false FY 0001174891

 P5Y

 2023-06-30

 2024-03-30

 BUUZ:AIQSystemIncMember

 2021-11-05

 country: KR

 2021-11-04
 2021-11-05

 country: KR
 BUUZ:AIQSystemIncMember

 2021-11-04
 2021-11-05

 country: KR
 BUUZ:AIQSystemIncMember

 2021-11-05

 BUUZ:OptionAgreementMember

 2023-03-30

 BUUZ:OptionAgreementMember

 2023-03-29
 2023-03-30

 BUUZ:OptionAgreementMember
 us-gaap: SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember

 2023-03-30

 2020-07-07

 2020-07-06
 2020-07-07

 BUUZ:BorrowerMember

 2020-07-06
 2020-07-07

 BUUZ:PromissoryNoteOneMember

 2021-04-22

 BUUZ:PromissoryNoteOneMember

 2021-04-20
 2021-04-22

 BUUZ:PromissoryNoteOneMember

 us-gaap: DebtMember

 us-gaap: DebtMember

 us-gaap: LiabilityMember
 us-gaap: DebtMember

 BUUZ:LossOnLiabilitySettlementMember
 us-gaap: DebtMember

 us-gaap: LiabilityMember

 BUUZ:LossOnLiabilitySettlementMember

 srt: ChiefExecutiveOfficerMember

 2023-06-01
 2023-06-30

 BUUZ:IncentiveOptionMember

 2023-06-01
 2023-06-30

 2023-06-01
 2023-06-30

 BUUZ:IncentiveOptionMember

 BUUZ:FirstAnniversaryGrantDateMember

 BUUZ:SecondAnniversaryGrantDateMember

 BUUZ:ThirdAnniversaryGrantDateMember

 BUUZ:FirstAndSecondAnniversaryGrantDateMember

 BUUZ:ThirdAnniversaryGrantDateMember

 BUUZ:InitialSiteDevelopmentMember

 BUUZ:PermitsConstructionMember

 BUUZ:CompletionOfConstructionMember

 BUUZ:BuildToSuitMember

 BUUZ:DirectorOneMember

 BUUZ:DirectorTwoMember

 BUUZ:DirectorThreeMember

 srt: DirectorMember

 BUUZ:DirectorsMember

 BUUZ:DecemberTwentyTwentyThreeStockOptionMember

 BUUZ:DecemberTwentyTwentyThreeStockOptionMember

 srt: ChiefExecutiveOfficerMember

 srt: ChiefOperatingOfficerMember

 srt: ChiefExecutiveOfficerMember

 BUUZ:StockOptionOneMember

 BUUZ:StockOptionTwoMember

 BUUZ:StockOptionThreeMember

 BUUZ:StockOptionFourMember

 BUUZ:ConsultantsOneMember

 BUUZ:ConsultantsTwoMember

 BUUZ:BoardOfDirectorsMember

 BUUZ:StockOptionOneMember

 BUUZ:StockOptionTwoMember

 BUUZ:StockOptionThreeMember

 BUUZ:StockOptionFourMember

 BUUZ:StockOptionFiveMember

 BUUZ:StockOptionOneMember

 BUUZ:StockOptionTwoMember

 BUUZ:StockOptionThreeMember

 BUUZ:StockOptionFourMember

 BUUZ:StockOptionFiveMember

 BUUZ:WarrantOneMember

 2023-11-30

 BUUZ:WarrantTwoMember

 2023-11-30

 us-gaap: WarrantMember

 2023-11-30

 us-gaap: WarrantMember

 us-gaap: WarrantMember

 us-gaap: DomesticCountryMember

 us-gaap: StateAndLocalJurisdictionMember

 BUUZ:AfterTwoThousandSeventeenMember

 2024-01-31

 2024-02-01

 BUUZ:M1AdvisorsLLCMember

 2024-02-01

 2024-02-01

 2024-02-01

 utr:acre

 UNITED
STATES

 SECURITIES
AND EXCHANGE COMMISSION

 Washington,
D.C. 20549

 FORM

 (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, 2023

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

 Commission
file number 000-50331

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)

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

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

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

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

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.

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.

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.

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).

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 registrant, as of June 30, 2023, the last day of the registrant's most recently completed second fiscal quarter, was
$ 2,770,711, computed by reference to the closing sales price for the registrant's common stock on June 30, 2023, as reported
on The OTC Pink Market.

 As
of March 30, 2024 there were 24,330,540 outstanding shares of the registrant's common stock, par value $0.001 per
share.

Inc.

 Annual
Report on Form 10-K

 For
the Fiscal-Year Ended December 31, 2023

 TABLE
OF CONTENTS

 Page

 Cautionary
 Note Regarding Forward Looking Statements

 ii

 PART
 I

 Item
 1.

 Business.

 Item
 1A.

 Risk
 Factors.

 Item
 1B.

 Unresolved
 Staff Comments

 Item
 1C.

 Cybersecurity

 Item
 2.

 Properties.

 Item
 3.

 Legal
 Proceedings.

 Item
 4.

 Mine
 Safety Disclosures

 PART
 II

 Item
 5.

 Market
 for Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Market Information.

 Item
 6.

 Selected
 Financial Data.

 Item
 7.

 Management's
 Discussion and Analysis of Financial Condition and Result of Operations.

 Item
 7A.

 Quantitative
 and Qualitative Disclosures about Market Risk.

 Item
 8.

 Financial
 Statements and Supplementary Data.

 Item
 9.

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

 Item
 9A.

 Controls
 and Procedures.

 Item
 9B.

 Other
 Information.

 PART
 III

 Item
 10.

 Directors,
 Executive Officers, Promoters and Control Persons; Compliance With Section 16(A) of the Exchange Act.

 Item
 11.

 Executive
 Compensation

 Item
 12.

 Security
 Ownership of Certain Beneficial Owners and Management

 Item
 13.

 Certain
 Relationships and Related Transactions and Director Independence.

 Item
 14.

 Principal
 Accountant Fees and Services.

 Part
 IV

 Item
 15.

