conventional energy efficient systems and will provide clean-energy-powered colocation services to large enterprise information technology (IT) customers.

To this end and to implement our going-forward plan, on March 28, 2023 we hired Joel Stone. a senior data center executive with 24 years of data center experience, as our President and Chief Operating Officer, and on March 30, 2023, we completed negotiations and signed an option agreement to acquire 80 acres of commercially-zoned land in Imperial County, California that is surrounded by nearby geothermal power plants and solar farms. We are currently in the process of negotiating with various power producers in the area to provide us with clean energy and with communication companies for access to their close-by long-haul and dark fiber networks.

With an experienced data center executive on board and the property under contract, we intend to complete a land use plan that will be submitted for approval to local authorities and to apply for permits to start construction. We expect, based on all related factors, that a submittable plan, which will include data center and infrastructure design, will take between four to six months to complete. Once submitted for approvals and permits, it is expected that it could take another three to six months or more before we receive the required permits for construction, and that the construction could take another six to eight months or more to complete depending on supply chain issues at the time for data center, electrical and communication connectivity components of the data center build. The foregoing time estimates are preliminary and are subject to change. In addition, there can be no assurance that our use plan will receive all required regulatory approvals or that we will be issued the required approvals or permits necessary to complete construction of the data center we intend to build.

As we move through the development process to build a clean-energy powered data center for enterprise IT customers, we will continue to refine and finalize the courses of action needed to implement our business plan and operations. As a result, management has not fully determined our actual short-term or long-term capital requirements, which management expects to be substantial.

In planning for our initial data centers, we are in discussions with several large companies that would 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 clean-energy powered wholesale colocation space 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. 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 solutions that address their current and future needs. We expect that our facilities and construction design will allow us to offer flexibility in rack density and power resiliency, and the opportunity for expansion as our customers’ needs grow.

Plan of Operations

As of the filing of this Report, we have ~~hired~~completed ~~Joel~~Phase ~~Stone~~I asand entered into Phase II of our ~~President~~data ~~and~~center ~~Chief~~development ~~Operating~~plans. ~~Officer~~In ~~and~~the initial phase of our project, we signed an option agreement on March 30, 2023 to acquire 80 acres of commercially-zoned land ~~for~~in ~~our~~Imperial ~~planned~~County, California ~~large~~that is surrounded by nearby geothermal power plants and solar farms. We believe this site is a unique location in that it will provide us with a rare opportunity to acquire commercially-~~scale,~~zoned ~~100%~~land on which we can combine nearby direct clean geothermal/solar 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 commitments to have an ESG-compliant, clean ~~energy~~digital footprint before 2030. As a result, ~~data~~we ~~center~~believe ~~operation~~the availability of nearby clean energy for our Imperial County site will provide us a significant competitive advantage in the marketplace.

ToIn ~~complete~~Phase ~~the~~I ~~initial phase~~ of our ~~planned~~development ~~data center~~plan, which we ~~are~~completed ~~now~~in ~~negotiating~~December ~~agreements for clean energy and fiber connectivity. Over the next couple of months~~2023, we ~~plan~~contracted ~~to finish negotiations~~ with ~~the~~leading ~~local~~data ~~geothermal~~center ~~and~~advisory ~~solar~~firms ~~power producers~~ to ~~deliver the~~complete ~~clean~~site, ~~energy we require to~~ power ~~our data center~~ and toconnectivity ~~complete~~assessments, ~~agreements~~feasibility ~~with~~studies, ~~multiple~~engineering ~~communication~~plans ~~providers for access to their close-by long-haul~~ and ~~dark~~project ~~fiber~~benchmarking. ~~communication~~Phase ~~networks~~I ~~for~~of ~~data~~our ~~center~~plan ~~connectivity.~~included:

~~We believe~~● ~~that~~Engaging ~~the~~HDR ~~significant~~Engineering, ~~experience~~Inc., ofa ~~our~~global ~~new~~professional ~~President~~services ~~and~~firm ~~Chief~~specializing ~~Operating Officer~~ in ~~both~~architecture, ~~building~~engineering, environmental and ~~operating~~construction ~~data~~services ~~centers and~~(“HDR ~~his~~Engineering”), ~~industry~~to ~~relationships~~complete ~~will~~a besite ~~instrumental~~assessment, inproject ~~helping~~feasibility usstudy, ~~acquire~~and the ~~required~~initial ~~third~~shovel-~~party~~ready ~~resources~~site ~~and~~development ~~assets~~plan ~~and~~for ~~the~~our ~~management team~~Imperial ~~and~~County ~~staff~~site. ~~necessary~~● toEngaging ~~execute~~ZGlobal, ~~our business plan~~Inc., Ina ~~addition~~power toengineering ~~acquiring~~and ~~the~~energy ~~principal~~solutions ~~components~~firm (~~experienced personnel~~“ZGlobal”), ~~land, clean~~to ~~energy,~~assess all available power and ~~fiber~~transmission ~~connectivity)~~routes ~~for~~in ~~our~~the ~~data~~immediate ~~center~~area ~~plan,~~of wethe ~~are~~site ~~also~~and into ~~the~~develop ~~process~~a ofplan ~~developing~~to ~~partnerships~~access ~~with~~power ~~leading-edge containerized~~from close by geothermal and ~~modular~~solar ~~designed~~producers ~~immersion~~via Behind-The-Meter, Off-Take and ~~liquid~~Power ~~cooled~~Purchase ~~data~~Agreements ~~center~~directly ~~system~~and ~~providers,~~through ~~whose~~agreements ~~systems~~with wethe ~~will~~local ~~offer~~grid ~~for~~operator. ~~rent~~● ~~to our~~Engaging ~~customers.~~American WeDark ~~believe~~Fiber, ~~that~~Inc., ~~when~~a ~~construction~~provider of ~~our~~dark ~~data~~fiber ~~center~~connectivity isto ~~complete~~municipalities, ~~the~~carriers, ~~principal~~anchor ~~differentiators of~~institutions, ~~our~~content ~~data~~developers, data-center ~~operation~~operators, inand ~~the~~other ~~marketplace~~sophisticated ~~are~~private ~~expected~~network users, to bedevelop –a werobust ~~are~~fiber-based ~~powered~~infrastructure bythat ~~100%~~will ~~certified~~provide ~~clean~~multiple ~~energy,~~diverse ~~and~~geographic weroutes ~~provide leading-edge~~of ~~immersion~~connectivity ~~and~~to ~~liquid~~our ~~cooled~~ data center ~~systems~~site. ~~that~~● ~~will~~Engaging ~~support~~Linesight, ~~the~~a ~~ever-increasing~~construction ~~power~~consultancy services firm (“Linesight”), to provide cost benchmarking of initial design concepts, and ~~cooling~~to ~~needs~~assist with desktop pre-qualification of ~~high~~architect-~~performance enterprise~~engineering ITfirms ~~computer~~and ~~systems.~~construction managers

InBased on the ~~colocation~~project ~~segment~~assessment, offeasibility ~~the~~and ~~data~~initial ~~center~~shovel-ready ~~industry~~site plan developed by HDR Engineering, and the ~~customer~~benchmarking ~~typically~~of ~~leases~~ the ~~building/shell~~project by orLinesight against 25 other large data ~~hall/suite~~center ~~level rather~~developments ~~than~~in the ~~smaller~~U.S. ~~scale~~over ofthe ~~retail~~last ~~colocation~~24 ~~(racks/cages/cabinets).~~months, ~~Projects~~we ~~generally~~plan ~~involve~~to ~~heavily~~develop our 80-~~customized~~acre ~~builds~~parcel in Imperial County, ~~although many~~California ~~operators~~to insupport ~~this~~a ~~segment~~300-megawatt ~~are~~(MW) ~~moving~~critical ~~toward~~IT aload ~~mix~~data center campus of ~~build-~~up to~~-suit~~ ~~and~~one ~~turnkey~~million ~~offerings.~~square ~~Customers~~feet of rentable colocation ~~are typically~~space ~~hyperscale~~utilizing ~~content~~baseload geothermal and ~~media/entertainment~~supplemental ~~providers,~~solar ~~scale-oriented~~from ~~cloud~~local ~~service~~power ~~providers~~producers. Our site is industrial zoned, approved ~~hosting~~for data center use and ITtoday ~~managed~~has ~~services~~access to up to 500MW of clean energy that can be delivered to it through two separate highly-reliable ~~providers,~~230kV ~~and~~high-voltage ~~telecommunications~~transmission ~~companies~~lines.

Currently, due to the ever-growing amounts of digital data being created on social media, and from internet streaming, gaming and overall internet use, and the need for digital data to be readily available for consumption on the internet, and because of the migration of software and computer applications to the cloud and their use, we believe there is a severe shortage of data center space in the global market. In some of the principal U.S. markets, there are wait times of up to a five-years for additional capacity. The need for new data center space is expected to continue growing at a high rate for the foreseeable future based on following recent industry reports:

Data Center Market - The market size is estimated to grow by $615.96 billion from 2021 to 2026, growing at a compound annual growth rate (CAGR) of 21.98% according to Technavio’s February 2022 market report.

Green Data Centers - The U.S. Green Data Center Market Size was valued at $13.79 billion in 2022 and is expected to reach $24.20 billion by 2028, growing at a CAGR of 9.82% during 2022 to 2028 according to Arizton’s March 2023 industry report.

Data Center as a Services (DCaaS) - The global data center as a service market size was valued at $52.7 billion in 2021 and is expected to expand at a CAGR of 26.2% from 2022 to 2030 according to Grand View Research’s January 2022 - Data Center As A Service Market Size & Growth Report.

We believe the Imperial County, California site we have optioned is a unique location in that it will provide us with a rare opportunity to acquire commercially-zoned land on which we can combine nearby direct clean geothermal/solar energy with a 24/7 data center operation.

We also 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 enterprise IT companies to meet their shareholder and customer commitments to have an ESG-compliant, clean digital footprint before 2030.

We are developing our business model to compete in the colocation segment of the data center services industry, which is focused on providing 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 data center services are in high demand.

At the end of December 2023, we started Phase II of our data center development plan. Phase II includes 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 customer pre-qualification requirements. During this phase, we will also develop requests for proposals (RFPs) and contract packages for contracting an engineering/design firm and general contractor. In addition, we will ramp up our operating staff to support the infrastructure and buildings design processes and the development of building plans and the permit packages. We will also undertake and complete utility studies, transmission planning, substation design and the next level of geotechnical testing.

Over the next few months, we plan to complete our negotiations with the local grid operator to deliver geothermal and solar power to our Imperial County site directly from local producers and to have selected and contracted our architect/engineering firm and general contractor. In addition, we expect that it will take three to six months to complete the necessary customer pre-qualifications and basic infrastructure and building designs required to negotiate a letter of intent with a customer that will lease all or a substantial portion of our planned data center capacity. We are currently in discussions with a number of companies that are interested in leasing wholesale colocation space under a long-term lease and we are entertaining build-to-suit arrangements with a number of potential customers. Based upon the interest we have received from potential customers, we expect that we will have a letter of intent signed by the end of the second quarter or the beginning of the third quarter of 2024 t lease all or a substantial part of the development.

We plan to start the design process for our initial data center in the beginning of May 2024 and to have plans and permit packages completed by the end of 2024. If those components of Phase II are completed as planned, we would then start the initial phase of construction in January of 2025.

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, 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

According to a March 2023 report of Prescient & Strategic Intelligence Pvt. Ltd., a market intelligence and consulting firm, the data center industry is large and on pace to grow rapidly, from $263 billion in 2022 to over $602 billion in 2030. The industry is not only large, but also very profitable. According to Dgtl Infra LLC, a digital infrastructure advisory firm, the larger data center developer/operator companies average 50% EBITDA on lease revenues. Those that are publicly traded are valued at an average of 25 times EBITDA.

A key metric for the industry is the cost per kilowatt-of-power-per-month ($/kW/Mo.), which drives lease revenues. According to the Evercore Digital Infrastructure Sector Update for the third quarter of 2023 (the “Evercore Report”) of Evercore, a leading global independent investment bank, hyperscale lease transactions (transactions involving the lease of 100MWs or more of data center capacity) in the U.S. are being consummated at $130/kW/Mo. or higher vs. $65-75 just three years ago, and some wholesale colocation customers are paying as high as $165/kW/mo.

Another key metric in the data center industry is the kilowatt (kW) of power-per-data-center-rack (the density of power a cabinet of servers or data storage systems consumes). According to the Evercore Report, historically, this metric has averaged 8-10kW per rack over the last ten years. However, because of artificial intelligence (AI) and other high performance computing (HPC) requirements, data center rack power densities are climbing upwards towards 100kW per rack. These higher rack densities require liquid-cooled systems rather than the conventional air-cooling methods that have been the standard for decades. Based on an average rack density of 20-40kW per rack, data center build costs over the last two to four years have averaged $10 to $15 million per megawatt. However, today, because of the new power and cooling requirements, build costs for data center developments are projected to be more in the range of $15 to $20 million per megawatt.

As a result of these changing dynamics, demand for data centers is intensive for both more facilities and greater power density. In the Evercore Report it was noted that during the third quarter of 2023, every data center under construction was pre-leased two to five years in advance of occupancy. The key constraint for the growth of data centers is the availability of power. However, in the Evercore Report, Evercore, noted that during the third quarter of 2023, on a nationwide basis, there was no availability of contiguous data center capacity above 10MW, and only three blocks of 5 MWs were available. To illustrate the power constraint, today’s data center developments start in increments of 100MW, while mega-campuses of 1GW or more are being planned.

To meet the growing demands of the digital world, it is projected by McKinsey & Company that the industry will increase energy consumption from 17GW today to over 35GW by 2030. This projected increase in demand for power has left data center developers and operators searching for electricity in any region with available power, land for construction and sufficient network bandwidth.

A second consideration is the environmental impact of power generation and use. Sustainability regulations are projected to become more difficult to meet, and it is expected that using renewable energy credits (RECs) to offset carbon footprints of conventional power sources will no longer qualify. Today, less than 5% of the energy powering data centers is clean.

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 developers, and public and private owners and operators of technology-related real estate and data centers. The key participants in the data center colocation market are Digital Realty ~~Trust~~, Equinix, ~~CenturyLink,~~ CyrusOne, QTS, and, ~~China Telecom Corporation Limited~~Vantage, Compass, among many others. ~~Business~~In ~~ventures~~addition, ~~throughout~~we may face competition from other new entrants into the ~~world~~data ~~are~~center ~~progressively~~market. Many of our current and ~~competing~~potential ~~for~~competitors ~~market~~may ~~share~~have bysignificant ~~providing~~advantages ~~services~~over tous, ~~arrange~~including ~~information~~greater name recognition, ~~store~~longer ~~data~~operating histories, pre-existing relationships with current or potential customers, significantly greater financial, marketing and ~~benefit~~other ~~from~~resources, ~~cloud~~ownership ~~services.~~of ~~This~~more data ~~move~~centers and data centers that are more broadly distributed geographically, access to less expensive power, and more robust interconnected ~~together~~hubs ~~with~~in ~~the~~certain ~~increasing~~geographic ~~demand~~markets. All of ~~businesses~~these potential advantages could allow competitors to ~~store~~respond ~~increasing~~more ~~amounts~~quickly ofto ~~media~~new or changing opportunities. In addition, once we are operational, if our competitors offer space, power and/or ~~other~~interconnection ~~information~~services at rates below current market rates, ~~represents~~or ~~gigantic~~below the rates we are then charging our customers, we may lose potential customers or be pressured to reduce ~~development~~our rental rates below those we are then charging or have modelled in ~~the~~order ~~market~~to ~~for~~retain ~~cloud~~customers ~~services~~when our customers’ leases expire.

~~The~~As a new entrant into the data center ~~services~~marketplace, ~~market~~we iswill ~~segmented~~compete byagainst ~~service~~the ~~(infrastructure~~larger, ~~cloud~~more established and ~~hosting,~~better ~~networks,~~capitalized ~~consulting~~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 local baseload geothermal and ~~virtualization),~~supplemental solar energy to power a 24/7 data- center ~~(Tier~~ 1operation, ~~Tier~~low-latency connectivity 2,to ~~Tier~~major 3market hubs, the various power distribution and ~~Tier~~cooling ~~4),~~designs ~~end-user~~that ~~industry~~we ~~(BFSI,~~will ~~Healthcare,~~employ ~~Retail,~~to ~~Manufacturing~~support a wide range of data center racking densities, and ITour proximity to the Southern California market and ~~Telecom),~~the ~~deployment~~multitudes ~~mode (On~~of companies utilizing high-~~premise~~performance computing ~~and~~that ~~Cloud),~~want ~~and~~close-by ~~geography~~data center space.