 Exhibits

 i

 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;

 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.

 ii

 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.

 We
are in the early stages of implementing our plan for the construction and operation 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.

 There
are many types of data centers and service models available in the marketplace. Generally, their classification depends on whether they
are owned by one or many organizations, how they fit into the topology of other data centers, what technologies they use for computing
and storage, and even their energy efficiency. However, there are four main types of data centers:

 Enterprise
 Data Centers. These are built, owned and operated by companies and are optimized for their end users. Most often they are housed
 on the corporate campus.

 Managed
 Services Data Centers. These data centers are managed by a third party (or a managed services provider) on behalf of a company. The
 company leases the equipment and infrastructure instead of buying it.

 Wholesale
 Colocation Data Centers. In colocation ("colo") data centers, a company rents space within a data center owned by others
 and located off company premises. The colocation data center hosts the infrastructure: building, cooling, bandwidth, security, etc.,
 while the company provides and manages the components, including servers, storage, and firewalls.

 Cloud
 Data Centers. In this off-premises form of data center, data and applications are hosted by a cloud services provider such as Amazon
 Web Services (AWS), Microsoft (Azure), or IBM Cloud or other public cloud provider.

 We
are developing our business model to compete in the wholesale colocation segment of the data center services industry, which is focused
on providing data center space to companies that provide the processing, networking and storage of data. With the move to treat data
as an asset, the data services market is expected to experience significant growth over the next decade. Industry automation and digital
businesses are expanding, and these businesses are expected to require huge amounts of data for their businesses. North America is the
most advanced region globally and data center services are in high demand.

 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 completed Phase I and entered into Phase II of our data center development plans. In the initial
phase of our project, we signed an option agreement on March 30, 2023 to acquire 80 acres of commercially-zoned land in Imperial County,
California 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-zoned 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 digital footprint before 2030. As a result, we believe the availability of nearby clean energy
for our Imperial County site will provide us a significant competitive advantage in the marketplace.

 In
Phase I of our development plan, which we completed in December 2023, we contracted with leading data center advisory firms to complete
site, power and connectivity assessments, feasibility studies, engineering plans and project benchmarking. Phase I of our plan included:

 Engaging
 HDR Engineering, Inc., a global professional services firm specializing in architecture, engineering,
 environmental and construction services ("HDR Engineering"), to complete a site assessment, project feasibility
 study, and the initial shovel-ready site development plan for our Imperial County site.

 Engaging
 ZGlobal, Inc., a power engineering and energy solutions firm ("ZGlobal"), to assess all available power and transmission
 routes in the immediate area of the site and to develop a plan to access power from close by geothermal and solar producers via Behind-The-Meter,
 Off-Take and Power Purchase Agreements directly and through agreements with the local grid operator.

 Engaging
 American Dark Fiber, Inc., a provider of dark fiber connectivity to municipalities, carriers,
 anchor institutions, content developers, data-center operators, and other sophisticated private network users, to develop
 a robust fiber-based infrastructure that will provide multiple diverse geographic routes of connectivity to our data center site.

 Engaging
 Linesight, a construction consultancy services firm ("Linesight"), to provide cost benchmarking of initial design concepts,
 and to assist with desktop pre-qualification of architect-engineering firms and construction managers

 Based
on the project assessment, feasibility and initial shovel-ready site plan developed by HDR Engineering, and the benchmarking of the project
by Linesight against 25 other large data center developments in the U.S. over the last 24 months, we plan to develop our 80-acre parcel
in Imperial County, California to support a 300-megawatt (MW) critical IT load data center campus of up to one million square feet of
rentable colocation space utilizing baseload geothermal and supplemental solar from local power producers. Our site is industrial zoned,
approved for data center use and today has access to up to 500MW of clean energy that can be delivered to it through two separate highly-reliable
230kV high-voltage transmission lines.

 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, Equinix, CyrusOne, QTS, and, Vantage, Compass,
among many others. In addition, we may face competition from other new entrants into the data center market. Many of our current and
potential competitors may have significant advantages over us, including greater name recognition, longer operating histories, pre-existing
relationships with current or potential customers, significantly greater financial, marketing and other resources, ownership of more
data centers and data centers that are more broadly distributed geographically, access to less expensive power, and more robust interconnected
hubs in certain geographic markets. All of these potential advantages could allow competitors to respond more quickly to new or changing
opportunities. In addition, once we are operational, if our competitors offer space, power and/or interconnection services at rates below
current market rates, or below the rates we are then charging our customers, we may lose potential customers or be pressured to reduce
our rental rates below those we are then charging or have modelled in order to retain customers when our customers' leases expire.

 As
a new entrant into the data center marketplace, we will compete against the larger, more established and better capitalized companies
that today control the majority of market share. We believe our principal advantages will be our location, which provides us with access
to an abundance of reasonably-priced local baseload geothermal and supplemental solar energy to power a 24/7 data center operation, low-latency
connectivity to major market hubs, the various power distribution and cooling designs that we will employ to support a wide range of
data center racking densities, and our proximity to the Southern California market and the multitudes of companies utilizing high-performance
computing that want close-by data center space.

 As
a developer of clean-energy powered data center space, we also compete for the services of key third-party service providers, including
engineers and contractors with expertise in the development of data centers. The competition for the services of specialized contractors
and other third-party providers required for the development of data centers is intense, increasing the cost of engaging such providers
and the risk of delays in completing our development 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, 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
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 four employees, three of whom are our executive officers, and one of whom is our VP of Data Center Development. None of
our employees are represented by a collective bargaining agreement, and we have never experienced any work stoppage. We believe we have
good relations with our employees.

 Corporate
History and Recent Developments

 We
were incorporated pursuant to the laws of the State of Nevada on March 20, 2002 under the name Integrated Brand Solutions Inc., and on
February 6, 2006, we changed our name to Upstream Biosciences Inc. From 2006 to December 2009, our company operated as a biotechnology
company, and from 2010 until May 2013, our company had no operating business. On July 11, 2013, we changed our corporate name to RealSource
Residential, Inc. Our initial business strategy in 2013 was to engage in various real estate related businesses. However, in 2016 we
disposed of all of our real estate and other assets and continued operations as a public "shell" company.