As a ~~new~~developer ~~entrant~~of ~~into~~clean-energy ~~the~~powered data center ~~marketplace~~space, we ~~will~~also compete ~~against~~for ~~larger, more established and better capitalized companies that today control~~ the ~~majority~~services of ~~market~~key ~~share.~~third-party Weservice ~~believe our principal advantages will be our location~~providers, ~~which~~including engineers ~~provides~~and uscontractors with ~~access~~ toexpertise anin ~~abundance~~the development of ~~reasonably-priced~~data ~~local~~centers. ~~geothermal~~The ~~and~~competition ~~solar~~for ~~energy~~the toservices ~~power~~of aspecialized ~~24/7 data center operation, the various~~contractors ~~immersion~~ and ~~liquid~~other ~~cooled~~third-party ~~data~~providers ~~center~~required ~~racking~~for ~~systems we~~the ~~will~~development ~~offer~~of asdata acenters ~~colocation~~is ~~service~~intense, ~~and~~increasing ~~our~~the ~~proximity~~cost toof ~~the~~engaging ~~Southern California~~such ~~market~~ providers and the ~~multitudes~~risk of ~~companies~~delays ~~utilizing~~in ~~high-performance~~completing ~~computing~~our ~~that~~development ~~want close-by data center space~~projects.

Finally, we face competition from real estate developers in our sector and in other industries for the acquisition of additional properties suitable for data center development. 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

Our intellectual property will consist of data center designs and systems for supporting ~~containerized~~, immersion and liquid cooled data center systems that we will deploy for wholesale colocation services to hyperscale and enterprise IT customers. We intend to rely on a combination of of patent, copyright, trademark and trade secret laws in the United States and other jurisdictions, as well as contractual protections, to protect our proprietary service offerings and data center management systems. 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 data center designs, systems or services 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 ~~one~~four ~~employee~~employees, ~~Joel~~three ~~Stone~~ of whom are our ~~President~~executive officers, and ~~Chief~~one ~~Operating~~of ~~Officer~~whom ~~and~~is our ~~other~~VP ~~officers~~of ~~and~~Data ~~directors~~Center ~~are~~Development. ~~serving~~None of our ~~company~~employees asare ~~consultants~~represented by a collective bargaining agreement, and ~~independent~~we have never experienced any work stoppage. We believe we have ~~contractors~~good relations with our employees.

3Corporate 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. in connection with the implementation of a plan for building a chain of large-format cannabis retail superstores to serve the needs of the rapidly-growing Southern California market. Over the subsequent two-year period, management assembled a number of acquisitions for retail licenses, store leases and display agreements with numerous cannabis brands as part of executing its business plan. However, once the COVID 19 pandemic lockdowns hit in early 2020 and Federal legalization of cannabis did not materialize after the 2020 elections, funding for cannabis-related businesses became less available and by the end of 2020, we concluded it would be better to pursue other business opportunities for our public company. After months of research, we determined there was a sizable opportunity to develop and manufacture high-performance computer systems for the cryptocurrency mining industry. In March 2021, we created a new business plan to develop a five nanometer ASIC chip and bitcoin mining computer system in South Korea utilizing Samsung technology and foundry capacity.

In August 2021, we hired an experienced chief technology officer from the chip industry to lead our product development and in September 2021, we closed a convertible debt financing of $3.5 million to fund the initial phase of product development. In connection with such capital raise, our board of directors determined that we are no longer a shell company, as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (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.

Item 1B.

Unresolved Staff Comments.

None.

ITEM 1C.

Cybersecurity

Risk Management and Strategy

While we are in our early stages of our business plan, we regularly assess risks from cybersecurity threats, monitor our information systems for potential vulnerabilities and test those systems pursuant to the our cybersecurity processes and practices, which are integrated into our overall risk management system. As we progress with the development of our business plans, we plan to use various security tools designed to help us identify, investigate, resolve and recover from security incidents in a timely manner.

To date, cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected and we believe are not reasonably likely to affect our company, including our business strategy, results of operations or financial condition.

Governance

One of the key functions of our board of directors is informed oversight of our risk management process, including risks from cybersecurity threats. Our board of directors is responsible for monitoring and assessing strategic risk exposure, and our executive officers are responsible for the day-to-day management of the material risks we face.

We take a risk-based approach to cybersecurity and have implemented cybersecurity policies throughout our operations that are designed to address cybersecurity threats and incidents.

Our Chief Executive Officer is primarily responsible for assessing and managing our material risks from cybersecurity threats with assistance from third-party service providers and outside counsel, as needed.

Our Chief Executive Officer oversees our cybersecurity policies and processes, including those described in “Risk Management and Strategy” above. Our cybersecurity risk management program includes tools and activities to prevent, detect and analyze current and emerging cybersecurity threats, and plans and strategies to address threats and incidents.

Item 2.

Properties.

We do not own any real property. Our executive office is located at 11753 Willard Avenue, Tustin, California 92782, in the office of Michael Campbell, our Chief Executive Officer. We are not charged rent for the use of this space. We believe our existing facilities are sufficient for our current operations.

Item 3.

Legal Proceedings.

We know of no material active or pending legal proceeding against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation.

Item 4.

Mine Safety Disclosures.

Not Applicable.

PART II

Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases Of of Equity Securities.

Our common stock is listed for quotation on the OTC Pink Market under the trading symbol “BUUZ.”. Trading in our common stock in the over-the-counter market has been limited and the quotations set forth below are not necessarily indicative of actual market values. The following table sets forth, for the periods indicated, the high and low closing bid prices for each quarter within the last two fiscal years ended December 31, ~~2022~~2023 as reported by the quotation service operated by the OTC Markets Group. All quotations for the OTC Pink Market reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

Quarter Ended	High		Low
December 31, 2022	$	2.46	$	1.06
December 31, 2023	$	1.00	$	0.50
September 30, 2023		0.50		0.50
June 30, 2023		0.74		0.50
March 31, 2023		0.74		0.50
December 31, 2022		2.46		1.06
September 30, 2022		2.50		1.80
June 30, 2022		2.80		1.70
March 31, 2022		2.95		1.96
December 31, 2021		4.25		1.97
September 30, 2021		2.70		1.92
June 30, 2021		3.30		0.40
March 31, 2021		1.00		0.03

On April 131, ~~2023~~2024, the closing bid price for our common stock on the OTC Pink Market as reported by the quotation service operated by the OTC Markets Group was $02.7462.

Transfer Agent

Nevada Agency and Transfer Company is the registrar and transfer agent for our common shares. Their address is 50 West Liberty, Suite 880 Reno, Nevada, 89501 Telephone: 775-322-0626, Facsimile: 775-322-5623.

Holders of Our Common Stock

As of ~~April~~March 1330, ~~2023~~2024, there were 56 67 registered holders of record of our common stock. As of such date, 1425,~~495~~330,~~621~~540 shares of common stock were issued and outstanding. The number of our shareholders of record excludes any estimate by us of the number of beneficial owners of shares held in street name, the accuracy of which cannot be guaranteed.

Dividend Policy

We have not declared or paid any cash dividends since inception. Although there are no restrictions that limit our ability to pay dividends on our common shares, we do not intend to pay dividends for the foreseeable future.

Item 6. Selected Financial Data.

We are a “smaller reporting company” as defined by Regulation S-K and as such, are not required to provide the information contained in this item pursuant to Regulation S-K.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operation.

The following discussion should be read in conjunction with our audited financial statements and the related notes that appear elsewhere in this Annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our 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.

Our audited financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.

Plan of Operations

It 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.

To 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. To this 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.

We 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.

It 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.

We 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.

~~Results of Operations for the years ended December 31, 2022 and 2021~~8

~~The~~Results ~~following~~of ~~summary~~Operations ~~should be read in conjunction with our audited financial statements~~ for the years ended December 31, ~~2022~~2023 and ~~2021.~~2022

	For the years ended December 31,
	2022			2021
Revenues	$	-		$	-
Operating Expenses
Professional fees		667,000			1,033,000
Restricted stock grants		(4,791,000	)		5,062,000
Impairment loss		154,000			-
General and administrative		52,000			57,000
Total operating (income) expenses		(3,918,000	)		6,152,000
Income (loss) from operations		3,918,000			(6,152,000	)
Financing costs		(1,744,000	)		(597,000	)
Interest income		7,000			-
Net income (loss)	$	(2,181,000	)	$	(6,749,000	)

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

	For the years ended December31,
	2023			2022
Revenues	$	-		$	-
Operating Expenses
Professional fees		344,000			667,000
Equity-based compensation (gain)		3,032,000			(4,791,000	)
Payroll and related cost		51,000			-
Impairment loss		-			154,000
General and administrative		38,000			52,000
Total operating expenses (income)		3,465,000			(3,918,000	)
(Loss) income from operations		(3,465,000	)		3,918,000

Financing costs		(252,000	)		(1,744,000	)
Gain on settlement of payable		23,000			-
Loss on extinguishment of debt		(986,000	)
Interest income		50,000			7,000
Total other expense		(1,165,000	)		(1,737,000	)
Net (loss) income	$	(4,630,000	)	$	2,181,000

Revenue

For the years ended December 31, ~~2022~~2023 and ~~2021~~2022, we had no revenues.

Operating Expenses

Professional fees

Our professional fees decreased from $1667,~~033,~~000 infor the year ended December 31, ~~2021~~2022 to $~~667~~344,000 infor the year ended December 31, ~~2022~~2023, representing ~~which~~a decrease of approximately $323,000. Our professional fees of $344,000 is net of data center capitalized cost of ~~represented~~approximately $80,000. Therefore, the actual professional fees incurred for the year ended December 31, 2023, was approximately $424,000, a decrease of approximately $~~366~~243,000. The decrease of approximately $243,000 was attributable to a $141,000 reduction in the use of outside ~~professional~~contractors, ~~services~~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.

~~Restricted~~Equity-based ~~stock~~compensation ~~grant expense~~ (gain)

Our equity-based ~~restricted~~compensation ~~stock~~for ~~grant~~the ~~expense (gain)~~year ~~decreased~~ended ~~from~~December an31, ~~expense~~2023 ofis ~~$5,062,000~~attributable into the ~~year~~stock ~~ended~~options ~~December~~and ~~31,~~warrants ~~2021~~issued to aour officers, ~~gain~~directors ofand ~~$(4,791,000)~~consultants induring the year ended December 31, ~~2022,~~2023 ~~which~~for ~~represented~~ a ~~decrease~~total expense of $93,~~853~~032,000. ~~brought~~Information with ~~about~~respect byto ~~the~~such ~~cancellation~~equity-based ofcompensation is set forth in Note 7 to our audited financial statements for the ~~stock~~year ~~grants~~ended December ~~made~~31, 2023 included elsewhere in ~~2021~~this Report.

Our 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

Our impairment loss ~~increased~~of ~~from nil in the year ended December 31, 2021 to~~ $154,000 in the year ended December 31, 2022, ~~which~~was ~~represented an increase of approximately $154,000~~ due to the impairment of intangibles and other assets as a result of the suspension of our South Korean subsidiary’s operations.

General and administrative expenses

Our general and administrative expenses decreased from $5752,000 in the year ended December 31, ~~2021~~2022 to $5138,000 in the year ended December 31, ~~2022~~ 2023, ~~which~~representing ~~represented~~ a decrease of approximately $614,000.

~~Financing~~Payroll ~~Costs~~and related expenses

~~Our~~For ~~financing~~the ~~cost~~year ~~increased~~ended ~~from~~December ~~$597~~31,~~000~~ in2022, ~~the~~we ~~year~~did ~~ended~~not ~~December~~have 31employees. Our first employee, ~~2021~~our toChief Operating Officer, was hired in March of 2023. The total payroll-related cost for this employee was approximately $1226,~~744,~~000 infor the year ended December 31, ~~2022~~2023, of which ~~represented an~~approximately ~~increase of~~ $1175,~~147,~~000. ~~Financing~~was ~~costs~~capitalized ~~increased~~as ~~due~~data tocenter ~~the amortization of debt issuance costs~~cost.

Financing costs

Our 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.

Gain on settlement of payable

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

Loss on extinguishment of debt

In 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.

Liquidity and Capital Resources

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

Working Capital

	As of December 31,
	2022			2021
	2023			2022
Current assets	$	2318,~~071,~~000		$	32,~~054~~071,000
Current liabilities		(51,~~214~~022,000	)		(35,~~632~~214,000	)
Working deficit	$	(3704,~~143,~~000	)	$	(~~578~~3,143,000	)

Our working capital decreased from a $~~578~~3,143,000 deficit as of December 31, ~~2021~~2022 to a deficit of $3704,~~143,~~000 as of December 31, ~~2022~~2023 for a a total change of $2,~~565~~439,000. The decline in our working capital was due to (i) ana ~~increase~~decrease in athe book basis of our convertible promissory notes, ~~book~~for ~~basis increasing due to~~ the ~~amortization~~December of2023 ~~debt~~conversion ~~issuance discounts~~ and (ii) the decrease in our cash and cash equivalents, which was used for the data center development.

Cash Flows

	For the years ended December 31,
	2022			2021
	2023			2022
Net cash used in operating activities	$	(~~820~~35,000	)	$	(~~565~~820,000	)
Net cash used in investing activities		(~~105~~1,730,000	)		(38105,000	)
Net cash provided by financing activities		~~(50,000~~-	)		3(50,~~652,~~000	)
Effect of exchange rate changes		(56,000	)		(25,000	)
Change in cash during the period		(~~980~~1,759,000	)		3(980,~~047,~~000	)
Cash, beginning of period		32,~~047~~067,000			-3,047,000
Cash, end of period	$	2308,~~067,~~000		$	32,~~047~~067,000

Cash flows from operations

Cash used in operating activities decreased to approximately $~~255~~35,000 in ~~2022~~2023 from approximately $~~382~~820,000 in ~~2021~~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.

Cash flow from investing

WeOur cash ~~made~~used ~~payments~~for ofinvesting ~~$105,000~~activities ~~in 2022~~was ~~and~~approximately $381,730,000 infor ~~2021~~the toyear anended ~~engineering~~December ~~and~~31, ~~design~~2023. ~~firm~~The ~~for~~primary ~~the~~use ~~design~~of ~~and~~cash was ~~development~~for ~~work~~expenditures for ~~our~~the ~~planned~~development ~~ASIC~~of ~~chip~~our ~~development~~data center.

Cash flows from financing

WeFor the ~~made~~year ~~payments~~ended ofDecember ~~$50~~31,~~000~~ ~~to reduce notes payable in 2022 and 2021. Additionally~~2023, in ~~2021,~~ we ~~received~~had ~~$3,592,000~~no ~~and~~financing ~~$150,000 in proceeds from the issuance of convertible debentures and notes payable, respectively~~activities.

Liquidity and Material Cash Requirements

Convertible Promissory Notes

As 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.

Cash Requirements

It is anticipated that we will incur expenses in the implementation of the 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.

Going Concern

The 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; (ii) the 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.

Our independent auditors included an explanatory paragraph in their report on our financial statements for the year ended December 31, ~~2022~~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.

Application of Critical Accounting Policies

The 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.

Principles of Consolidation

The consolidated financial statements include the accounts of ~~the~~our ~~Company~~company and ~~its~~our wholly -owned subsidiary from the formation date. All ~~material~~ material intercompany transactions and balances have been eliminated in consolidation.

Foreign Currency Translation

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

Debt and Debt Discounts

In 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.

We 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.

Stock-Based Compensation

We 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.

We 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 periods.

Recent Accounting Pronouncements

Our 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 ~~the~~our ~~Company’s~~ consolidated financial condition or the results of - our operations.

Off-Balance Sheet Arrangements

We 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.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide this information.

Item 8.

Financial Statements and Supplementary Data.

Our financial statements and notes thereto and the reports of RBSM LLP, our independent registered public accounting firm, are set forth on pages F-1 through F-1817 of this Report.

Item 9.

Changes In and Disagreements With Accountants On Accounting and Financial Disclosure.

Not Applicable

Item 9A.

Controls and Procedures.

Disclosure Controls and Procedures

As required by paragraph (b) of Rules 13a-15 or 15d-15 under the Exchange Act, our principal executive officer and principal financial officer evaluated our company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K. Based on this evaluation, these officers concluded that as of the end of the period covered by this Annual Report on Form 10-K, these disclosure controls and procedures were not effective.

The conclusion that our disclosure controls and procedures were not effective was due to the presence of material weaknesses in internal control over financial reporting as identified below under the heading “Management’s Report on Internal Control Over Financial Reporting.” Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdown can occur because of simple error or mistake.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) for our company. Our internal control over financial reporting is designed to provide reasonable assurance, not absolute assurance, regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America. Internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles in the United States of America, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.

Our management, including our principal executive officer and principal financial officer, conducted an evaluation of the design and operation of our internal control over financial reporting as of December 31, ~~2022~~2023 based on the criteria set forth in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation, our management concluded our internal control over financial reporting was not effective as at December 31, ~~2022~~2023 due to the following material weaknesses which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines; (iii) inadequate security and restricted access to computer systems including insufficient disaster recovery plans; and

(iv) no written whistle-blower policy.