 On
December 20, 2018, we changed our corporate name from RealSource Residential, Inc. to CalEthos, Inc. 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 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, 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, 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

 On
April 1, 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 $2.62.

 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 March 30, 2024, there were 67 registered holders of record of our common stock. As of such date, 25,330,540 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, 2023 and 2022

 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
)

 $

 Revenue

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

 Operating
Expenses

 Professional
fees

 Our
professional fees decreased from $667,000 for the year ended December 31, 2022 to $344,000 for the year ended December 31, 2023,
representing a decrease of approximately $323,000. Our professional fees of $344,000 is net of data center capitalized cost of
approximately $80,000. Therefore, the actual professional fees incurred for the year ended December 31, 2023, was approximately
$424,000, a decrease of approximately $243,000. The decrease of approximately $243,000 was attributable to a $141,000 reduction in
the use of outside contractors, a $110,000 reduction in legal fees, and a $17,000 reduction in the overhead cost of our South
Korean subsidiary, for a total of $268,000. These reductions were offset by an approximate $21,000 increase in audit fees and a $4,000 increase in other
expenses for a total of $25,000.

 Equity-based
compensation (gain)

 Our
equity-based compensation for the year ended December 31, 2023 is attributable to the stock options and warrants issued to our
officers, directors and consultants during the year ended December 31, 2023 for a total expense of $3,032,000. Information
with respect to such equity-based compensation is set forth in Note 7 to our audited financial statements for the year ended
December 31, 2023 included elsewhere in this Report.

 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 of $154,000 in the year ended December 31, 2022 was due to the impairment of intangibles and other assets as a result
of the suspension of our South Korean subsidiary's operations.

 General
and administrative expenses

 Our
general and administrative expenses decreased from $52,000 in the year ended December 31, 2022 to $38,000 in the year ended December
31, 2023, representing a decrease of approximately $14,000.

 Payroll
and related expenses

 For
the year ended December 31, 2022, we did not have employees. Our first employee, our Chief Operating Officer,
was hired in March of 2023. The total payroll-related cost for this employee was approximately $226,000 for the year ended December 31, 2023,
of which approximately $175,000 was capitalized as data center cost.

 Financing
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,

 2023

 2022

 Current
 assets

 $
 318,000

 $
 2,071,000

 Current
 liabilities

 (1,022,000
)

 (5,214,000
)

 Working
 deficit

 $
 (704,000
)

 $
 (3,143,000
)

 Our
working capital decreased from a $3,143,000 deficit as of December 31, 2022 to a deficit of $704,000 as of December 31, 2023 for
a total change of $2,439,000. The decline in our working capital was due to (i) a decrease in the book basis of our convertible
promissory notes, for the December 2023 conversion and (ii) the decrease in our cash and cash equivalents, which was used for the data
center development.

 Cash
Flows

 For
 the years ended

 December
 31,

 2023

 2022

 Net
 cash used in operating activities

 $
 (35,000
)

 $
 (820,000
)

 Net
 cash used in investing activities

 (1,730,000
)

 (105,000
)

 Net
 cash provided by financing activities

 -

 (50,000
)

 Effect
 of exchange rate changes

 6,000

 (5,000
)

 Change
 in cash during the period

 (1,759,000
)

 (980,000
)

 Cash,
 beginning of period

 3,047,000

 Cash,
 end of period

 $
 308,000

 $

 Cash
flows from operations

 Cash
used in operating activities decreased to approximately $35,000 in 2023 from approximately $820,000 in 2022, which was predominantly
related to the reduction in our expenditures for filing fees, legal fees, transfer agent fees and consulting fees paid during the year.

 Cash
flow from investing

 Our
cash used for investing activities was approximately $1,730,000 for the year ended December 31, 2023. The primary use of cash
was for expenditures for the development of our data center.

 Cash
flows from financing

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

 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.

 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, 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 our company and our wholly-owned subsidiary from the formation date. All
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 our 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-17 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, 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, 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.

 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 breakdowns can occur because of simple error or mistake.

 Changes
In Internal Control Over Financial Reporting.

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

 Item
9B.
 Other
 Information.

 None.

 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

 Campbell

 Chairman
 of the Board and Chief Executive Officer

 Joel
 D, Stone

 President
 and Chief Operations Officer

 Dean
 S. Skupen

 Chief
 Financial Officer

 Steven
 Shum

 Sean
 Fontenot

 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.

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.

 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.

 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.

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, the salary and benefits of our executive officers are determined by our
entire board of directors. As we continue to develop our data center and commence selling colocation services, we expect to
increase the size of our board to include independent directors who will approve the compensation arrangements with our executive officers.

 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) Reports

 Section 16(a) of the Exchange
Act requires our executive officers, directors and persons who beneficially own more than 10% of our common stock to file with the SEC
reports of their ownership and changes in their ownership of our common stock. To our knowledge, based solely on review of the copies
of such reports and amendments to such reports with respect to the year ended December 31, 2023 filed with the SEC, all required Section
16 reports under the Exchange Act for our directors, executive officers and beneficial owners of greater than 10% of our common stock
were filed on a timely basis during the year ended December 31, 2023, except for (i) late Form 3 filings for Joel Stone and Dean Skupen,
(ii) late Form 4 filings for Michael Campbell, Sean Fortenot and Steven Shum, and (iii) late Schedule 13D filings for Michael Campbell
and Sean Fortenot. As of the date of the filing of this annual report, all such Form 3, Form 4 and Schedule 13D filings have been made.