We plan to take steps to enhance and improve the design of our internal controls over financial reporting when our company has sufficient staff to allocate responsibilities. During the period covered by this Report, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes once our financial resources will support the required staffing level: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; (ii) adopt sufficient written policies and procedures for accounting and financial reporting and a whistle-blower policy; and (iii) implement sufficient security and restricted access measures regarding our computer systems and implement a disaster recovery plan. The remediation efforts set out in (i) and (iii) are largely dependent upon our company securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely effected in a material manner.

This Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Our internal control over financial reporting was not subject to attestation by our independent registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Report.

Changes In Internal Control Over Financial Reporting.

There were no changes in our internal control over financial reporting during the year ended December 31, ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B.

Other Information.

None.

1114

PART III

Item 10.

Directors, Executive Officers and Corporate Governance.

Directors and Executive Officers

Our directors and executive officers, their ages and their positions held with our company are as follows:

Name	Age	Position(s) Held with the Company
Michael Campbell	6768	Chairman of the Board and Chief Executive Officer
Joel D, Stone	5354	President and Chief Operations Officer
Dean S. Skupen	6263	Chief Financial Officer
Steven Shum	5354	Director
Sean Fontenot	4041	Director

There are no arrangements between our directors and any other person pursuant to which our directors were nominated or elected for their positions. There are no family relationships among our directors or officers.

The following biographical information regarding our directors and executive officers.

Michael Campbell. Mr. Campbell became our Chief Executive Officer on September 12, 2018. For the past 20 years, Mr. Campbell has been the managing director of M1 Advisors LLC, a business advisory and consulting firm that has engineered, orchestrated and provided support and services to numerous private-to-public transitions, debt and equity financings and hyper- organic-growth and consolidation strategies in a wide range of industries. In addition, from December 2011 to February 2017, Mr. Campbell was the Chief Executive Officer and a director of NXChain, Inc., a publicly-traded start-up shell company in the cryptocurrency business that was a successor to AgriVest Americas Inc., a publicly-traded start-up shell company that sought to acquire cattle ranches in Brazil for conversion to soybean farms. Mr. Campbell spent the first 20 years of his career in the high-tech industry creating and operating various companies that included a computer retailing operation, data-storage peripheral company with three computer disk-drive manufacturing companies through joint ventures with the Russian, Chinese and Spanish governments, a specialized call-center company for telco broadband provisioning and an online broadband services ordering and order aggregation company with the Regional Bell Operating Companies.

Joel D. Stone. Mr. Stone became our President and Chief Operating Officer on March 28, 2023. Mr. 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. 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. 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, Mr. Stone was Group Operations Director at Global Switch in London, one of the largest wholesale data center providers in Europe and Asia. Mr. Stone spent nine years at Microsoft where he was responsible for all North America data center operations. Earlier in his career, Mr. Stone built-out two state-of-the-art data centers in Silicon Valley (Santa Clara) for Cable & Wireless Communications.

Dean S. Skupen. Mr. Skupen became our Chief Financial Officer on September 12, 2018. Mr. Skupen is a business advisor who has provided various financial accounting services to, or acted as the Interim Chief Financial Officer for, a number of public companies since 2010. Prior to that, he was a Partner at Stonefield Josephson, Inc. (now Marcum, LLP), an accounting firm with five offices throughout California where he provided auditing and consulting services to public companies and to privately-held entrepreneurial companies transitioning to public ownership in diverse industries. Mr. Skupen graduated from the University of Southern California with a Bachelor of Science degree in Accounting. In addition, he is licensed as a Certified Public Accountant in the State of California.

1215

Steven M. Shum. Mr. Shum became a director of our company on October 7, 2021. Mr. 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: 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. Mr. 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. He earned a B.S. in Finance and a B.S. in General Management from Portland State University in 1992.

Sean Fontenot. Mr. Fontenot became a director of our company on October 7, 2021. Mr. 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. Mr. 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, Mr. Campbell, currently serves as a consultant to our company. Mr. 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.

Involvement in Certain Legal Proceedings

None of our directors and executive officers have been involved in any of the following events during the past ten years:

1. any 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; 2. any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences); 3. being 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; 4. being 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; 5. being 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 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.

~~2. any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences);~~16

3. being 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;

4. being 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;

5. being 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 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.

Director Independence

Our board of directors has reviewed the composition of our board of directors and the independence of each director. Based upon information requested from and provided by each director concerning his background, employment and affiliations, including family relationships, our board of directors has determined that each of Steven Shum and Sean Fontenot is an “independent director” as defined under Rule 5605(a)(2) of the Nasdaq Marketplace Rules. In making such determinations, our board of directors considered the relationships that each such non-employee director has with our company and all other facts and circumstances our board of directors deemed relevant in determining independence, including the beneficial ownership of our capital stock by each non-employee director.

Board Committees

We do not have a standing Audit Committee. We do not believe that the lack of an Audit Committee has had or will have any adverse effect on our financial statements, based upon current operations; however, our board of directors will consider establishing an Audit Committee of independent directors as the number of directors increases. Until such time, our board of directors will perform the duties of an Audit Committee including delegating an auditor firm and interacting with them.

We do not have a standing Compensation Committee. Presently, ~~our~~the ~~executive~~salary ~~officers,~~and ~~who~~benefits ~~constitute~~of our ~~only~~executive ~~employees,~~officers doare ~~not~~determined ~~take~~by ~~salary~~our orentire ~~other~~board ~~benefits~~of ~~from our company~~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.

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

Code of Ethics

Effective March 28, 2022, our Board of Directors adopted an amended Code of Business Conduct and Ethics that applies to, among other persons, members of our board of directors, our company’s officers, contractors, consultants and advisors. We will provide a copy of the Code of Business Conduct and Ethics to any person without charge, upon request. Requests can be sent to our company at the address on the cover of this Annual Report.

Delinquent Section 16(a) ~~Beneficial Ownership Compliance~~Reports

Section 16(a) of the ~~Securities~~ Exchange Act requires our executive officers, ~~and~~ directors, and persons who beneficially own more than 10% of our common stock, to file ~~reports~~with ~~regarding~~the ~~ownership~~SEC reports of, their ownership and ~~transactions~~changes in, their ownership of our ~~securities~~common ~~with~~stock. ~~the~~To ~~Securities~~our ~~and~~knowledge, ~~Exchange~~based ~~Commission~~solely ~~and~~on toreview ~~provide us~~of ~~with~~the copies of ~~those~~such ~~filings.~~reports ~~Based~~and ~~solely~~amendments onto ~~our~~such ~~review~~reports ofwith respect to the ~~copies~~year ofended ~~such~~December ~~forms~~31, ~~received~~2023 byfiled ~~us,~~with orthe ~~written~~SEC, ~~representations~~all ~~from~~required Section ~~certain~~16 ~~reporting~~reports ~~persons~~under the Exchange Act for our directors, executive officers and ~~without~~beneficial ~~conducting~~owners ~~any~~of ~~independent~~greater ~~investigation~~than 10% of our ~~own~~common westock were ~~believe~~filed ~~that~~on a timely basis during the ~~fiscal~~ year ended December 31, ~~2022~~2023, ~~all~~except ~~filing~~for ~~requirements~~(i) ~~applicable~~late toForm ~~our~~3 ~~officers~~filings for Joel Stone and Dean Skupen, (ii) ~~directors~~late Form 4 filings for Michael Campbell, Sean Fortenot and ~~greater~~Steven ~~than~~Shum, ~~10%~~and ~~percent~~(iii) ~~beneficial~~late ~~owners~~Schedule ~~were~~13D filings for Michael Campbell ~~complied~~and ~~with~~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.

1417

Item 11.

Executive Compensation.

The following table sets forth all compensation awarded to, earned by or paid to the executive officers of our company during the years ended December 31, ~~2022~~2023 and ~~2021~~2022. No compensation was paid to any other executive officer of our company during such periods.

SUMMARY COMPENSATION TABLE

Name and Principal Position	Fiscal Year		Salary ($)		Bonus ($)		Stock Awards ($)			Option/Warrant Awards(4) ($)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)			Total ($)
Michael Campbell		~~2022~~2023		-		-	$	-			-1,601,110		-		-	$	~~200~~204,~~000~~179	(1)	$	~~200~~1,~~000~~805,289	~~(2)~~
Chief Executive officer (1)		2021		-		-		2,895,000	(1)		-		-		-		200,064	(2)		3,095,064	(2)
Chief Executive Officer		2022		-		-					-		-		-		200,064	(1)		200,064
Hyuncheol Peter Kim		2022		-		-		-			-		-		-		140,000			140,000	(3)
Joel D. Stone		2023		187,500		-		-			409,968		-		-		38,396			635,864
Chief Technology Officer		2021		-		-		19,300,000	(1)		-		-		-		66,664	(3)		19,366,664	(3)
President and Chief Operating Officer(2)		2022		-		-		-			-		-		-		-			-
Dean S. Skupen		~~2022~~2023		-		-		-			-		-		-		60,000	(43)		60,000	~~(4)~~
Chief Financial Officer		~~2021~~2022		-		-	$	~~75,000~~-			-		-		-	$	3060,000	(3)	$	~~105~~60,000

	(1)	~~Represents~~Represented aamounts ~~restricted~~earned ~~stock~~by ~~share~~Mr. ~~award~~Campbell ~~that~~as ~~was~~a consultant to ~~vest upon the completion of the multiple phases of~~ our ~~previous chip development business plan~~company. ~~In August 2022, we abandoned the chip development business plan and~~ Mr,. Campbell ~~and~~became ~~Mr.~~an ~~Kim’s~~employee ~~consulting~~of ~~agreements~~our ~~were~~company ~~terminated~~in ~~and~~March ~~the associated restricted stock share awards were cancelled~~2024.
	(2)	~~Represents~~Mr. ~~amounts~~Stone ~~earned~~became byour ~~Mr.~~President ~~Campbell~~and ~~under~~Chief ~~his~~Operating ~~consulting~~Officer ~~agreement~~on March 28, 2023.
	(3)	Represents amounts earned by Mr. ~~Kim~~Skupen under his consulting agreement. ~~Mr. Kim terminated his consulting engagement in August of 2022.~~
	(4)	~~Represents~~Reflects 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 ~~earned~~reflect the accounting cost for these stock options and do not reflect the actual economic value that may be realized by ~~Mr.~~the ~~Skupen~~named ~~under~~executive ~~his~~officer ~~consulting~~upon ~~agreement~~the vesting of the stock options, the exercise of the stock options, or the sale of the common stock underlying such stock options.

Employment Agreement

On 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.

The Employment Agreement also provides for certain severance benefits upon a termination by us without “cause” or by Mr. Stone 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^stday and the end of the first year of employment, Mr. Stone will be entitled to a pro rata portion of such payment.

The 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.

Consulting Agreements

~~Between~~On October ~~August 17~~20, ~~2021 and August 31~~2018, ~~2022,~~ we ~~had~~entered ~~consulting~~into ~~agreements~~a inconsulting ~~place~~agreement with M1DSS ~~Advisors~~Consulting ~~LLC~~Corporation, a ~~limited~~corporation ~~liability company~~ controlled by ~~Michael~~Dean ~~Campbell~~Skupen, our Chief ~~Executive~~Financial Officer (“M1DSS ~~Advisors~~Consulting”), ~~and Hyuncheol Kim,~~ pursuant to which M1DSS ~~Advisors~~Consulting agreed to continue to provide consulting services to our company and to cause Mr. ~~Campbell~~Skupen to serve as our Chief ~~Executive~~Financial Officer~~, and Mr~~. ~~Kim~~The ~~agreed~~agreement towith ~~provide~~DSS Consulting ~~consulting~~will ~~services~~continue ~~and~~until toterminated ~~serve~~by aseither ~~our Chief Technology Officer~~party. InPursuant ~~addition, pursuant~~ to such ~~consulting agreements~~agreement, M1DSS ~~Advisors~~Consulting was ~~granted~~issued ~~a restricted stock award of 1~~250,~~500,~~000 shares of common stock ~~and~~in ~~Mr.~~March ~~Kim~~2019 ~~was~~and ~~granted~~DSS aConsulting ~~restricted~~will ~~stock~~be ~~award~~paid ofa ~~10,000,000~~monthly ~~shares~~consulting offee ~~common~~in ~~stock.~~the Inamount ~~August~~of ~~2022~~$5,000. weThe ~~terminated~~consulting agreement ~~the~~contains ~~chip~~customary ~~development~~confidentiality ~~business~~restrictions ~~plan~~ and ~~terminated~~work-product ~~the~~provisions, ~~consulting~~as ~~agreements~~well ~~with~~as M1customary ~~Advisors~~non-competition covenants and ~~Mr.~~non-solicitation ~~Kim~~covenants ~~and canceled related restricted stock awards. We are currently structuring a new consulting agreement~~ with M1respect ~~Advisors~~ to ~~continue~~our ~~providing~~employees, ~~consulting~~consultants ~~services~~ and ~~for Mr~~customers. ~~Campbell to continue serving as our Chief Executive Officer.~~

On 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.

Each of our consulting agreements 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.

Equity Compensation Plan Information

The following table provides information as of December 31, ~~2022~~2023, regarding our compensation plans under which equity securities are authorized 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))

~~(a)~~

(a)

~~(b)~~

(b)

~~(c)~~

(c)

2021 Equity compensation plan approved by security holders

—6,854,000

—0.53

23,~~500~~146,000

Equity compensation plans not approved by security holders

—

Total

—6,854,000

—0.53

23,~~500~~146,000

2021 Equity Incentive Plan

On October 4, 2021, we adopted our 2021 Equity Incentive Plan (the “Equity Plan”) to provide an additional means to attract, motivate, retain and reward selected employees and other eligible persons. Our stockholders also approved the Equity Plan on October 4, 2021. 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 ~~that~~who 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.

As of December 31, ~~2022~~2023, nooptions ~~equity~~to ~~grants~~purchase an aggregate of 6,854,000 shares of common stock had been made under the Equity Plan, and 23,~~500~~146,000 shares authorized under the Equity Plan remained available for award purposes.

Purpose. The purpose of the Equity Plan is to further and promote the interests of our company and its stockholders by enabling us to attract, retain and motivate employees, directors and consultants, or those who will become employees, directors or consultants, and to align the interests of those individuals with the interests of our stockholders.

Administration. The Equity Plan will be administered by an independent compensation committee appointed by the Board (the “Compensation Committee”), which will have general administrative authority for the Equity Plan. In the event that the Board has not appointed the Compensation Committee, then the Board shall have all the powers of the Compensation Committee under the Equity Plan. The Compensation Committee may delegate certain limited authority to one or more of our senior executive officers to grant awards to employees who are not subject to Section 16 of the Exchange Act. Additionally, the Compensation Committee may designate persons other than members of the Compensation Committee to carry out the day-to-day ministerial administration of the Equity Plan (other than with regard to the selection for participation in the Equity Plan and/or the granting of any awards to participants) under such conditions and limitations as prescribed by the Compensation Committee (the appropriate acting body, be it the Compensation Committee, the Board, or an executive officer within his or her delegated authority, is referred to herein as the “Administrator”). The Administrator’s determinations under the Equity Plan need not be uniform and may be made selectively among the Equity Plan’s participants, whether or not such participants are similarly situated.

The Administrator has broad authority under the Equity Plan with respect to award grants including, without limitation, the authority to:

	●	select the Equity Plan’s participants;

	●	make awards in such amounts and form as the Administrator shall determine;

	●	impose such restrictions, terms and conditions upon such awards as the Administrator shall deem appropriate; and

	●	correct any technical defect(s) or technical omission(s), or reconciling any technical inconsistency(ies), in the Equity Plan and/or any award agreement.

Eligibility. Persons eligible to receive awards under the Equity Plan include employees, directors and consultants, or those who will become employees, directors or consultants, of our company and/or its subsidiaries. Notwithstanding the above, incentive stock options may only be granted under the Equity Plan to our employees.

Authorized Shares. The maximum number of shares of common stock that may be initially issued or transferred pursuant to awards under the Equity Plan shall not exceed 210,~~500~~000,000 shares, all of which may be issued as any type of award permitted under the Equity Plan, including, but not limited to, incentive stock options.

Types of Awards. The Equity Plan authorizes awards of stock options and restricted shares of common stock.

A stock option is the right to purchase shares of common stock at a future date at a specified price per share (the “Exercise Price”). The per share Exercise Price of an option generally may not be less than the fair market value of a share of common stock on the date of grant. The maximum term of an option is ten years from the date of grant. An option may either be an incentive stock option or a nonqualified stock option. Incentive stock option benefits are taxed differently from nonqualified stock options, as described under “Federal Income Tax Consequences of Awards Under the Plan” below. Incentive stock options are also subject to more restrictive terms and are limited in amount by the U.S. Internal Revenue Code (the “Code”) and the Equity Plan. Incentive stock options may only be granted to employees of our company or a subsidiary.

Restricted shares are shares of common stock granted to Equity Plan participants, subject to such restrictions, terms and conditions, if any, as the Administrator deems appropriate, including, without limitation, (a) restrictions on the sale, assignment, transfer, hypothecation or other disposition of such shares, (b) the requirement that the participant deposit such shares with our company while such shares are subject to such restrictions, and (c) the requirement that such shares be forfeited upon termination of employment or service with our company for any reason or for specified reasons within a specified period of time or for other reasons (including, without limitation, the failure to achieve designated performance goals). Upon satisfaction or lapse of the applicable restrictions, terms, and conditions, subject to applicable securities laws, the participant will receive shares of common stock in exchange for such restricted shares.

Dividend Equivalents; Deferrals. The Administrator may provide for the deferred payment of awards and may determine the other terms applicable to deferrals. The Administrator may provide that awards under the Equity Plan earn dividends or dividend equivalents based on the amount of dividends paid on outstanding shares of common stock.

Assumption and Termination of Awards. Generally, and subject to limited exceptions set forth in the Equity Plan, if we dissolve or undergo certain corporate transactions such as a merger, business combination, or other reorganization, or a sale of substantially all of its assets, all awards then-outstanding under the Equity Plan will become fully vested or paid, as applicable, and will terminate or be terminated in such circumstances, unless the Administrator provides for the assumption, substitution or other continuation of the award. The Administrator also has the discretion to establish other change in control provisions with respect to awards granted under the Equity Plan. For example, the Administrator could provide for the acceleration of vesting or payment of an award in connection with a corporate event that is not described above and provide that any such acceleration shall be automatic upon the occurrence of any such event.

Clawback. We may cancel any award under the Equity Plan, require reimbursement from a participant, and effect any other right of recoupment of equity or other compensation provided under the Equity Plan in accordance with any clawback policies adopted by us.

Transfer Restrictions. Subject to certain exceptions contained in the Equity Plan, awards under the Equity Plan generally are not transferable by the recipient other than by will or the laws of descent and distribution and are generally exercisable, during the recipient’s lifetime, only by the recipient. Any amounts payable or shares issuable pursuant to an award generally will be paid only to the recipient or the recipient’s beneficiary or representative. The Administrator has discretion, however, to establish written conditions and procedures for the transfer of awards to other persons or entities, provided that such transfers comply with applicable federal and state securities laws.

Adjustments. As is customary in incentive plans of this nature, each share limit and the number and kind of shares available under the Equity Plan and any outstanding awards, as well as the exercise or purchase prices of awards, and performance targets under certain types of performance-based awards, are subject to adjustment in the event of certain reorganizations, mergers, combinations, recapitalizations, stock splits, stock dividends, or other similar events that change the number or kind of shares outstanding, and extraordinary dividends or distributions of property to the stockholders.

No Limit on Other Authority. The Equity Plan does not limit the authority of the Board or any committee to grant awards or authorize any other compensation, with or without reference to the our common stock, under any other plan or authority.

Termination of or Changes to the Equity Plan. The Board may amend or terminate the Equity Plan at any time and in any manner. Stockholder approval for an amendment will be required only to the extent then required by applicable law or any applicable listing agency or required under Sections 422 or 424 of the Code to preserve the intended tax consequences of the plan. For example, stockholder approval will be required for any amendment that proposes to increase the maximum number of shares that may be delivered with respect to awards granted under the Equity Plan (adjustments as a result of stock splits or similar events will not, however, be considered an amendment requiring stockholder approval). Unless terminated earlier by the Board, the authority to grant new awards under the Equity Plan will terminate on October 4, 2031. Outstanding awards, as well as the Administrator’s authority with respect thereto, generally will continue following the expiration or termination of the Equity Plan. Generally speaking, outstanding awards may be amended by the Administrator (except for a repricing), but the consent of the award holder is required if the amendment (or any Equity Plan amendment) materially and adversely affects the holder.

Federal Income Tax Consequences of Awards under the Plan.

The U.S. federal income tax consequences of the Equity Plan under current federal law, which is subject to change, are summarized in the following discussion of the general tax principles applicable to the Equity Plan. This summary is not intended to be exhaustive and, among other considerations, does not describe the deferred compensation provisions of Section 409A of the Code to the extent an award is subject to and does not satisfy those rules, nor does it describe certain elections under the Code (such as an election under Code Section 83(b)), alternative minimum tax, or state, local, or international tax consequences.

With respect to nonqualified stock options, we are generally entitled to deduct, and the participant recognizes taxable income in an amount equal to the difference between the option exercise price and the fair market value of the shares at the time of exercise. With respect to incentive stock options, we are generally not entitled to a deduction nor does the participant recognize income at the time of exercise, although the participant may be subject to the U.S. federal alternative minimum tax. Upon a disposition of shares acquired by exercise of an incentive stock option before the end of the applicable incentive stock option holding periods, the participant generally must recognize ordinary income equal to the lesser of (i) the fair market value of the shares at the date of exercise minus the exercise price or (ii) the amount realized upon the disposition of the incentive stock option shares minus the exercise price. Otherwise, a participant’s disposition of shares acquired upon the exercise of an option (including an incentive stock option for which the incentive stock option holding periods are met) generally will result in only capital gain or loss.

With respect to restricted shares, we are generally entitled to deduct and the participant recognizes taxable income in an amount equal to the excess of the fair market value over the price paid (if any) only at the time the restrictions lapse (unless the recipient elects to accelerate recognition as of the date of grant).

If an award is accelerated under the Equity Plan in connection with a “change in control” (as this term is used under the Code), we may not be permitted to deduct the portion of the compensation attributable to the acceleration (“parachute payments”) if it exceeds certain threshold limits under the Code (and certain related excise taxes may be triggered).

We have the authority and the right to deduct or withhold, or require a participant to remit to us, an amount sufficient to satisfy any income, payroll, and other taxes (including, without limitation, pursuant to the Federal Insurance Contributions Act and the Federal Unemployment Tax Act) to the extent required by law to be withheld with respect to any taxable event concerning a participant arising as a result of an award under the Equity Plan.

~~Outstanding~~Incentive ~~Equity~~Plan Awards ~~At Annual Period End~~

AsThe offollowing ~~December~~table ~~31,~~sets ~~2022,~~forth ~~there~~information ~~were~~relating noto ~~awards~~stock ~~outstanding~~option grants made to our named executive officers during the fiscal year ended December 31, 2023.

	Date of Option/Warrant Grant		# of Options		Fair Value ($)⁽¹⁾
Michael Campbell⁽²⁾		12/6/23		3,454,801		1,314,780
Michael Campbell⁽²⁾		12/6/23		500,000		260,000
Michael Campbell		12/6/23		1,000,000		530,000
Joel D. Stone		06/19/23		2,500,000		1,175,000
Joel D. Stone		12/06/23		1,000,000		530,000

	(1)	Reflects 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.

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

Outstanding Equity Awards at Fiscal Year-End

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

	Option/Warrants Awards							Stock Awards
Name	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)		3,454,801		-	$	0.54	12/31/2028		-		-
Michael Campbell (1)		500,000		-		0.54	12/31/2030		-		-
Michael Campbell (2)		-		500,000		0.54	12/6/2030		-		-
Michael Campbell (3)				500,000		0.54	12/6/2030		-		-
Joel D. Stone (2)		-		500,000		0.50	12/6/2030		-		-
Joel D. Stone (3)				500,000		0.50	12/6/2030		-		-
Joel D. Stone (4)				1,250,000		0.50	6/19/2030		-		-
Joel D. Stone (5)				600,000		0.54	6/19/2030		-		-
Joel D. Stone (5)		-		650,000		0.54	6/19/2030		-		-

	(1)	Granted on December 6, 2023. Represents fully-vested options/warrants granted to M1 Advisors LLC, a company controlled by Michael Campbell.
	(2)	Granted 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 date.
	(3)	Granted on December 6. 2023. These options vest at various times based on the achievement of various performance milestones.
	(4)	Granted on June 19, 2023. These options vest at various times based on the achievement of various performance milestones.
	(5)	Granted 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 date.

Aggregated Option Exercises

There were no options exercised by any officer or director of our company during the year ended December 31, ~~2022~~2023.

~~Directors~~Director Compensation

NoGeneral. ~~director~~The ~~compensation~~following ~~was~~discussion ~~paid~~describes ~~during~~the significant elements of the ~~years~~expected ~~ended~~compensation ~~December~~program ~~31,~~for ~~2022~~members of our board of directors and ~~2021~~its incommittees. ~~the~~The ~~form~~compensation of ~~cash~~our ~~expenses,~~directors ~~stock~~is ~~awards,~~designed ~~option~~to ~~awards, non-equity~~attract ~~incentive~~and ~~plan~~retain ~~compensation,~~committed ~~pension~~and ~~value~~qualified directors and ~~nonqualified~~to ~~deferred~~align their compensation ~~earnings~~with orthe ~~any~~long-term ~~other~~interests ~~type~~ of ~~compensation~~our shareholders. Directors who are also executive officers (each, an “Excluded WeDirector”) dowill not ~~currently~~be ~~pay~~entitled to receive any ~~cash~~compensation ~~fees~~for tohis ~~our~~or ~~directors~~her service as a director, ~~nor~~committee domember weor ~~pay~~Chair of our board of directors’ ~~expenses~~or inof ~~attending~~any committee of our board ~~meetings~~of directors.

~~Employment~~Director ~~Agreements~~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.

WeCash ~~are~~Compensation. We did not ~~presently~~pay aany ~~party~~cash compensation to ~~any~~our ~~employment~~directors ~~agreements~~during the year ended December 31, 2023. However, we intend to implement a cash compensation program for our board members in the future.

19Equity Awards. 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).

Name		Option/warrants Awards	Total⁽¹⁾
Steven Shum	$	210,000	$	210,000
Sean Fontenot		1,131,000		1,131,000

Total:	$	1,341,000		1,341,000

(1)

Reflects 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.

Pension and Retirement Plans

Currently, 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 retirement.

Item 12.

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

The following table sets forth, as of ~~April~~March 1325, ~~2023~~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 director of our company, (iii) each named Executive Officer and (iv) all executive officers and directors of our company as a group (except as indicated, each beneficial owner listed exercises sole voting power and sole dispositive power over the shares beneficially owned):

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership		Percent of Class(1)
M1 Advisors LLC(2)		811,~~954~~009,~~199~~000		6140.7720%	%
(Michael Campbell)(2)		8,954,199		61.77	%
Michael Campbell(2)		11,509,000		41.27%
Joel Stone		-		~~0.00~~-	%
Dean Skupen(3)		325,000		21.2428%	%
Steven Shum		4,655		0.03	%
Steven Shum4)		408,655		1.59%
Sean Fontenot(4)		4,620,000		24.17	%
Nanosha LLC 5)		10,774,386		39.14%
Sean Fontenot(5)		11,524,386		40.75%
All executive officers and directors as a group
(5 persons)		1323,~~903~~963,~~854~~051		9576.9271%	%
5% Stockholders:
David Unsworth (5)		1,435,000		9.90	%
The Cooper Family Living Trust Dtd 7/20/98 (6)		1,079,000		7.44	%

(1)	As of ~~April~~March 1327, ~~2023~~2004, there were 1425,~~495~~330,~~621~~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.
(2)	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. Mr. Campbell has sole voting and investment power over the shares held by M1 Advisors LLC.
(3)	Represents shares of common stock owned of record by DSS Consulting Corporation, a company controlled by Dean Skupen. DSS Consulting Corporation’s address is ~~2945~~30 ~~Townsgate~~N ~~Road~~Gould Street, Suite ~~200~~12829, ~~West~~Sharidan, ~~Lake~~WY ~~Village~~82801 ~~CA 91361.~~ Mr. Skupen has sole voting and investment power over the shares held by DSS Consulting Corporation.
(4)	Represents 3(i) 196,~~080,000~~010 shares of common stock ~~issuable~~owned ~~upon~~of ~~the~~record ~~conversion~~by ofCore Fund Management, LP, a ~~convertible~~company ~~note~~controlled by Steven Shum, ~~and~~(ii) 14,~~540,000~~655 shares of common stock ~~issuable~~owned ~~upon~~by ~~the~~Steven ~~exercise~~Shum ofand ~~warrants,~~(iii) ~~owned~~currently-exercisable ofstock ~~record~~options byto ~~Nanosha~~purchase ~~Investments~~404,000 ~~LLC,~~shares aof ~~company~~common ~~controlled~~stock owned by ~~Sean~~Steven ~~Fontenot~~Shum. The address of ~~Nanosha~~Core ~~Investments~~Fund Management, ~~LLC~~LP is ~~1202~~1515 ~~Walnut~~SW 5th Avenue, ~~Long~~Suite ~~Beach~~606, CAPortland, ~~90813~~OR 97201. Mr. ~~Fontenot~~Shum has sole voting and investment power over the ~~securities~~shares held by ~~Nanosha~~Core ~~Investments,~~Fund ~~LLC~~Management.
(5)	~~David~~Represents ~~Unsworth’s~~(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 ~~246~~1202 ~~Bayview~~Walnut Avenue, ~~Belvedere~~Long Beach, CA ~~94920~~90813. Mr. Fontenot has sole voting and investment power over the securities held by Nanosha Investments, LLC.
(6)	Piers 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.

2024

Item 13.

Certain Relationships and Related Transactions, and Director Independence.

ToA ~~the~~“related ~~best~~party oftransaction” ~~our~~is ~~knowledge,~~any ~~except~~actual asor ~~set~~proposed ~~forth below~~transaction, ~~during~~arrangement ~~the~~or ~~last~~relationship ~~fiscal~~or ~~year,~~series ~~there~~of ~~were~~similar ~~no material~~ transactions, arrangements or ~~series~~relationships, ~~of similar~~including ~~transactions,~~those orinvolving ~~any~~indebtedness ~~currently~~not ~~proposed~~in ~~transactions,~~the orordinary ~~series~~course of ~~similar transactions~~business, to which we or our subsidiaries were or are toa beparty, or in which we or our subsidiaries were or are a ~~party~~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 ~~each of~~ the last two completed fiscal years, and in which any ~~director~~related orparty ~~executive~~had ~~officer,~~ or ~~any~~will ~~security~~have ~~holder~~a ~~who~~direct ~~is known by us to own of record~~ or ~~beneficially~~indirect ~~more than~~material 5%interest. ofA ~~any~~“related ~~class~~party” ~~of our common stock, or any member of the immediate family of any of the foregoing persons, has an interest.~~includes:

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

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

	●	any immediate family member of any of the foregoing; or

	●	any 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.

Other 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.

Between 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.

On 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.

Item 14.

Principal Accountant Fees And Services.

Audit Fees

The aggregate fees billed for professional services rendered by RBSM LLP, our principal accountants for the years ended December 31, ~~2022~~2023 and ~~2021~~2022, for the audit of financial statements, quarterly reviews of our interim financial statements and services normally provided by the independent accountant in connection with statutory and regulatory filings or engagements for these periods were as follows:

	For the Years ended December 31,
	2022			2021
	2023		2022
Audit Fees and Audit Related Fees	$	2845,000	$	$28,000	~~50,000~~
Tax Fees		—-		—	—
All Other Fees		—-		—	—
Total	$	2845,000	$	$28,000	~~50,000~~

In the above table, “audit fees” are fees billed by our company’s external auditor for services provided in auditing our company’s financial statements for the periods indicated above. “Audit-related fees” are fees not included in audit fees that are billed by the auditor for assurance and related services, including quarterly reviews, that are reasonably related to the performance of the audit of our company’s financial statements. “Tax fees” are fees billed by the auditor for professional services rendered for tax compliance, tax advice and tax planning. “All other fees” are fees billed by the auditor for products and services not included in the foregoing categories.

Our board of directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by our board of directors either before or after the respective services were rendered.

2125

PART IV

Item.15.

Exhibits, Financial Statement Schedules.

Exhibit
Number		Description
3.1		Articles of Incorporation (incorporated by reference to Exhibit 3.1 to our Registration Statement on Form SB-2 filed on July 5, 2002).
3.2		Certificate of Change filed with the Nevada Secretary of State on December 20, 2005 (incorporated by reference to Exhibit 99.1 to our Current Report on Form 8-K filed on December 29, 2005).
3.3		Articles of Merger filed with the Nevada Secretary of State on February 6, 2006 (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on February 9, 2006).
3.4		Certificate of Amendment filed with the Nevada Secretary of State on November 27, 2006 (incorporated by reference from Exhibit 99.1 to Current Report on Form 8-K filed on November 30, 2006).
3.5		Articles of Merger filed with the Nevada Secretary of State on February 6, 2006 (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on February 9, 2006).
3.6		Articles of Merger filed with the Nevada Secretary of State on July 15, 2013 (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on July 19, 2013).
3.7		Certificate of Change filed with the Nevada Secretary of State on August 28, 2018 (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on August 29, 2018).
3.8		Certificate of Designation of Series A Preferred Stock filed with the Nevada Secretary of State on September 12, 2018 (incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed on September 14, 2018).
3.9		Amendment to Certificate of Designation After Issuance of Class or Series filed with the Nevada Secretary of State on October 29, 2018 (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on October 29, 2018).
3.10		Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed on July 19, 2013).
4.10		Description of Registered Securities
4.1		Description of Registered Securities
10.1		2021 Equity Incentive Plan (incorporated by reference to Exhibit Annex A to our Schedule 14C Information Statement filed on October 21, 2021).
10.2		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).
10.3		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).
10.4		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).
10.5		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).