 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, 2023 and 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
 ($)

 Campbell

 2023

 -

 -

 -

 1,601,110

 -

 -

 204,179
 (1)

 1,805,289

 Chief
 Executive Officer

 2022

 -

 -

 -

 -

 -

 200,064
 (1)

 200,064

 Joel
 D. Stone

 2023

 187,500

 -

 -

 409,968

 -

 -

 38,396

 635,864

 President
 and Chief Operating Officer (2)

 2022

 -

 -

 -

 -

 -

 -

 -

 -

 Dean
 S. Skupen

 2023

 -

 -

 -

 -

 -

 -

 60,000
 (3)

 60,000

 Chief
 Financial
 Officer

 2022

 -

 -

 -

 -

 -

 -

 60,000
 (3)

 60,000

 (1)

 Represented
 amounts earned by Mr. Campbell as a consultant to our company. Mr. Campbell became an employee of our company in March
 2024.

 (2)

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

 (3)

 Represents
 amounts earned by Mr. Skupen under his consulting agreement.

 (4)

 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.

 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 st
 day 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

 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. The consulting
agreement contains customary confidentiality restrictions and work-product provisions, as well as customary non-competition
covenants and non-solicitation covenants with respect to our employees, consultants and customers.

 Equity
Compensation Plan Information

 The
following table provides information as of December 31, 2023, regarding our compensation plans under which equity securities are authorized
for issuance:

 Plan
 category

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

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

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

 (a)

 (b)

 (c)

 2021
 Equity compensation plan approved by security holders

 6,854,000

 $
 0.53

 3,146,000

 Equity
 compensation plans not approved by security holders

 —

 —

 —

 Total

 6,854,000

 $
 0.53

 3,146,000

 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 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, 2023, options to purchase an aggregate of 6,854,000 shares of common stock had been made under the Equity Plan, and 3,146,000
shares authorized under the Equity Plan remained available for award purposes.

 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 10,000,000 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.

 Incentive
Plan Awards

 The
following table sets forth information relating to stock 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

 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)

 -

 0.54

 12/31/2030

 -

 -

 Michael Campbell (2)

 -

 0.54

 12/6/2030

 -

 -

 Michael Campbell (3)

 0.54

 12/6/2030

 -

 -

 Joel D. Stone (2)

 -

 0.50

 12/6/2030

 -

 -

 Joel D. Stone (3)

 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)
 on December 6, 2023. Represents fully-vested options/warrants granted to M1 Advisors LLC,
 a company controlled by Michael Campbell.

 (2)
 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)
 on December 6. 2023. These options vest at various times based on the achievement of various
 performance milestones.

 (4)
 on June 19, 2023. These options vest at various times based on the achievement of various
 performance milestones.

 (5)
 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, 2023.

Compensation

 General.
 The following discussion describes the significant elements of the expected compensation program for members of our board of directors
and its committees. The compensation of our directors is designed to attract and retain committed and qualified directors and to align
their compensation with the long-term interests of our shareholders. Directors who are also executive officers (each, an "Excluded
Director") will not be entitled to receive any compensation for his or her service as a director, committee member or Chair of
our board of directors or of any committee of our board of directors.

Compensation Arrangements. Our non-employee director compensation program is designed to attract and retain qualified individuals
to serve on our board of directors. Our board of directors, on the recommendation of our compensation committee, will be responsible
for reviewing and approving any changes to the directors' compensation arrangements. In consideration for serving on our board
of directors, each director (other than Excluded Directors) will be paid an annual retainer. All directors will be reimbursed for their
reasonable out-of-pocket expenses incurred while serving as directors.

 Cash
Compensation. We did not pay any cash compensation to our directors during the year ended December 31, 2023. However, we intend to
implement a cash compensation program for our board members in the future.

 Equity
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 March 25, 2024, the names, addresses and number of shares of common stock beneficially owned by (i)
all persons known to our management to be beneficial owners of more than 5% of the outstanding shares of our common stock, (ii) each
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

and Nature of Beneficial Ownership

 Percent of Class(1)

 M1 Advisors LLC (2)

 11,009,000

 40.20%

 Michael Campbell (2)

 11,509,000

 41.27%

 Joel Stone

 -

 -

 Dean Skupen (3)

 325,000

 1.28%

 Steven Shum 4)

 408,655

 1.59%

 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)

 23,963,051

 76.71%

 (1)

 As
 of March 27, 2004, there were 25,330,540 shares of common stock outstanding. Except as indicated in the footnotes to this table,
 we believe that all persons named in the table have sole voting and investment power with respect to all common stock shown as beneficially
 owned by them. In accordance with the rules of the Securities and Exchange Commission (the "Commission"), a person or
 entity is deemed to be the beneficial owner of common stock that can be acquired by such person or entity within sixty (60) days
 upon the exercise of options or warrants or other rights to acquire common stock. Each beneficial owner's percentage ownership
 is determined by assuming that options and warrants that are held by such person (but not those held by any other person) and which
 are exercisable within sixty (60) days have been exercised. The inclusion herein of such shares listed as beneficially owned does
 not constitute an admission of beneficial ownership.

 (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 30 N Gould Street, Suite 12829, Sharidan, WY 82801 Mr. Skupen has sole voting and investment power over the shares held by DSS
 Consulting Corporation.

 (4)

 Represents
 (i) 196,010 shares of common stock owned of record by Core Fund Management, LP, a company controlled by Steven Shum, (ii) 4,655 shares
of common stock owned by Steven Shum and (iii) currently-exercisable stock options to purchase 404,000 shares of common stock owned by
Steven Shum. The address of Core Fund Management, LP is 1515 SW 5th Avenue, Suite 606, Portland, OR 97201. Mr. Shum has sole voting and
investment power over the shares held by Core Fund Management.

 (5)

 Represents
 (i) 8,574,386 shares of common stock owned of record by Nanosha LLC, a company controlled by Sean Fortenot, (ii) currently-exercisable
 warrants to purchase 2,200,000 shares of common stock owned of record by Nanosha LLC, and (iii) currently-exercisable stock options
 to purchase 750,000 shares of common stock owned by Sean Fortenot. The address of Nanosha Investments, LLC is 1202 Walnut Avenue,
 Long Beach, CA 90813. Mr. Fontenot has sole voting and investment power over the securities held by Nanosha Investments, LLC.

 Item
 13.

 Certain
 Relationships and Related Transactions, and Director Independence.