2226

Exhibit
Number		Description
10.6		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).
10.2		Consulting Agreement dated as of October 10, 2018 between CalEthos Inc. and DSS Consulting Corporation (incorporated by reference to Exhibit 10.12 to our Annual Report on Form 10-K filed on March 31, 2022).
10.7		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).
10.3		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).
10.8		Consulting Agreement dated as of October 10, 2018 between CalEthos Inc. and DSS Consulting Corporation.
10.4		Form of Promissory Note dated February 12, 2024 of CalEthos Inc. to Nanosha Investments LLC.
14		Code of Conduct and Ethics of CalEthos Inc.
10.5		Warrant dated February 12, 2024 of CalEthos Inc. issued to Nanosha Investments LLC.
14		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).
31.1		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.***
31.2		Certification of the Chief Financial 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.***
32.1		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.***
101.ins**		Inline XBRL Instance Document
101.xsd**		Inline XBRL Taxonomy Extension Schema Document
101.cal**		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.def**		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.lab**		Inline XBRL Taxonomy Extension Label Linkbase Document
101.pre**		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)
**		Furnished. Not filed. Not incorporated by reference. Not subject to liability.
***		A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

2327

SIGNATURES

Pursuant 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 179th day of April ~~2023~~2024.

	CalEthos, Inc.

	By:	/s/ Michael Campbell
	Name:	Michael Campbell
	Title:	Chief Executive Officer
		(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Michael Campbell	Chief Executive Officer and Director	~~Date:~~ April 179, ~~2023~~2024
Michael Campbell	(Principal Executive Officer)
/s/ Dean S. Skupen	Chief Financial Officer	~~Date:~~ April 179, ~~2023~~2024
Dean S. Skupen	(Principal Accounting Officer)
/s/ Sean Fontenot	Director	~~Date:~~ April 179, ~~2023~~2024
Sean Fontenot	(Director)
/s/ Steven Shum	Director	~~Date:~~ April 179, ~~2023~~2024
Steven Shum	(Director)

2428

CalEthos, Inc.

For the Years Ended December 31, 2022 and 2021

Index to the Consolidated Financial Statements

Contents	Page(s)
Report of Independent Registered Public Accounting Firm PCAOB ID 587	F-2
Consolidated Balance Sheets as of December 31, 2022 and 2021	F-3
Consolidated Statements of Operations and Comprehensive Loss for the Years ended December 31, 2022 and 2021	F-4
Consolidated Statements of Changes in Stockholders’ Deficit for the Years ended December 31, 2022 and 2021	F-5
Consolidated Statements of Cash Flows for the Years ended December 31, 2022 and 2021	F-6
Notes to the Consolidated Financial Statements	F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

CalEthos, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of CalEthos Inc., (the “Company”) as of December 31, ~~2022~~2023 and ~~2021~~2022, the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity (deficit) and cash flows for each of the ~~two~~ years in the two-year period ended December 31, ~~2022~~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, ~~2022~~2023 and ~~2021~~2022, and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, ~~2022~~2023 in conformity with accounting principles generally accepted in the United States of America.

The Company’s Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the accompanying consolidated financial statements, although the Company has net income it is primarily attributable to non-cash reversal of compensation for restricted stock units, has generated negative cash flows from operating activities, has an accumulated deficit and has stated that substantial doubt exists about Company’s ability to continue as a going concern. 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.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

We determined that there are no critical audit matters.

/s/ RBSM LLP

We have served as the Company’s auditor since 2018.

~~Larkspur,~~New CAYork, NY

April 179, ~~2023~~2024

~~F-2~~PCAOB ID No. 587

F-1

CalEthos, Inc.

Consolidated Balance Sheets

As of December 31,

	2022			2021
	2023			2022
Assets
Current assets
Cash and cash equivalents	$	2308,~~067,~~000		$	32,~~047~~067,000
Prepaid and other current expenses		410,000			74,000
Total current assets		2318,~~071,~~000			32,~~054~~071,000
Other assets		-			38,000
Data center costs		2,262,000			-
Total assets	$	2,071,000		$	3,092,000
Other assets		-			-
Liabilities and stockholders’ deficit
Total assets	$	2,580,000		$	2,071,000
Liabilities and stockholders’ equity (deficit)
Current liabilities
Accounts payable and accrued expenses	$	~~540~~670,000		$	~~434~~540,000
Convertible promissory notes, net		4341,~~613,~~000			34,~~087~~613,000
Notes payable		6111,000			~~111~~61,000
Total current liabilities		51,~~214~~022,000			35,~~632~~214,000
Commitments and contingencies (Note 7)		-			-
Stockholders’ equity (deficit)
Stockholders’ deficit
Series A convertible preferred stock, par value $0.001, 3,600,000 shares authorized; no shares issued and outstanding		-			-
Preferred stock, par value $0.001, 100,000,000 shares authorized; no shares issued and outstanding		-			-
Preferred stock, value		-			-
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		24,000			26,000
Common stock par value $0.001: 100,000,000 shares authorized; 24,345,598 and 24,495,621 shares issued and outstanding		24,000			24,000
Additional paid-in capital		1120,~~480~~807,000			1611,~~269~~480,000
Other comprehensive income (loss)		5,000			(2,000	)
Other comprehensive income		9,000			5,000
Stock subscription receivable		(2,000	)		(2,000	)
Accumulated deficit		(1419,~~650~~280,000	)		(1614,~~831~~650,000	)
Total stockholders’ deficit		(3,143,000	)		(540,000	)
Total stockholders’ equity (deficit)		1,558,000			(3,143,000	)
Total liabilities and stockholders’ deficit	$	2,071,000		$	3,092,000
Total liabilities and stockholders’ equity (deficit)	$	2,580,000		$	2,071,000

~~The accompanying notes are an integral part of these Consolidated Financial Statements.~~F-2

CalEthos, Inc.

Consolidated Statements of Operations and Comprehensive (Loss) Income

For the Year Ended December 31,

	2023			2022

Revenues	$	-		$	-

Operating Expenses
Professional fees		344,000			667,000
Equity-based compensation		3,032,000			(4,791,000	)
General and administrative expenses		38,000			52,000
Payroll and related expense		51,000			-
Impairment loss		-			154,000
Operating expense		3,465,000			(3,918,000	)

(Loss) income from operations		(3,465,000	)		3,918,000

Other income (expenses)
Interest income		50,000			7,000
Gain on settlement of debt		23,000			-
Financing costs		(252,000	)		(1,744,000	)
Loss on extinguishment of debt		(986,000	)
Total other expenses		(1,165,000	)		(1,737,000	)

(Loss) income before provision for income taxes		(4,630,000	)		2,181,000
Provision for income taxes		-			-

Net (loss) income		(4,630,000	)		2,181,000

Net (loss) income per share - Basic		(0.24	)		0.15
Net (loss) income per share - Diluted		(0.24	)		0.08

Weighted Average common shares outstanding - Basic		19,157,230			14,495,621
Weighted Average common shares outstanding - Diluted		19,157,230			29,342,327

Comprehensive (loss) income
Net (loss) income		(4,630,000	)		2,181,000
Foreign currency translation gain		4,000			7,000
Comprehensive (loss) income	$	(4,626,000	)	$	2,188,000

F-3

CalEthos, Inc.

Consolidated ~~Statements~~Statement of ~~Operations~~Changes ~~and~~in ~~Comprehensive~~Stockholders’ ~~Loss~~Equity (Deficit)

For the Years Ended December 31, 2023 and 2022

	2022			2021
	Shares			Amount			Shares		Amount		Shares			Amount			Capital			Receivable			Income (Loss)			Deficit			(Deficit)
Revenue	$	-		$	-
	Series A convertible preferred stock						Preferred Stock				Common Stock						Additional Paid-in			Stock Subscription			Other Comprehensive			Accumulated			Total Stockholders Equity
Operating expenses
	Shares			Amount			Shares		Amount		Shares			Amount			Capital			Receivable			Income (Loss)			Deficit			(Deficit)
Professional fees		667,000			1,033,000
Balance December 31, 2021		-		$	-			-	$	-		25,995,621		$	26,000			16,269,000		$	(2,000	)	$	(2,000	)	$	(16,831,000	)	$	(540,000	)
Restricted stock grants		(4,791,000	)		5,062,000
Equity-based compensation		-			-			-		-		-			-			6,377,000			-			-			-			6,377,000
General and administrative expenses		52,000			57,000
Forfeiture of equity-based compensation		-			-			-		-		(1,500,000	)		(2,000	)		(11,166,000	)		-			-			-			(11,168,000	)
Impairment loss		154,000			-
Foreign currency translation income		-			-			-		-		-			-			-			-			7,000			-			7,000
Total operating (income) expenses		(3,918,000	)		6,152,000
Net income		-			-			-		-		-			-			-			-			-			2,181,000			2,181,000
Income (loss) from operations		3,918,000			(6,152,000	)
Balance, December 31, 2022		-			-			-		-		24,495,621			24,000			11,480,000			(2,000	)		5,000			(14,650,000	)		(3,143,000	)
Other income (expenses)
Balance		-			-			-		-		24,495,621			24,000			11,480,000			(2,000	)		5,000			(14,650,000	)		(3,143,000	)
Interest income		7,000			-
Cancellation of shares equity-based compensation												(10,000,000	)		(10,000	)		10,000			-			-			-			-
Financing costs		(1,744,000	)		(597,000	)
Shares issued for extinguishment of debt		-			-			-		-		9,849,977			10,000			5,949,000			-			-			-			5,959,000
Total other expenses		(1,737,000	)		(597,000	)
Equity-based compensation		-			-			-		-		-			-			3,368,000			-			-			-			3,368,000
Income (loss) before provision for income taxes		2,181,000			(6,749,000	)
Foreign currency translation income		-			-			-		-		-			-			-			-			4,000			-			4,000
Provision for income taxes		-			-
Net loss		-			-			-		-		-			-			-			-			-			(4,630,000	)		(4,630,000	)
Net income (loss)	$	~~2,181,000~~-		$	~~(6,749,000~~-	)		-		-		-			-			-			-			-			(4,630,000	)		(4,630,000	)
Net income (loss) per share, basic	$	0.15		$	(0.35	)
Balance, December 31, 2023		-		$	-			-	$	-		24,345,598		$	24,000		$	20,807,000		$	(2,000	)	$	9,000		$	(19,280,000	)	$	1,558,000
Net income (loss) per share, diluted	$	0.08		$	(0.35	)
Balance		-		$	-			-	$	-		24,345,598		$	24,000		$	20,807,000		$	(2,000	)	$	9,000		$	(19,280,000	)	$	1,558,000
Weighted average common shares outstanding – basic		14,495,621			19,482,261
Weighted average common shares outstanding – diluted		29,342,327			19,482,261
Comprehensive income (loss):
Net income (loss)	$	2,181,000		$	(6,749,000	)
Change in foreign currency translation		7,000			(2,000	)
Comprehensive income (loss)	$	2,188,000		$	(6,751,000	)

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

F-4

CalEthos, Inc.

Consolidated Statements of Changes in Stockholders’ Deficit

For the Years Ended December 31, 2022 and 2021

	Shares		Amount		Shares			Amount			Capital			Receivable			Income (Loss)			Deficit			Equity
	Series A Convertible Preferred Stock				Common Stock						Additional Paid-In			Stock Subscription			Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Shares			Amount			Capital			Receivable			Income (Loss)			Deficit			Equity
Balance, December 31, 2020		-	$	-		16,634,951		$	17,000		$	8,744,000		$	(2,000	)	$	-		$	(10,082,000	)	$	(1,323,000	)
Relative fair value of warrants issued with convertible promissory note		-		-		-			-			1,690,000			-			-			-			1,690,000
Stock options issued for services		-		-		-			-			575,000			-			-			-			575,000
Stock issued for debt forgiveness		-		-		75,000			-			166,000			-			-			-			166,000
Stock issued for accrued compensation		-		-		-			-			38,000			-			-			-			38,000
Stocks returned		-		-		(3,674,330	)		(4,000	)		4,000			-			-			-			-
Stock issued on exercise of options		-		-		1,435,000			2,000			-			-			-			-			2,000
Stock-based compensation		-		-		25,000			-			272,000			-			-			-			272,000
Restricted common stock awards issued for compensation		-		-		11,500,000			11,000			4,780,000			-			-			-			4,791,000
Foreign currency translation loss		-		-		-			-			-			-			(2,000	)		-			(2,000	)
Net loss		-		-		-			-			-			-			-			(6,749,000	)		(6,749,000	)
Balance, December 31, 2021		-		-		25,995,621		$	26,000		$	16,269,000			(2,000	)	$	(2,000	)		(16,831,000	)		(540,000	)
Stock-based compensation		-		-		-			-			6,377,000			-			-			-			6,377,000
Forfeiture of stock-based compensation		-		-		(1,500,000	)		(2,000	)		(11,166,000	)		-			-			-			(11,168,000	)
Foreign currency translation income		-		-		-			-			-			-			7,000			-			7,000
Net income		-		-		-			-			-			-			-			2,181,000			2,181,000
Net income (Loss)		-		-		-			-			-			-			-			2,181,000			2,181,000
Balance, December 31, 2022		-	$	-		24,495,621		$	24,000		$	11,480,000		$	(2,000	)	$	5,000		$	(14,650,000	)	$	(3,143,000	)

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

F-5

CalEthos, Inc.

Consolidated Statements of Cash Flows

For the Years Ended December 31,

	2022			2021
	2023			2022
Cash Flows From Operating Activities
Net income (loss)	$	2,181,000		$	(6,749,000	)
Net (loss) income	$	(4,630,000	)	$	2,181,000
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:
Impairment		~~154,000~~-			-154,000
Amortization of convertible promissory note discounts		~~1,526,000~~-			~~524~~1,526,000
Fair value of equity-based compensation		-			846,000
Forfeiture of restricted stock awards		-			(11,168,000	)
Forfeiture of restricted stock grants		(11,168,000	)		-
Fair value of equity-based compensation		3,032,000			6,377,000
Accretion of compensation cost for restricted stock awards		6,377,000			4,791,000
Gain on settlement of accounts payable		(23,000	)		-
Loss on extinguishment of debt		986,000			-
Changes in operating assets and liabilities
Prepaid expenses and other current assets		3(6,000	)		(53,000	)
Accounts payable and accrued expenses		~~107~~606,000			28107,000
Net Cash Used in Operating Activities		(~~820~~35,000	)		(~~565~~820,000	)
Cash Flows From Investing Activities
Other assets		(105,000	)		(38,000	)
Project development cost		(1,730,000	)		-
Net Cash Used in Investing Activities		(105,000	)		(38,000	)
Other assets		-			(105,000	)
Net Cash Used in Investing Activities		(1,730,000	)		(105,000	)
Cash Flows From Financing Activities
Proceeds from the issuance of convertible promissory notes		-			3,550,000
Repayments of notes payable		-			(50,000	)
Proceeds from the issuance of notes payable		-			150,000
Net Cash Used in Financing Activities		-			(50,000	)
Repayments of notes payable		(50,000	)		(50,000	)
Effect of exchange rate changes on cash and cash equivalents		6,000			(5,000	)
Proceeds from the exercise of options		-			2,000
Net decrease in Cash		(1,759,000	)		(980,000	)
Net Cash (Used in) Provided by Financing Activities		(50,000	)		3,652,000
Cash, Beginning of Period		2,067,000			3,047,000
Effect of exchange rate changes on cash and cash equivalents		(5,000	)		(2,000	)
Cash, End of Period	$	308,000		$	2,067,000
Net (decrease) increase in Cash		(980,000	)		3,047,000
Cash, Beginning of Period		3,047,000			-
Cash, End of Period	$	2,067,000		$	3,047,000
Supplemental disclosure of cash flow information:
Cash paid for interest	$	~~5,407~~-		$	-5,407
Cash paid for income taxes	$	-		$	-
Non-cash investing and financing activities
Relative fair value of warrants issued with convertible promissory notes	$	-		$	1,690,000
Equity-based compensation capitalized	$	336,000		$	-
Common stock issued for accrued compensation	$	-		$	38,000
Common stock issued from forgiven debt	$	4,974,000		$	-
Common stock issued from forgiven debt	$	-		$	166,000
Original issue discount recorded on convertible promissory notes	$	-		$	355,000

~~The accompanying notes are an integral part of these Consolidated Financial Statements.~~F-5

F-6

CalEthos, Inc.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, ~~2022 and 2021~~2023

Note 1 -– Organization and Accounting Policies

CalEthos, Inc. (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~~data ~~and~~center ~~liquid~~operation ~~cooled~~using ~~data~~the ~~center~~latest ~~that~~energy-efficient ~~provides~~building ~~colocation~~materials and ~~data~~cooling ~~center~~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 in or joint venture ~~with~~ with other more-established companies already in the industry that would add value to the Company’s business strategy.

InAs of 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~~a 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

On November 5, 2021, AIQ System Inc. (“AIQ”) was incorporated in Seoul, Republic of Korea. AIQ is authorized to issue 3 million shares of common stock. At the date of incorporation, 10,000 shares were issued to the Company for 100,000,000 Korean Won, or approximately $89,000, for 100% ownership of AIQ. As of July 2022, AIQ was placed into a dormant state of operations.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary from the formation date. All material intercompany transactions and balances have been eliminated in consolidation.

Going Concern and Liquidity

The Company incurred a net ~~income~~loss of approximately $24,~~181~~630,000 for the year ended December 31, ~~2022~~2023, ~~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 $1419,~~650~~280,000 as of December 31, ~~2022~~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.

The 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.

The Company is subject to a number of risks similar to those of other similar stage companies, including dependence on key individuals; successful development, marketing and branding of ~~products~~services; the uncertainty of product development and generation of revenues; dependence on outside sources of financing; risks associated with research and development; dependence on third-party suppliers and collaborators; protection of intellectual property; and competition with larger, better-capitalized companies. Ultimately, the attainment of profitable operations is dependent on future events, including obtaining adequate financing to fund ~~its~~the Company’s operations and generating a level of revenues adequate to support the Company’s cost structure.

The Company will need to raise debt or equity financing in the future in order to continue its operations and achieve its growth targets. However, there can be no assurance that such financing will be available in sufficient amounts and on acceptable terms, when and if needed, or at all. The precise amount and timing of the funding needs cannot be determined accurately at this time, and will depend on a number of factors, including 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.F-6

~~F-7~~The Company will need to raise debt or equity financing in the future in order to continue its operations and achieve its growth targets. However, there can be no assurance that such financing will be available in sufficient amounts and on acceptable terms, when and if needed, or at all. The precise amount and timing of the funding needs cannot be determined accurately at this time, and will depend on a number of factors, including the development of the Company’s data center campus development, approvals for construction permits, construction times, delivery of critical equipment, market demand for the Company’s wholesale colocation data center services, the timing of customer commitments for data center space, the management of working capital, and payment terms and conditions for purchase of the Company’s services. The Company believes its cash balances and cash flow from operations will not be sufficient to fund its operations and growth for the next twelve months from the issuance date of these financial 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.

COVID-19

The 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 evolving. 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.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods.

Foreign Currency Translation

The financial statements of foreign subsidiaries, for which the functional currency is the local currency, are translated into U.S. dollars 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.

Fair Value Measurement

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that market participants would use in valuing the asset or liability. There are three levels of inputs that may be used to measure fair value:

Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 - Other inputs that are directly or indirectly observable in the marketplace.

Level 3 - Unobservable inputs which are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

As of and for the year ended December 31, ~~2022~~2023, the Company had no assets or liabilities that require fair value measurement.

F-7

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. Cash and cash equivalents are recorded at cost, which approximates its fair value. The Company maintains its cash and cash equivalents in banks insured by the Federal Deposit Insurance Corporation (“FDIC”) in accounts that at times may be in excess of the federally insured limit of $250,000 per bank. The Company minimizes this risk by placing its cash deposits with major financial institutions. As of December 31, ~~2022~~2023 and ~~2021~~2022, the Company had approximately $122,~~817,~~000 and $21,~~797~~817,000, respectively, in excess of the federal insurance limit, respectively.

Prepaid Expense

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

~~Other~~Data ~~Assets~~Center Cost

~~Other~~Data ~~assets~~center ~~consist~~cost is stated at cost, which includes the cost incurred to complete phase I of ~~long-term~~our ~~advances~~data ~~paid~~center development plan. Phase I costs include the option payment for ~~chip~~the land and ~~processor~~the ~~design~~cost of consulting firms to provide power and ~~development~~connectivity assessments, feasibility studies, engineering plans, and project benchmarking. Also data center cost includes internal cost such as payroll related cost and debt interest cost.

FIn accordance with ASC 360-810-35, 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.

The 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. If the 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.

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

Related Parties

The Company follows Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) section 850-10 for the identification of related parties and disclosure of related party transactions.

Pursuant to ASC section 850-10-20 the related parties include (a.) affiliates of the Company (“Affiliate” means, with respect to any specified Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Person, as such terms are used in and construed under Rule 405 under the Securities Act); (b.) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option of ASC section 825–10–15, to be accounted for by the equity method by the investing entity; (c.) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; (d.) principal owners of the Company; (e.) management of the Company; (f.) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (g.) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

F-8

The consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: (a.) the nature of the relationship(s) involved; (b.) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; (c.) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and (d.) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

Commitments and Contingencies

The Company follows ASC section 450-20 to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

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

Debt Discounts

The 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.

Warrant Liability

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

F-9

Stock-Based Compensation

Income Taxes

The Company accounts for income taxes in accordance with ASC 740, Income Taxes, deferred tax assets and liabilities are computed based on the difference between the financial reporting and income tax bases of assets and liabilities using the enacted marginal tax rate. ASC 740 requires that the net deferred tax asset be reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the net deferred tax asset will not be realized.

The Company accounts for income taxes using an asset and liability approach, which requires the recognition of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. The measurement of current and deferred tax assets and liabilities is based on provisions of enacted tax laws; the effects of future changes in tax laws or rates are not anticipated. If necessary, the measurement of deferred tax assets is reduced by the amount of any tax benefits that are not expected to be realized based on available evidence.

F-9

The Company has adopted guidance related to the accounting for uncertainty in income taxes which prescribes rules for recognition, measurement and classification in the financial statements of tax positions taken or expected to be taken in a tax return. The guidance prescribes a two-step approach which involves evaluating whether a tax position will be more likely than not (greater than 50 percent likelihood) sustained upon examination based on the technical merits of the position. The second step requires that any tax position that meets the more likely than not recognition threshold be measured and recognized in the financial statements at the largest amount of benefit that is a greater than 50 percent likelihood of being realized upon settlement.

The Company’s policy is to recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense. The Company is not currently under examination by any taxing authority nor has the Company been notified of a pending examination. The statute of limitations for which the Company is generally no longer subject to federal or state income tax examinations by tax authorities is for years before 2013.

Earnings Per Share

WeThe ~~use~~Company uses ASC 260, “Earnings Per Share” for calculating the basic and diluted earnings (loss) per share. WeThe ~~compute~~Company computes basic earnings (loss) per share by dividing net income (loss) by the weighted average number of common shares outstanding. Diluted ~~earnings~~ earnings (loss) per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential ~~common~~ common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock ~~options~~ 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~~ common stock equivalents would have the effect of being anti-dilutive in the computation of net loss per share.

~~Securities~~The ~~that~~following ~~could~~table ~~potentially~~sets ~~dilute~~forth ~~income (loss) per share in~~ the ~~future were not included in the~~ computation of basic and diluted ~~income~~earnings (loss) per share onfor ~~December~~the 31years ~~because~~ended ~~their~~December ~~inclusion would be anti-dilutive as follows~~31,:

SCHEDULE OF ~~INCOME~~COMPUTATION OF BASIC AND DILUTED EARNINGS (LOSS) PER SHARE ~~ANTI-DILUTIVE~~

	2022			2021
Numerator	2023			2022
Restricted stock awards		-			11,500,000
Net (loss) income	$	(4,630,000	)	$	2,181,000
Convertible promissory notes and accrued interest		4,125,699			3,947,394
Effect of dilutive instruments – convertible notes interest		-			204,000
Series A warrants issued with convertible promissory notes		1,668,304			1,921,304
Numerator for diluted EPS	$	(4,630,000	)	$	2,385,000
Series B warrants to be issued upon exercise of Series A warrants		1,668,304			1,921,304
Denominator
Warrants issued for services		100,000			100,000
Denominator – for basic EPS		19,157,230			14,495,621
Total potential future shares		7,562,307			19,390,002
Effect of dilutive instruments
Convertible promissory notes and accrued interest		-			4,125,699
Restricted stock units		-			10,000,000
Warrants issued for services					721,006
Dilutive potential common shares		-			14,846,705
Denominator for diluted EPS		19,157,230			29,342,327
Basic earnings per share	$	(0.24	)	$	0.15
Diluted earnings per share	$	(0.24	)	$	0.08

~~Recent~~Securities ~~Accounting~~that ~~Pronouncements~~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.

The 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.

F-10

~~Note~~Recent 2Accounting ~~– Related Party Transactions~~Pronouncements

~~RELATED~~The ~~PARTY~~Company’s ~~TRANSACTIONS~~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 consolidated financial condition or the results of its operations.

~~The~~Note ~~Company~~2 ~~incurred~~– ~~approximately~~Data ~~$200,000~~Center 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.Costs

~~INTANGIBLE~~On ~~AND~~March ~~OTHER~~30, ~~ASSETS~~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 up. Once the escrow is set up, the Company will deposit the $84,000. If the Company does not exercise the Option by September 2024, the Escrow funds will be returned to the Company.

OnThe ~~December~~Purchase ~~23,~~Price ~~2021,~~is ~~AIQ~~payable ~~entered~~with ~~into~~ a ~~Technology~~cash ~~Development~~payment ~~Agreement~~of ~~(the “Agreement”) with PICOCEL~~$1, ~~Co.~~680,000 ~~Ltd.~~and (the ~~“Contractor” or~~issuance ~~“PICOCEL”)~~of to840,000 ~~develop~~shares aof ~~FPGA~~the ~~based~~Company’s ~~Bitcoin~~common ~~mining~~stock ~~simulation~~(the “Purchase ~~system~~Shares”). ~~The~~At ~~Agreement~~the ~~was~~closing ~~expected to be completed within 6 weeks for a total contract price~~ of ~~198,000,000~~the ~~Korean~~purchase ~~Won~~ (“~~KRW~~Closing Date”) ~~or approximately $167~~,~~000.~~ ~~Total~~if ~~payments~~the ~~made~~stock tois ~~PICOCEL as~~trading ofat ~~December~~a ~~31,~~value ~~2022~~less than ~~amounted to approximately~~ $~~69,000~~1.00 Onper ~~March 17~~share, ~~2022,~~ the Company ~~and~~is ~~PICOCEL~~required ~~entered~~to ~~into~~issue a ~~mutual~~promissory ~~agreement to~~note ~~cancel~~in ~~and~~the ~~terminate~~amount ~~the~~of ~~Agreement.~~$840,000, Aspayable ofon the ~~date~~third anniversary of the ~~termination~~closing date, ~~PICOCEL~~with ~~had~~an ~~completed~~interest ~~the~~rate ~~first~~equal ~~phase~~to of the ~~Agreement~~Secured ~~upon delivery~~Overnight ofFinancing ~~the~~Rate ~~SHA-256~~plus ~~code and FPGA board simulator~~2.0%.

OnIf ~~April~~the 5,Purchase ~~2022~~Shares are issued at the Closing Date, ~~AIQ~~the ~~entered~~Company ~~into~~has aagreed ~~Technology~~to ~~Development~~repurchase ~~Agreement~~the Purchase Shares (the “~~Agreement~~Put Option”) under ~~with~~specific ~~NNS, Co~~circumstances. However, ~~Ltd. (~~the ~~“Contractor” or~~Put ~~“NNS”)~~Option toexpires ~~develop~~if athe ~~FPGA~~Company’s ~~based~~common ~~Bitcoin~~stock ~~mining~~trades ~~simulation~~above ~~system~~$2.00 ~~The~~per ~~Agreement~~share ~~was~~for ~~expected~~120 consecutive todays. beIf ~~completed~~the ~~within~~Company’s 9common ~~weeks for~~stock atrades ~~total~~below ~~contract~~$2.00 ~~price~~per ofshare ~~99,000,000~~for ~~KRW,~~10 ~~including~~consecutive 9days,~~000,000~~ ~~KRW~~the ~~VAT,~~Holder orhas ~~approximately~~the ~~$82,000.~~option for ~~The~~the ~~payments~~Company ~~are~~to ~~scheduled~~repurchase asthe ~~follows:~~Purchase Shares for $2.00 per share.

~~SCHEDULE~~As OFof ~~PAYMENTS~~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.

	Amount
	USD		KRW
Within 5 days after signing the contract	$	41,000		49,500,000
Within 5 days after all conditions are met as stated in “Schedule B – Statement of Work”		41,000		49,500,000
Total	$	82,000		99,000,000

Note 3 – Accounts Payable and Accrued Expenses

Payment 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.

Impairment

During 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.

Indicators 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.

As 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.

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

SCHEDULE OF IMPAIRMENT LOSS

	Amount		VAT		Total
PICOCEL	$	69,000	$	5,000	$	74,000
NNS		69,000		5,000		74,000
Total		138,000		10,000		148,000
Foreign exchange loss		4,000		2,000		6,000
Impairment loss	$	142,000	$	12,000	$	154,000

F-11

Note 4 – Accounts Payable and Accrued Expenses

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

	2022		2021
	2023		2022
Accounts payable	$	~~186~~218,000	$	~~221~~186,000
Accrued expenses		28330,000		9928,000
Accrued interest		~~326~~122,000		~~114~~326,000
Accounts payable and accrued expenses	$	~~540~~670,000	$	~~434~~540,000

Accrued Interest

The following table presents the details of accrued interest as of December 31,:

SCHEDULE OF ACCRUED INTEREST

	2022		2021
	2023		2022
Notes payable	$	177,000	$	917,000
Convertible promissory notes		~~309~~115,000		~~105~~309,000
Balance, end of the year	$	326,000	$	114,000
Balance, end of period	$	122,000	$	326,000

~~Note 5 – Notes Payable~~F-11

Note 4 – Notes Payable

The table below summarizes the transactions asfor ofthe year ended December 31,:

SCHEDULE OF NOTES PAYABLE

	2022			2021
	2023			2022
Balance, beginning of the year	$	~~111~~61,000		$	1161,000
Additions		–			~~150,000~~–
Payments		(50,000	)		(50,000	)
Conversion		(50,000	)		–
Balance, end of the year	$	6111,000		$	~~111~~61,000

On July 7, 2020, the Company issued a promissory note in the principal amount of $11,000. The note is noninterest bearing. The principal was due on or before ~~August~~March 711, ~~2020~~2022. During any event of default under the note, the interest rate shall increase to 10% per annum. Events of default include failure to pay principal or interest, breach of covenants, breach of representations and warranties, borrower’s assignment of a substantial part of its property or business, any money judgment, writ, or similar process shall be entered or filed ~~against~~ 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 and interest amount outstanding under this note was $11,000 ~~as of December 31, 2022. The note principal~~ and ~~interest are past due~~$4, ~~therefore in default. For the year ended December 31~~000, ~~2022~~respectively, ~~the Company has accrued approximately~~ ~~$3,000~~as of ~~default~~December ~~interest~~31, 2023.

On ~~February~~April 1922, 2021, the Company issued a promissory note in the principal amount of $2550,000 (“2021 Note”). The interest on the unpaid principal balance ~~accrued~~ 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 ~~February 19~~April 22, 2022. If the Company fails to pay the balance of this note in full on the ~~due~~ date or fails to make any ~~payment~~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 of default include failure to make any payment including accrued interest when due, voluntary, or involuntary petition of bankruptcy, ~~appointment~~ 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 and interest amount ~~was~~outstanding ~~settled~~under inthis ~~full~~note onwas ~~January~~$11,000 25and $7,000, ~~2022~~respectively, December 31, 2023.