 A
"related party transaction" is any actual or proposed transaction, arrangement or relationship or series of similar transactions,
arrangements or relationships, including those involving indebtedness not in the ordinary course of business, to which we or our subsidiaries
were or are a party, or in which we or our subsidiaries were or are a participant, in which the amount involved exceeded or exceeds the
lesser of (i) $120,000 or (ii) one percent of the average of our total assets at year-end for the last two completed fiscal years and
in which any related party had or will have a direct or indirect material interest. A "related party" includes:

 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, 2023
and 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,

 2023

 2022

 Audit
 Fees and Audit Related Fees

 $
 45,000

 $

 28,000

 Tax
 Fees

 -

 —

 All
 Other Fees

 -

 —

 Total

 $
 45,000

 $

 28,000

 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.

 PART
IV

 Item.15.

 Exhibits,
 Financial Statement Schedules.

 Exhibit

 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).

 4.1

 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).

 Exhibit

 Description

 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).

 10.3

 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).

 10.4

 Form of Promissory Note dated February 12, 2024 of CalEthos Inc. to Nanosha Investments LLC.

 10.5

 Warrant dated February 12, 2024 of CalEthos Inc. issued to Nanosha Investments LLC.

 Code of Conduct and Ethics of CalEthos Inc. (incorporated by reference to Exhibit 14 to our Annual Report on Form 10-K filed on March 31, 2022).

 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**

 101.xsd**

 101.cal**

 101.def**

 101.lab**

 101.pre**

 Cover

 **

 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.

 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 9 th day of April 2024.

 Inc.

 By:

 /s/
 Michael Campbell

 Name:

 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

 April 9, 2024

 Campbell

 (Principal
 Executive Officer)

 /s/
 Dean S. Skupen

 Chief
 Financial Officer

 April 9, 2024

 Dean
 S. Skupen

 (Principal
 Accounting Officer)

 /s/
 Sean Fontenot

 April 9, 2024

 Sean
 Fontenot

 (Director)

 /s/
 Steven Shum

 April 9, 2024

 Steven
 Shum

 (Director)

 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 To
the Board of Directors and Stockholders of

Inc.

 Opinion
on the Financial Statements

 We
have audited the accompanying consolidated balance sheets of CalEthos Inc., (the "Company") as of December 31, 2023 and 2022,
the related consolidated statements of operations and comprehensive loss, changes in stockholders' equity (deficit) and cash flows
for each of the years in the two-year period ended December 31, 2023, and the related notes and schedules (collectively referred to as
the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2023 and 2022, and the consolidated results of its operations and
its cash flows for each of the two years in the period ended December 31, 2023 in conformity with accounting principles generally accepted
in the United States of America.

 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.

 New
York, NY

 April
9, 2024

 PCAOB
ID No. 587

 F- 1

 CalEthos, Inc.

 Consolidated Balance Sheets

 As of December 31,

 2023

 2022

 Assets

 Current assets

 Cash and cash equivalents

 $
 308,000

 $

 Prepaid and other current expenses

 10,000

 4,000

 Total current assets

 318,000

 2,071,000

 Data center costs

 2,262,000

 -

 Other assets

 -

 -

 Total assets

 $
 2,580,000

 $
 2,071,000

 Liabilities and stockholders' equity (deficit)

 Current liabilities

 Accounts payable and accrued expenses

 $
 670,000

 $
 540,000

 Convertible promissory notes, net

 341,000

 Notes payable

 11,000

 61,000

 Total current liabilities

 1,022,000

 5,214,000

 Stockholders' equity (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

 -

 -

 Common stock par value $ 0.001:
 100,000,000 shares authorized; 24,345,598
 and 24,495,621 shares issued
 and outstanding

 Additional paid-in capital

 20,807,000

 11,480,000

 Other comprehensive income

 9,000

 5,000

 Stock subscription receivable

)

)

 Accumulated deficit

 ( 19,280,000
)

 ( 14,650,000
)

 Total stockholders' equity (deficit)

 1,558,000

 ( 3,143,000
)

 Total liabilities and stockholders' equity (deficit)

 $
 2,580,000

 $
 2,071,000

 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

)

 Provision for income taxes

 -

 -

 Net (loss) income

)

 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

)

 Foreign currency translation gain

 4,000

 7,000

 Comprehensive (loss) income

 $
 ( 4,626,000
)

 $
 2,188,000

 F- 3

 CalEthos, Inc.

 Consolidated
Statement of Changes in Stockholders' Equity
(Deficit)

 For the Years Ended December 31, 2023 and 2022

 Capital

 Receivable

 Income (Loss)

 Deficit

 (Deficit)

 Series
 A convertible preferred stock

 Preferred
 Stock

 Common
 Stock

 Additional
 Paid-in

 Stock
 Subscription

 Other
 Comprehensive

 Accumulated

 Total
 Stockholders Equity

 Capital

 Receivable

 Income (Loss)

 Deficit

 (Deficit)

 Balance December 31, 2021

 -

 $
 -

 -

 $
 -

 25,995,621

 $
 26,000

 16,269,000

 $
)

 $
)

 $
 ( 16,831,000
)

 $
 ( 540,000
)

 Equity-based compensation

 -

 -

 -

 -

 -

 -

 6,377,000

 -

 -

 -

 6,377,000

 Forfeiture of equity-based compensation

 -

 -

 -

 -

 ( 1,500,000
)

)

 ( 11,166,000
)

 -

 -

 -

 ( 11,168,000
)

 Foreign currency translation income

 -

 -

 -

 -

 -

 -

 -

 -

 7,000

 -

 7,000

 Net income

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Balance, December 31, 2022

 -

 -

 -

 -

 24,495,621

 11,480,000

)

 5,000

 ( 14,650,000
)

 ( 3,143,000
)

 Balance

 -

 -

 -

 -

 24,495,621

 11,480,000

)

 5,000

 ( 14,650,000
)

 ( 3,143,000
)

 Cancellation of shares equity-based compensation

 ( 10,000,000
)

 ( 10,000
)