OnIn ~~April~~December 222023, ~~2021,~~ the Company ~~issued~~offer athe ~~promissory~~2021 ~~note~~Note inholder ~~the~~to ~~principal~~convert, ~~amount~~without ofa ~~$50~~time limit,~~000.~~ ~~The~~the principal and interest oninto the ~~unpaid principal balance~~Company’s ~~accrued~~common stock at a ~~rate~~price of ~~10%~~$0.96 per ~~annum~~share. The ~~principal~~holder ~~and~~agreed ~~any~~to ~~accrued~~convert ~~interest~~the ~~was~~principal toand beinterest ~~paid~~of inapproximately a$50,000 ~~single~~and ~~installment~~$17,000, respectively, on(total or$67,000) ~~before~~for ~~April 22~~196,010 ~~2022.~~shares Ifof the Company’s ~~fails~~common tostock ~~pay~~with ~~the~~a ~~balance~~fair ofmarket ~~this~~value ~~note~~of inapproximately ~~full~~$188,000 as onof the date orof ~~fails~~conversions. toAs ~~make~~the ~~any~~terms ~~payments~~of ~~due~~the ~~within~~conversion 15the ~~days~~Holders ~~of the~~did ~~due~~not ~~date,~~provide any ~~unpaid~~concession ~~principal~~to ~~shall accrue interest at~~ the ~~rate~~Company ofand ~~15%~~there ~~per~~was not ~~annum~~an ~~during~~inducement ~~the~~to ~~default.~~Holders ~~Events~~to ofconvert, ~~default~~because ~~include~~the ~~failure to~~offer ~~make~~did ~~any~~not ~~payment~~have ~~including~~a ~~accrued~~time ~~interest when due~~limit, ~~voluntary,~~the orCompany ~~involuntary~~has ~~petition~~accounted offor ~~bankruptcy,~~the ~~appointment~~conversion ofin accordance awith ~~receiver, custodian,~~ASC ~~trustee~~470-50-40-4. orThe ~~similar~~difference ~~party~~between tothe ~~take~~fair ~~possession~~value of the ~~Company’s~~consideration ~~assets~~paid orof ~~property~~approximately $188,000 orand ~~assignment made by~~ the ~~Company for~~liability ~~the benefit~~ of ~~creditors.~~$67,000 ~~The~~was ~~principal~~approximately ~~amount~~$121,000, ~~outstanding~~which ~~under this note~~ was ~~$50,000~~accounted asfor ofa ~~December~~loss ~~31,~~on ~~2022~~liability settlement. The ~~note~~loss ~~principal~~on ~~and~~settlement was recorded as ~~interest~~loss ~~are~~on ~~past~~extinguishment ~~due,~~of ~~therefore~~debt inon ~~default.~~the ~~Interest~~statement ~~accrued,~~of ~~including~~operations ~~default~~for ~~interest,~~the asyear ofended December 31, ~~2022 is $10,000~~2023.

~~F-12~~Interest expense on these notes payable amounted to $9,000 and $14,000 for the years ended December 31, 2023 and 2022, respectively.

OnNote ~~July~~5 1,– ~~2021,~~Convertible ~~the~~Promissory 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 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.Notes

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

Note 6 – Convertible Promissory Notes

InConvertible ~~2021, the Company issued two convertible~~ promissory notes ~~amounting~~consisted 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~~following ~~of maturity will accrue interest at rate of 10% per annum (default interest). Interest accrued~~ as of December 31, 2022 is $133,000. The 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.:

In 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 $1.95.

In 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.

The 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.

Financing 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.

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

	2022			2021
	2023			2022
Principal
Balance, beginning of year	$	4,613,000		$	~~708~~4,613,000
Additions		–			~~3,905,000~~–
Balance, end of year		4,613,000			4,613,000
Conversion		(4,272,000	)
Balance, end of year		341,000			4,613,000
Discount
Balance, beginning of year		~~1,526,000~~–			51,526,000
Additions		-–			~~2,045,000~~–
Amortization		~~(1,526,000~~–	)		(~~524~~1,526,000	)
Balance, end of year		-–			~~1,526,000~~–
Net carrying amount	$	4341,~~613,~~000		$	34,~~087~~613,000

~~Effective interest rate used to amortize the debt discount for the years ended December 31, 2022 and 2021 ranges from 4.76% to 64.60%.~~F-12

~~F-13~~The effective interest rate used to amortize the debt discount for the year ended December 31, 2022 ranged from 4.76% to 64.60%.

~~Potential~~In ~~future~~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 to $0.54 per share. As of December 31, 2023 approximately five of the Holders agreed to convert principal and interest of approximately, $4,272,000 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 bethe ~~issued~~Company onand 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 ~~notes~~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.

~~SCHEDULE~~Interest OFexpense ~~POTENTIAL~~on ~~FUTURE~~default ~~SHARES~~convertible ~~ISSUANCE~~promissory OFnotes ~~CONVERSION~~amounted ~~NOTES~~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.

	2022		2021
Principal	$	4,613,000	$	4,613,000
Interest		309,000		105,000
Total		4,922,000		4,718,000
Conversion price per share		1.00 – 1.25		1.00 – 1.25
Potential future shares		4,125,699		3,947,394

Note 6 – Commitments and Contingencies

The 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.

Note 7 – Commitments and contingencies

Litigation

From 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~~.

OnEmployment January 3, 2022, a complaint was filed against our company in the Superior Court of California, County of Los Angeles titled Michael Sekula v. 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. Plaintiff 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.Agreement

OnIn June 92023, ~~2022,~~the aCompany ~~Settlement~~executed an employment agreement (“Employment Agreement”) ~~and~~to ~~Mutual~~employ ~~Release~~an ~~was~~individual ~~reached~~to bybe the ~~parties~~Company’s President inand ~~the~~Chief ~~above~~Operating ~~mentioned~~Officer ~~complaint~~(“Executive” ~~whereby~~or as“COO”). ~~full consideration~~As compensation for services rendered, the ~~plaintiff~~Executive will be paid a base salary of $250,000 per annum. The Executive’s ~~execution~~base salary may be increased as certain milestones are met, such as 1) when the necessary governmental permits are granted to start construction of ~~and~~the ~~compliance~~Data ~~with~~Center, 2) once the ~~agreement~~Data Center is operational and ~~plaintiff~~at least 25% of the planned MW’s ~~release~~of collation capacity is leased. Also, at the discretion of ~~all~~the ~~claims~~Company, following each calendar ~~against~~year ~~the~~of ~~defendants~~continued employment, the ~~Company~~Executive ~~agreed~~shall be eligible to ~~pay~~receive a ~~gross~~discretionary ~~settlement~~bonus ~~amount~~of up to fifty percent (50%) of ~~$90~~Executive’s base salary during the first year of employment,~~000~~ 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 ~~Such~~established ~~payment~~by the Company. In addition, the Executive was ~~made~~granted onoptions ~~June~~to 23purchase 600,000 ~~2022~~and 1,900,000 shares of the Company’s common stock (see Note 7 – Stockholders Deficit) for further information.

~~Note~~The 8Employment –Agreement ~~Equity~~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 91st day and the end of the first year of employment, the Executive will be entitled to a pro-rata portion of such payment.

~~EQUITY~~F-13

~~Shares~~Note ~~Authorized~~7 – Stockholders Deficit

~~Preferred~~June 2023 – Stock Options

~~Series~~As Apart ~~Convertible~~of ~~Preferred~~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. The Stock Options are exercisable for a period of seven years from the date of grant, which was June 19, 2023 (“Grant Date”).

The ~~Series~~Incentive AOption ~~Convertible~~shall ~~Preferred~~vest ~~Stock~~and ~~(“Series~~become A”exercisable as follows: (i) isoptions ~~convertible~~to ~~into~~purchase up to 200,000 shares of ~~the~~Common ~~Company’s~~Stock ~~common~~shall ~~stock~~vest atand become exercisable on the ~~rate~~ first anniversary of ~~$1.38~~the ~~per~~Grant ~~share,~~Date; ~~subject~~(ii) options to ~~adjustments~~purchase ~~based~~up to 200,000 shares of Common Stock shall vest and become exercisable on the ~~Company’s~~second ~~future~~anniversary ~~sales~~ of ~~financial~~the ~~instruments~~Grant atDate; aand ~~value~~(iii) ~~less~~options ~~than~~to ~~$1.38~~purchase up to 200,000 ~~per~~shares ~~share.~~of ~~The~~Common ~~holders~~Stock shall vest and become exercisable on the third anniversary of the ~~Series~~Grant ADate; ~~have~~provided that the ~~right~~Optionee tois ~~convert~~an ~~any~~employee ~~time~~in ~~after~~good standing with the ~~date~~Company ofon such ~~issuance~~applicable vesting date. ~~With~~The ~~the~~Incentive ~~issuance~~Option Grant Date fair value of $300,000 was calculated using the ~~convertible promissory~~Black ~~notes,~~Scholes asfair ~~explained~~value inoption-pricing ~~Note~~model 5with ~~above~~key input variables provided by management, as of the ~~Series~~date ~~A’s~~of ~~conversion~~issuance: ~~rate~~volatility ~~adjusted~~of to339%, the ~~$1.00~~fair ~~per~~value ~~share.~~of Incommon ~~accordance~~stock ~~with~~$0.50, ~~ASC~~estimated ~~470~~life of 5 years, ~~the~~risk-free ~~Company~~rate ~~has~~of ~~calculated~~3.99% and ~~the~~dividend ~~effect~~rate of $0. For the ~~conversion~~year ~~rate~~ended ~~adjustment~~December 31, ~~which~~2023, ~~was~~ approximately $3698,000~~. The conversion rate~~ ~~adjustment~~was ~~has~~earned. ~~been~~Of ~~treated~~the asamount aearned ~~deemed~~of ~~dividend~~$98,000 approximately ~~which~~$74,000 was ~~has~~capitalized ~~been~~as ~~presented~~date incenter cost and the ~~Statement~~remaining of$24,000 was ~~Changes~~expensed inas ~~Stockholders’~~stock-based ~~Deficit~~compensation.

The ~~Series~~Non-Qual AOption isshall ~~mandatorily~~vest ~~convertible~~and ~~upon~~become ~~(i)~~exercisable ~~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.follows:

	(1)	216,666 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.

	(2)	the remaining 1,250,000 shares based on the Company completing the following milestones:

	a.	250,000 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.
	b.	250,000 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).
	c.	250,000 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.
	d.	500,000 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.

The 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.

F-14

OnThe ~~any~~Non-Qual ~~matter~~Option ~~presented~~Grant toDate ~~the~~fair ~~stockholders~~value of ~~the~~$875,000 was ~~Company~~calculated ~~for~~using ~~their~~the ~~action~~Black orScholes ~~consideration~~fair atvalue option-pricing ~~any~~model ~~meeting~~with ofkey ~~stockholders~~input ofvariables ~~the~~provided ~~Company (or~~ by ~~written consent of stockholders in lieu of meeting)~~management, ~~each~~as ~~holder~~ of ~~outstanding~~the ~~shares~~date of ~~Series~~issuance: Avolatility ~~shall~~range ~~be entitled to cast the number~~ of ~~votes equal~~ 137% to 338%, the ~~number~~fair ofvalue ~~whole shares~~ of common stock ~~into~~$0.50, estimated ~~which~~life ~~the~~range ~~shares~~ of ~~Series~~3.9 years Ato ~~held~~5.0 years, byrisk-free ~~such~~rate ~~holder~~range ~~are~~of ~~convertible~~3.99% asto of5.24% and ~~the~~dividend ~~record~~rate ~~date~~of ~~for~~$0. The ~~determining~~calculated ~~stockholders~~compensation ~~entitled~~for tothe ~~vote~~year onended ~~such~~December ~~matter.~~31, ~~Except~~2023 aswas ~~provided~~approximately ~~by law or by the other provisions~~$279,000 of ~~the~~which ~~Articles of Incorporation~~$209,000 was ~~holders~~capitalized ofas ~~Series~~data Acenter ~~shall~~development ~~vote~~cost and ~~together with~~ the ~~holders~~remaining of$70,000 ~~common~~was ~~stock~~expensed as astock-based ~~single class~~compensation.

~~From~~December ~~and~~2023 ~~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.Options

OnIn ~~February~~December 112023, ~~2020~~the Board of Directors approved the issuance of stock options to the directors for the purchase of 500,000, 750,000 and 404,000 of the Company’s ~~converted~~common 85stock,~~975~~ for a total of 1,654,000 shares, to the three directors (“Directors Options”) for an exercise price of ~~Series~~$0.54, which Awas ~~into~~the afair ~~Convertible~~market ~~Promissory~~value ~~Notes~~of inthe Company’s common stock on the ~~principal~~date ~~amount~~of ~~approximately~~issuance. The Director Options vested on December ~~$147~~31,~~000~~ 2023 and expire on December 29, 2030.

~~Common~~The ~~Stock~~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.

In ~~January~~December ~~2021~~2023, the ~~Company’s~~Board ~~President~~of ~~and~~Directors aapproved ~~member of~~ the ~~Board~~issuance of ~~Directors,~~stock ~~resigned~~options asto anthe ~~officer~~Company’s CEO and ~~director~~COO offor the ~~Company~~purchase of 1,000,000 and 1,000,000, respectively (“~~Termination~~2023 ~~Agreement~~Executive Options”). ~~Part~~for ofan ~~the~~exercise ~~Termination~~price ~~Agreement~~of ~~stipulates~~$0.54, ~~the~~which ~~return~~was ofthe ~~3,674,330~~fair ~~shares~~market ofvalue of the Company’s common stock ~~(“Cancelled~~on ~~Shares”).~~the ~~The~~date ~~Cancelled~~of ~~Shares~~issuance. ~~were~~The ~~returned~~2023 ~~and~~Executive ~~cancelled~~Options ~~on April 20~~vest, ~~2021.~~as follows:

InThe ~~March~~both ~~2021,~~ the ~~Company’s Chief Executive Officer (“~~CEO’) ~~agreed~~and toCOO ~~forgive approximately $68~~1,000,000 ~~due~~options tovest ~~him,~~and ~~which was~~become ~~treated~~exercisable as ~~contributed paid in capital.~~follows:

In 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 cash.

	(1)	166,667 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.

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

~~In September~~a. ~~2021~~100,000 shares upon completion of the ~~Company~~initial ~~entered~~site ~~into~~development aplan ~~release~~and ~~agreement~~Data ~~with~~Center ~~one~~design, and submission of ~~its~~a ~~consultants~~complete set of plans to Imperial County Planning and Development Department for approvals and permits. Asb. ~~part~~100,000 shares upon the Company receiving permits necessary to start construction of the ~~separation~~data ~~payment~~center site and facilities (including but not limited to power substation, ~~the~~water ~~Company issued~~delivery, 25pumping,~~000~~ ~~shares~~storage ~~valued~~and aton- ~~$76~~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). c. 100,000 shares) upon the completion of construction of a complete data center facility and ~~paid~~receipt ~~$20~~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. d. 200,000 ~~cash~~shares) inupon ~~October~~the ~~2021~~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.

~~Restricted~~The ~~Common~~Company’s management has accounted for the 2023 Executive Options in accordance with ASC 718 – Stock ~~Awards~~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 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.

OnThe ~~August~~2023 ~~17,~~Executive ~~2021,~~Options ~~the~~grant ~~Company~~date ~~entered~~fair ~~into~~value ~~Restricted~~of ~~Share~~$1,060,000 was ~~Award~~calculated ~~Agreements~~using (the ~~“Award~~Black ~~Agreements”)~~Scholes fair value option-pricing model with ~~two~~key ~~consultants pursuant~~input tovariables ~~which~~provided by management, as of the ~~Company~~date ~~issued~~of issuance: volatility range of 232.67% to 235.04%, the ~~consultants~~fair ~~shares~~value of common stock of$0.50, estimated ~~the~~life ~~Company~~range inof ~~exchange~~4.5 years ~~for~~to ~~their future services~~4.77 ~~The~~years, ~~Awards~~risk-free ~~had~~rate anof ~~initial~~4.12% and ~~term~~dividend rate of ~~one~~$0. For the year, ~~which~~ended ~~was~~December to31, be2023, ~~automatically~~the ~~renewed~~Company onrecorded acompensation ~~year-to-year~~expenses ~~basis~~of ~~unless~~approximately ~~either~~$59,000, of ~~party~~which ~~gave~~approximately a$21,000 ~~written~~was ~~notice~~expensed ofas ~~termination.~~compensation ~~The~~expense ~~two~~and ~~consultants~~approximately $38,000 was ~~who~~capitalized ~~entered~~as ~~into~~data ~~these~~center ~~agreements include:~~cost.

	1)	A consultant who was granted 10,000,000 restricted share awards.
	2)	An entity, which is owned by the Company’s CEO and majority shareholder, was granted 1,500,000 restricted share awards.

The Company’s management accounted for the Award Grants as restricted stock compensation in accordance with ASC 718 – Stock Compensation (“ASC 718”). 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 period.

The 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

The 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.

F-15

~~Also~~In December 2023, the Board of Directors approved the issuance of stock options to two consultants, an executive advisor and data atcenter development advisor, for the ~~end~~purchase of ~~August~~350,000 and ~~2022~~350,000, for each consultant (collectively “2023 Consultant Options”) for an exercise price of $0.54, which was the ~~Company~~fair ~~canceled~~market value of the ~~restricted~~Company’s common stock ~~grant~~on ~~issued~~the todate M1of ~~Advisors LLC~~issuance.

The ~~table~~ ~~below~~350,000 ~~summarizes~~options ~~the~~for ~~transactions~~data ~~related~~center todevelopment ~~the~~consultant ~~Company restricted stock awards as of December 31~~vest, ~~2022~~as follows:

SCHEDULE OF COMPANY RESTRICTED STOCK AWARDS

	(1)	43,750 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.