 10,000

 -

 -

 -

 -

 Shares issued for extinguishment of debt

 -

 -

 -

 -

 9,849,977

 10,000

 5,949,000

 -

 -

 -

 5,959,000

 Equity-based compensation

 -

 -

 -

 -

 -

 -

 3,368,000

 -

 -

 -

 3,368,000

 Foreign currency translation income

 -

 -

 -

 -

 -

 -

 -

 -

 4,000

 -

 4,000

 Net loss

 -

 -

 -

 -

 -

 -

 -

 -

 -

)

)

 Net income (loss)

 -

 -

 -

 -

 -

 -

 -

 -

 -

)

)

 Balance, December 31, 2023

 -

 $
 -

 -

 $
 -

 24,345,598

 $

 $
 20,807,000

 $
)

 $
 9,000

 $
 ( 19,280,000
)

 $
 1,558,000

 Balance

 -

 $
 -

 -

 $
 -

 24,345,598

 $

 $
 20,807,000

 $
)

 $
 9,000

 $
 ( 19,280,000
)

 $
 1,558,000

 F- 4

 CalEthos, Inc.

 Consolidated Statements of Cash Flows

 For the Years Ended December 31,

 2023

 2022

 Cash Flows From Operating Activities

 Net (loss) income

 $
)

 $

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

 Impairment

 -

 154,000

 Amortization of convertible promissory note discounts

 -

 1,526,000

 Forfeiture of restricted stock awards

 -

 ( 11,168,000
)

 Fair value of equity-based compensation

 3,032,000

 6,377,000

 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

 ( 6,000
)

 3,000

 Accounts payable and accrued expenses

 606,000

 107,000

 Net Cash Used in Operating Activities

 ( 35,000
)

 ( 820,000
)

 Cash Flows From Investing Activities

 Project development cost

 ( 1,730,000
)

 -

 Other assets

 -

 ( 105,000
)

 Net Cash Used in Investing Activities

 ( 1,730,000
)

 ( 105,000
)

 Cash Flows From Financing Activities

 Repayments of notes payable

 -

 ( 50,000
)

 Net Cash Used in Financing Activities

 -

 ( 50,000
)

 Effect of exchange rate changes on cash and cash equivalents

 6,000

 ( 5,000
)

 Net decrease in Cash

 ( 1,759,000
)

 ( 980,000
)

 Cash, Beginning of Period

 3,047,000

 Cash, End of Period

 $
 308,000

 $

 Supplemental disclosure of cash flow information:

 Cash paid for interest

 $
 -

 $
 5,407

 Cash paid for income taxes

 $
 -

 $
 -

 Non-cash investing and financing activities

 Equity-based compensation capitalized

 $
 336,000

 $
 -

 Common stock issued from forgiven debt

 $
 4,974,000

 $
 -

 F- 5

Inc.

 Notes
to the Consolidated Financial Statements

 For the Years Ended December 31, 2023

 Note
1 – Organization and Accounting Policies

 ORGANIZATION AND ACCOUNTING POLICIES

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 data center operation using the latest energy-efficient building materials
and cooling technologies and to provide wholesale colocation services to enterprise IT and hyperscale customers. In addition, the Company
may acquire assets and all or part of other companies operating in the high-density computing industry or invest in or joint venture
with other more-established companies already in the industry that would add value to the Company's business strategy.

 As
of July 2022, the Company's board of directors resolved to focus exclusively on developing a clean-energy-powered data center.

 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 loss of approximately $ 4,630,000 for the year ended December 31, 2023, had an accumulated deficit of approximately
$ 19,280,000 as of December 31, 2023 and had no recurring revenue from operations. The Company has financed its activities principally
through debt and equity financing and shareholder contributions. Management expects to incur additional losses and cash outflows in the
foreseeable future in connection with its operating activities. These conditions raise substantial doubt about the Company's ability
to continue as a going concern for one year from the issuance of these consolidated financial statements.

 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 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 the Company's operations and generating a level of
revenues adequate to support the Company's cost structure.

 F- 6

 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.

 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, 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, 2023 and 2022, the Company had approximately $ 22,000 and $ 1,817,000, 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.

 Data
Center Cost

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

 In
accordance with ASC 360-10-35, the Company reviews the carrying amounts of data center cost when events or changes in circumstances indicate
the assets may not be recoverable. If any such indication exists, the recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an individual asset, the Company
estimates the recoverable amount of the cash-generating unit to which the asset belongs.

 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.

 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.

 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

 The
Company uses ASC 260, " Earnings Per Share " for calculating the basic and diluted earnings (loss) per share. The Company
computes basic earnings (loss) per share by dividing net income (loss) by the weighted average number of common shares outstanding. Diluted
earnings (loss) per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential
common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock
options and warrants and stock awards. For periods with a net loss, basic and diluted loss per share is the same, in that any potential
common stock equivalents would have the effect of being anti-dilutive in the computation of net loss per share.

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

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

 Numerator

 2023

 2022

 Net (loss) income

 $
)

 $

 Effect of dilutive instruments – convertible notes interest

 -

 204,000

 Numerator for diluted EPS

 $
)

 $
 2,385,000

 Denominator

 Denominator – for basic EPS

 19,157,230

 14,495,621

 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

 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, 2023 because their inclusion would be anti-dilutive. Common stock equivalents amounted to 13,484,743 for the year
ended December 31, 2023.

 F- 10

 Recent
Accounting Pronouncements

 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 consolidated financial condition or the results of its operations.

 Note
2 – Data Center Costs

 DATA CENTER COSTS

 On
March 30, 2023, the Company signed an option agreement to acquire 80 acres of commercially-zoned land in Imperial County, California
(the "Option") for $ 3,360,000 ("Purchase Price"). The Option expires in September 2024. The Company paid a non-refundable
deposit of $ 84,000 on the signing of the Option, which has been recognized as other assets in the consolidated balance sheet.
The Company is required to deposit an additional $ 84,000 into escrow ("Escrow Funds") within 10 days after the execution
of the purchase agreement. As of the issuance of these consolidated financial statements, the escrow had not been set
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.

 The
Purchase Price is payable with a cash payment of $ 1,680,000 and the issuance of 840,000 shares of the Company's common stock (the
"Purchase Shares"). At the closing of the purchase ("Closing Date"), if the stock is trading at a value less
than $ 1.00 per share, the Company is required to issue a promissory note in the amount of $ 840,000, payable on the third anniversary
of the closing date, with an interest rate equal to the Secured Overnight Financing Rate plus 2.0 %.

 If
the Purchase Shares are issued at the Closing Date, the Company has agreed to repurchase the Purchase Shares (the "Put Option")
under specific circumstances. However, the Put Option expires if the Company's common stock trades above $2.00 per share for 120
consecutive days. If the Company's common stock trades below $2.00 per share for 10 consecutive days, the Holder has the option
for the Company to repurchase the Purchase Shares for $2.00 per share.

 As
of December 31, 2023, the Company has incurred costs of approximately $ 2,262,000
for the development of the Data Center, which includes approximately $ 196,000
of capitalized interest related to the convertible promissory notes.

 Note
3 – Accounts Payable and Accrued Expenses

 ACCOUNTS PAYABLE AND ACCRUED EXPENSES

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

OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES

 2023

 2022

 Accounts payable

 $
 218,000

 $
 186,000

 Accrued expenses

 330,000

 28,000

 Accrued interest

 122,000

 326,000

 Accounts payable and accrued expenses

 $
 670,000

 $
 540,000

 Accrued
Interest

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

OF ACCRUED INTEREST

 2023

 2022

 Notes payable

 $
 7,000

 $
 17,000

 Convertible promissory notes

 115,000

 309,000

 Balance, end of period

 $
 122,000

 $
 326,000

 F- 11

 Note
4 – Notes Payable

 NOTES PAYABLE

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

OF NOTES PAYABLE

 2023

 2022

 Balance, beginning of the year

 $
 61,000

 $
 61,000

 Additions

 –

 –

 Conversion

 ( 50,000
)

 –

 Balance, end of the year

 $
 11,000

 $
 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 March 11, 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 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 and $ 4,000, respectively,
as of December 31, 2023.

 On
April 22, 2021, the Company issued a promissory note in the principal amount of $ 50,000 ("2021 Note"). The interest on the
unpaid principal balance accrues at a rate of 10 % per annum. The principal and any accrued interest was to be paid in a single installment
on or before April 22, 2022. If the Company fails to pay the balance of this note in full on the date or fails to make any payments due
within 15 days of the due date, any unpaid principal shall accrue interest at the rate of 15 % per annum during the default. 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 and interest amount outstanding under this note was $ 11,000 and $ 7,000, respectively,
December 31, 2023.

 In
December 2023, the Company offer the 2021 Note holder to convert, without a time limit, the principal and interest into the Company's
common stock at a price of $ 0.96 per share. The holder agreed to convert the principal and interest of approximately $ 50,000 and $ 17,000,
respectively, (total $ 67,000) for 196,010 shares of the Company's common stock with a fair market value of approximately $ 188,000
as of the date of conversions. As the terms of the conversion the Holders did not provide any concession to the Company and there was
not an inducement to Holders to convert, because the offer did not have a time limit, the Company has accounted for the conversion in
accordance with ASC 470-50-40-4. The difference between the fair value of the consideration paid of approximately $ 188,000 and the liability
of $ 67,000 was approximately $ 121,000, which was accounted for a loss on liability settlement. The loss on settlement was recorded as
loss on extinguishment of debt on the statement of operations for the year ended December 31, 2023.

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

 Note
5 – Convertible Promissory Notes

 CONVERTIBLE PROMISSORY NOTES

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

OF CONVERTIBLE PROMISSORY NOTES

 2023

 2022

 Principal

 Balance, beginning of year

 $

 $

 Additions

 –

 –

 Conversion

 ( 4,272,000
)

 Balance, end of year

 341,000

 Discount

 Balance, beginning of year

 –

 1,526,000

 Additions

 –

 –

 Amortization

 –

 ( 1,526,000
)

 Balance, end of year

 –

 –

 Net carrying amount

 $
 341,000

 $

 F- 12

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

 In
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 the Company and there was not an inducement to Holders to convert, because the offer did
not have a time limit, the Company has accounted for the conversion in accordance with ASC 470-50-40-4. The
difference between the fair value of the consideration paid of approximately $ 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.

 Interest
expense on default convertible promissory notes amounted to $ 439,000 and $ 204,000 for the year ended December 31, 2023, respectively,
of which $ 214,000 and nil was capitalized as data center cost, respectively.

 Note
6 – Commitments and Contingencies

 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.
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.

 Employment
Agreement

 In
June 2023, the Company executed an employment agreement ("Employment Agreement") to employ an individual to be the Company's
President and Chief Operating Officer ("Executive" or "COO"). As compensation for services rendered, the Executive
will be paid a base salary of $ 250,000 per annum. The Executive's base salary may be increased as certain milestones are met, such
as 1) when the necessary governmental permits are granted to start construction of the Data Center, 2) once the Data Center is operational
and at least 25% of the planned MW's of collation capacity is leased. Also, at the discretion of the Company, following each calendar
year of continued employment, the Executive shall be eligible to receive a discretionary bonus of up to fifty percent (50%) of Executive's
base salary during the first year of employment, up to seventy-five percent (75%) of Executive's then-current base salary during
the second year of employment, and up to one-hundred percent (100%) of Executive's then-current base salary during Executive's
third year of employment (the "Bonus"). Payment of the Bonus will be based on achieving certain goals and performance criteria
established by the Company. In addition, the Executive was granted options to purchase 600,000 and 1,900,000 shares of the Company's
common stock (see Note 7 – Stockholders Deficit) for further information.