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

	Shares			Deferred compensation
Grant date fair value		11,500,000		$	22,195,000
Accretion		-			(11,168,000	)
Canceled		(1,500,000	)		(11,027,000	)
Balance as of December 31, 2022		10,000,000		$	-

	a.	35,000 upon completion of the initial site development plan and Data Center design and 100% Construction Documents.
	b.	17,500 upon the Award of a GMP contract to a construction manager/company
	c.	17,500 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).
	d.	35,000 upon the completion of all Network Ready meet me rooms in the first data center
	e.	70,000 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.

~~Restricted~~The ~~stock~~Company’s ~~grant~~management ~~compensation~~has ~~expense~~accounted for the ~~year~~data ~~ended~~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, ~~2022~~2024, isthe asthird ~~follows:~~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.

~~SCHEDULE~~The OFdata ~~RESTRICTED~~center ~~STOCK~~development ~~GRANT~~consultant ~~COMPENSATION~~options ~~EXPENSE~~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.

2022 Accretion expense	$	6,377,000
Reversal of 2021 accretion expense		(4,791,000	)
Reversal of 2022 accretion expense		(6,377,000	)
Restricted stock grant compensation	$	(4,791,000	)

The 350,000 options for executive advisor, as follows:

~~Issuance~~ a. 70,000 upon completion of ~~Stock~~the ~~Options~~initial site development plan and ~~Warrants~~data center design and 100% construction documents. b. 35,000 upon the award of a GMP contract to a construction manager/company. c. 35,000 options upon the Company receiving the permits necessary to start construction of the data center site and facilities. d. 70,000 options upon the completion of a network-ready meeting room in the first data center. e. 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.

InThe ~~February~~Company’s ~~2021,~~management ~~the~~has ~~Company~~accounted ~~signed~~for athe ~~new~~executive ~~consulting~~advisors ~~agreement~~options ~~that~~in ~~granted~~accordance ~~one~~with ofASC ~~its~~718 ~~shareholders~~– anStock ~~option~~Compensation to(“ASC 718”). ~~purchase~~ASC ~~750,000~~718 ~~shares of~~requires the Company’s ~~common~~to ~~stock~~estimate atthe ~~$0.001~~service ~~per~~period ~~share~~over ~~for~~which the ~~consultancy~~compensation ~~work~~cost ~~provided~~will ~~from~~be ~~August~~recognized. ~~2020~~Management has toestimated ~~February~~that ~~2021.~~the ~~The~~first ~~options were~~development ~~fully~~phase ~~vested~~(a) onwill ~~the~~be ~~date~~completed ofby ~~issuance.~~October ~~The~~1, ~~fair~~2024, ~~value~~the ofsecond ~~the~~development ~~options~~phase ~~was~~(b) ~~approximately~~by ~~$52~~December 31,~~000~~ 2024, asthe ofthird ~~the~~development ~~grant~~phase ~~date,~~(c) ofby ~~which~~April ~~approximately $38~~1,~~000~~ ~~was~~2025, ~~expensed~~and the fourth and ~~accrued~~fifth ~~during~~development ~~the~~phases ~~year~~(d) ~~ended~~and ~~December~~(e) 31by September 1, ~~2020~~2026. The ~~and~~estimated ~~$14,000~~service ~~was~~period ~~expensed~~will be adjusted for ~~the~~actual ~~year~~and ~~ended~~expected ~~December~~completion 31date changes. Any such change will be recognized prospectively, and ~~2021~~the remaining deferred compensation will be recognized over the remaining service period.

InThe ~~May~~data ~~2021,~~center ~~the~~development ~~Company~~consultant ~~signed~~options agrant ~~letter~~date offair ~~understanding~~value ~~that granted one~~ of ~~its~~$182,000 was ~~shareholders~~calculated anusing ~~option~~the toBlack ~~purchase~~Scholes ~~300,000~~fair ~~shares of the~~value ~~Company’s~~option-pricing ~~common~~model ~~stock~~with atkey ~~$0.001~~input ~~per~~variables ~~share~~provided ~~for~~by ~~the~~management, ~~consultancy~~as ~~work~~of ~~provided~~the ~~during~~date ~~the~~of ~~Company’s~~issuance: ~~restructuring~~volatility ~~phase~~of ~~from~~224.03%, ~~February~~the ~~17,~~fair ~~2021~~value ~~through~~of ~~April~~common ~~30,~~stock ~~2021~~$0.50, estimated ~~The~~life ~~options~~of ~~were~~3.5 years, ~~fully~~risk-free ~~vested~~rate onof ~~the~~4.127% and ~~date~~dividend rate of ~~issuance~~$0. For ~~The~~the ~~fair~~year ~~value~~ended ofDecember 31, 2023, the ~~options~~Company ~~was~~recorded ~~approximately $561,000,~~compensation asexpenses of ~~grant~~approximately ~~date~~$8, 000, which was ~~expensed~~capitalized ~~during~~as ~~the~~data ~~year~~center ~~ended December 31, 2021~~cost.

In 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.

The 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):

SCHEDULE OF STOCK OPTION ACTIVITIES

Number of Stock Option Shares

Exercise Price Range Per Share

Weighted Average Exercise Price

Relative Fair Value

Aggregate Intrinsic Value

Number of Shares

Weighted Average Strike Price/Share

Weighted Average Remaining Contractual Term (Years)

Weighted Average Grant Date Fair Value/Share

Aggregate Intrinsic Value

Balance, January 1, 2021

~~385,000~~-

–-

~~0.001~~-

–-

~~7,315~~–

Granted

~~1,050,000~~-

~~0.001~~-

~~1.94~~-

–-

Forfeited

–

Exercised

~~(1,435,000~~–

)

~~0.001~~–

–

Expired

–

Balance, December 31, 2021

–

Balance, December 31, 2022

Granted

–6,854,000

–0.53

–7.00

–0.51

–2,980,000

Forfeited

–

Exercised

–

Expired

–-

Balance, December 31, 2022

–

Balance, December 31, 2023

6,854,000

0.53

7.00

0.51

2,980,000

Vested and exercisable, December 31, 2022

–

Vested and exercisable, December 31, 2023

1,654,000

0.54

7.00

0.52

695,000

Unvested, December 31, 2022

–

Unvested, December 31, 2023

5,200,000

0.52

7.00

0.50

2,285,000

On 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, 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% and dividend rate of $0.

F-16

~~The 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):~~Warrants

In November 2023, the Company issued two warrants to purchase 2,000,000 and 3,545,801 (“2023 Warrants”) to two of the Company’s directors. The 2023 Warrants have an exercise price of $0.54, which was the fair value of the Company’s common stock on the date of issuance. 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.

During 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).

SCHEDULE OF WARRANTS ACTIVITY

	Number of Shares			Weighted Average Strike Price/Share		Weighted Average Remaining Contractual Term (Years)		Weighted Average Grant Date Fair Value/Share		Aggregate Intrinsic Value
Balance, January 1, 2021		353,804		$	1.50		2.88	$	0.18	$	–
Balance, January 1, 2022		2,021,304		$	1.84		2.28	$	1.80	$	-
Granted		~~1,667,500~~-			~~1.86~~-		~~3.00~~-		~~1.67~~-		~~0.11~~-
Forfeited		–			–		–		–		–
Exercised		–			–		–		–		–
Expired		–(253,000	)		–1.50		–-		–1.37		–
Balance, December 31, 2021		2,021,304			1.80		2.98		1.14		0.17
Balance, December 31, 2022		1,768,304			1.84		1.58		1.86		-
Vested and exercisable, December 31, 2021		2,021,304			1.80		2.98		1.14		0.17
Granted		5,545,801			0.54		0.66		–		–
Unvested, December 31, 2021		–			–		–		–		–
Forfeited		(1,567,500	)		1.86		–		–		–
Balance, January 1, 2022		2,021,304			1.80		2.98		1.14		0.17
Exercised		-			–		–		–		–
Granted		–			–		–		–		–
Expired		(100,804	)		1.50		2.98		1.14		0.17
Forfeited		–			–		–		–		–
Balance, December 31, 2023		5,645,801			1.84		3.00		1.49		1,118,000
Exercised		–			–		–		–		–
Vested and exercisable, December 31, 2022		5,645,801			1.84		3.00		1.49		1,118,000
Expired		(253,000	)		1.80		2.98		1.14		0.17
Unvested, December 31, 2023		–		$	–		–	$	–	$	–
Balance, December 31, 2022		1,768,304			1.84		3.00		1.49		–
Vested and exercisable, December 31, 2022		1,768,304			1.84		3.00		1.49		–
Unvested, December 31, 2022		–		$	–		–	$	–	$	–

~~The~~Note ~~following~~8 ~~table~~– ~~sets~~Income ~~forth~~Taxes ~~the weighted-average assumptions used to estimate the fair value of warrants granted for the year ended December 31:~~

~~SCHEDULE OF~~INCOME ~~FAIR VALUE OF WARRANTS~~TAXES

	2022		2021
Expected life (in years)		–		3
Risk-free interest rate		–		0.27% - 0.42	%
Expected volatility		–		405% - 406	%
Dividend yield		–		0.00	%
Stock price		–		$ 0.10 – 1.95

For 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. 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.

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

	2023		2022
Current provision for income taxes:
Federal	$	-	$	-
State		-		-
Total current income tax		-		-

Deferred tax expense:
Federal		-		-
State		-		-
Total deferred tax		-		-
Total income tax	$	-	$	-

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

	2023			2022
Taxes calculated at federal rate		21.0	%		21.0	%
Permanent differences		(13.8	)		-
State tax, net of federal impact		-			-
Return to provision		-			-
Other		2.3			14.4
Change in valuation allowance		(9.5	)		(35.4	)
Provision for income taxes		0	%		0	%

F-17

~~Note~~The 9tax –effects, ~~Earnings~~rounded ~~(Loss)~~to ~~Per~~thousands, ~~Share~~of ~~EARNINGS~~temporary ~~(LOSS)~~differences ~~PER~~that ~~SHARE~~give rise to significant portions of the deferred tax assets at December 31, are presented below:

The 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

Numerator	2022		2021
Net income (loss)	$	2,181,000	$	(6,749,000	)
Effect of dilutive instruments
Convertible notes interest expense		204,000		-
Numerator for diluted EPS		2,385,000		(6,749,000	)
Denominator
Denominator - for basic EPS		14,495,621		19,482,261
Effect of dilutive instruments
Warrants		721,006		-
Restricted stock awards		10,000,000		-
Convertible notes		4,125,699		-
Dilutive potential common shares		14,846,705		-
Denominator for diluted EPS		29,342,327		19,482,261
Basic EPS	$	0.15	$	(0.35	)
Diluted EPS	$	0.08	$	(0.35	)

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

Note 10 – Deferred Tax Assets and Income Tax Provision

DEFERRED TAX ASSETS AND INCOME TAX PROVISION

Deferred Tax Assets

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

Deferred 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.

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

	2022			2021
	2023			2022
Net deferred tax assets – Non-current:
Deferred tax assets
Intangible assets	$	1,000		$	-
Net operating loss carryforwards	$	1,786,000		$	1,661,000
Impairment loss		38,000			-
Stock based compensation		328,000			9,000
Interest expense limitations		802,000			-
Intangible assets		1,000			1,000
Stock-based compensation		9,000			1,488,000
Impairment loss		38,000			38,000
Expected income tax benefit from NOL carry-forwards		859,000			1,002,000
Total deferred tax assets		2,153,000			1,709,000
Less valuation allowance		(1,709,000	)		(2,490,000	)
Deferred tax liability
Deferred tax assets, net of valuation allowance	$	-		$	-
Deferred tax liability		-			-
Total deferred tax liability		-			-
Net deferred tax assets		2,153,000			1,709,000
Valuation allowance		(2,153,000	)		(1,709,000	)
Net deferred tax	$	—		$	—

~~F-18~~Deferred 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. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which these deductible temporary differences reverse.

~~Income~~For ~~Tax~~financial ~~Provision~~reporting purposes, the Company has incurred a loss in each period since its inception. Based on all available evidence, including the ~~Statements~~Company’s history of ~~Operations~~losses, management believes it is more likely than not that the net deferred tax assets will not be fully realizable. Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets on December 31, 2023, and 2022. 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.

AOn ~~reconciliation~~December of31, 2023, the Company has federal ~~statutory~~and state net operating loss carryforwards, which are available to offset future taxable income, of ~~tax~~approximately ~~rate~~$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 ~~effective~~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, ~~rate~~respectively. In general, an ownership change, as adefined ~~percentage~~by Sections 382 and 383, results from transactions increasing ownership of ~~income~~certain ~~before~~stockholders ~~income~~or ~~taxes~~public groups in the stock isof asthe ~~follows~~corporation ~~for~~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 ~~years~~asset ~~ended~~would ~~December~~be ~~31:~~removed from the deferred tax asset schedule with a corresponding reduction in the valuation allowance. Due to the existence of the valuation allowance, limitations created by future ownership changes, if any, will not impact the Company’s effective tax rate.

~~SCHEDULE~~The OFCompany ~~RECONCILIATION~~files OFincome ~~INCOME~~tax ~~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.

	2022			2021
Federal statutory income tax rate		21.0	%		21.0	%
Change in valuation allowance on net operating loss carry-forwards		(21.0	)		(21.0	)
Effective income tax rate		0.0	%		0.0	%

The 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.

Note 119 – Subsequent Events

The 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~~there ~~following~~are no reportable events: except for the following.

~~Purchase~~In January and February 2024, the remaining convertible promissory notes principal balance and accrued interest of ~~Land~~$341,000 ~~for~~and ~~Building~~$115,000, respectively awere ~~Data~~converted ~~Center~~into 884,942 shares of the Company’s common stock.

~~On March~~In ~~30,~~February ~~2023~~2024, the Company ~~signed~~issued ~~an option agreement to acquire 80 acres of commercially zoned land in Imperial County~~100, ~~California (the “Option”) for $3,360,~~000 ~~(“Purchase~~ ~~Price”).~~shares ~~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’s ~~required~~common stock to ~~deposit~~ an ~~additional~~individual ~~$84,000 into~~who anheld ~~escrow~~a ~~(“Escrow~~promissory ~~Funds”). If~~note ~~the~~issued ~~Company~~on ~~does~~August ~~not~~31, ~~exercise~~2018 ~~the Option~~ by ~~September~~M1 ~~2024,~~Advisors ~~the Escrow funds will be returned to the Company~~LLC.

~~The Purchase~~In ~~Price~~February is2024, ~~payable~~issued ~~with~~ a ~~cash~~promissory ~~payment~~note ofin ~~$1,680,000 and~~ the ~~issuance~~principal amount of ~~840~~$1,000,000 that ~~shares~~bears ofinterest ~~the~~at ~~Company’s common stock (~~the ~~“Purchase~~ ~~Shares”).~~rate ~~At the closing~~ of ~~the~~10% ~~purchase~~per ~~(“Closing~~annum ~~Date”),~~and ifmatures ~~the~~on ~~stock~~May is30, ~~trading~~2024 atand a ~~value~~five-year ~~less than~~warrant ~~$1.00~~to ~~per~~purchase ~~share,~~up ~~the Company is required~~ to ~~issue a promissory note in the amount of $840~~200,000, ~~payable on the third anniversary~~shares of ~~the~~common ~~closing~~stock ~~date,~~ with an ~~interest~~initial ~~rate~~exercise ~~equal~~price toof ~~the~~$0.50 ~~Secured~~per ~~Overnight Financing Rate plus 2~~share.~~0%.~~

~~If the~~In ~~Purchase~~February ~~Shares are issued at the Closing Date~~2024, the Company ~~has~~hired ~~agreed to repurchase the Shares (the “Put Option”). The Put Option period ends on the one-year anniversary after~~ a ~~six-month~~consulting ~~holding period. However, if the Company’s common stock trades~~firm ~~above~~to ~~$2.00~~develop ~~per~~an ~~share~~environmental ~~for~~health ~~120~~and ~~consecutive~~safety ~~days,~~program ~~the~~compliant ~~Put~~with ~~Option~~ISO ~~expires.~~45001 Ifrequirements ~~the Company’s common stock trades below $2.00 per~~ for 10 ~~consecutive~~an ~~days,~~estimated ~~the~~fee ~~Holder~~of ~~has the option for the Company to repurchase the Purchase Shares for~~ $2200,000.~~00 per share. o~~

~~Employment~~On March 1, 2024, the Company hired an individual ~~Agreement~~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 3rd calendar years, respectively.

On March 27, 2023, executed an offer of employment to hire an individual as the Company’s president and chief operating officer. The 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. Also, the individual is eligible for a cash annual bonus and2,000,000 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.F-18

Cancellation of Restricted Stock Awards

On 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.

F-19

Filing Compare · CalEthos, Inc.