 The
Employment Agreement also provides for certain severance benefits upon termination by the Company without "cause" or by the
Executive for good reason. In the event of a termination by the Company without cause or by the Executive for good reason after the first
full year of employment, the Executive would be entitled to (i) continued payment of the base salary for the lesser of six months or
the remaining term of the Employment Agreement, subject to the Executive signing a timely and effective separation agreement containing
a release of all claims against the Company and other customary terms; provided, however, that if such termination is between the 91 st
 day and the end of the first year of employment, the Executive will be entitled to a pro-rata portion of such payment.

 F- 13

 Note
7 – Stockholders Deficit

 STOCKHOLDERS DEFICIT

 June
2023 – Stock Options

 As
part of the Employment Agreement, as defined in Note 6 – Commitments and Contingencies, the executive was granted an incentive
stock option ("Incentive Option") and a non-qualified stock option ("Non-Qual Option") (collectively "Stock
Options") to purchase 600,000 and 1,900,000, respectively, shares of the Company's common stock for $ 0.50 per share. The
Stock Options are exercisable for a period of seven years from the date of grant, which was June 19, 2023 ("Grant Date").

 The
Incentive Option shall vest and become exercisable as follows: (i) options to purchase up to 200,000
 shares of Common Stock shall vest and become
exercisable on the first anniversary of the Grant Date; (ii) options to purchase up to 200,000
 shares of Common Stock shall vest and become
exercisable on the second anniversary of the Grant Date; and (iii) options to purchase up to 200,000
 shares of Common Stock shall vest and become
exercisable on the third anniversary of the Grant Date; provided that the Optionee is an employee in good standing with the Company on
such applicable vesting date. The Incentive Option Grant Date fair value of $ 300,000
 was calculated using the Black Scholes fair value option-pricing model with key input variables provided by management,
as of the date of issuance: volatility of 339 %,
estimated life of 5
 years, risk-free rate of 3.99 %
For the year ended December 31, 2023, approximately $ 98,000
 was earned. Of the amount earned of $ 98,000
 approximately $ 74,000
 was capitalized as date center cost and the remaining $ 24,000
 was expensed as stock-based compensation.

 The
Non-Qual Option shall vest and become exercisable as 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.

 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

 The
Non-Qual Option Grant Date fair value of $ 875,000
 was calculated using the Black Scholes fair value
option-pricing model with key input variables provided by management, as of the date of issuance: volatility range of 137 %
to 338 %,
estimated life range of 3.9
 years to 5.0
 years, risk-free rate range of 3.99 %
to 5.24 %
The calculated compensation for the year ended December 31, 2023 was approximately $ 279,000
 of which $ 209,000
 was capitalized as data center development cost
and the remaining $ 70,000 was expensed as stock-based compensation.

 December
2023 Stock Options

 In
December 2023, 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 common stock, for a total of 1,654,000
shares, to the three directors ("Directors Options") for an exercise price of $ 0.54,
which was the fair market value of the Company's common stock on the date of issuance. The Director Options vested on December
31, 2023 and expire on December 29, 2030.

 The
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
December 2023, the Board of Directors approved the issuance of stock options to the Company's CEO and COO for the purchase of 1,000,000
and 1,000,000, respectively ("2023 Executive Options") for an exercise price of $ 0.54, which was the fair market value of
the Company's common stock on the date of issuance. The 2023 Executive Options vest, as follows:

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

 (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):

 a.

 100,000
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.

 100,000
 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.

 100,000
 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.

 200,000
shares) upon the signing of a build-to-suit contract
or one or more contracts being signed for 50% or more of a constructed and operational wholesale colocation facility's capacity.

 The
Company's management has accounted for the 2023 Executive 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 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.

 The
2023 Executive Options grant date fair value of $ 1,060,000
 was calculated using the Black Scholes fair value
option-pricing model with key input variables provided by management, as of the date of issuance: volatility range of 232.67 %
to 235.04 %,
estimated life range of 4.5
 years to 4.77
 years, risk-free rate of 4.12 %
For the year ended December 31, 2023, the Company recorded compensation expenses of approximately $ 59,000,
of which approximately $ 21,000
 was expensed as compensation expense and approximately
$ 38,000
 was capitalized as data center cost.

 F- 15

 In
December 2023, the Board of Directors approved the issuance of stock options to two consultants, an executive advisor and data
center development advisor, for the purchase of 350,000
and 350,000,
for each consultant (collectively "2023 Consultant Options") for an exercise price of $ 0.54,
which was the fair market value of the Company's common stock on the date of issuance.

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

 (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):

 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.

 The
Company's management has accounted for the data center development consultant options in accordance with ASC 718 – Stock
Compensation ("ASC 718"). ASC 718 requires the Company to estimate the service period over which the compensation cost will
be recognized. Management has estimated that the first development phase (a) will be completed by October 1, 2024, the second development
phase (b) by December 31, 2024, the third development phase (c) by April 1, 2025, and the fourth and fifth development phases (d) and
(e) by September 1, 2026. The estimated service period will be adjusted for actual and expected completion date changes. Any such change
will be recognized prospectively, and the remaining deferred compensation will be recognized over the remaining service period.

 The
data center development consultant options grant date fair value of $ 189,000
 was calculated using the Black Scholes fair value
option-pricing model with key input variables provided by management, as of the date of issuance: volatility 322.83 %,
estimated life of 5.5
 years, risk-free rate of 4.12 %
For the year ended December 31, 2023, the Company recorded compensation expenses of approximately $ 7,000,
which was capitalized as data center cost.

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

 a.

 70,000 upon completion of the initial site development plan and 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.

 The
Company's management has accounted for the executive advisors options in accordance with ASC 718 – Stock Compensation ("ASC
718"). ASC 718 requires the Company to estimate the service period over which the compensation cost will be recognized. Management
has estimated that the first development phase (a) will be completed by October 1, 2024, the second development phase (b) by December
31, 2024, the third development phase (c) by April 1, 2025, and the fourth and fifth development phases (d) and (e) by September 1, 2026.
The estimated service period will be adjusted for actual and expected completion date changes. Any such change will be recognized prospectively,
and the remaining deferred compensation will be recognized over the remaining service period.

 The
data center development consultant options grant date fair value of $ 182,000
 was calculated using the Black Scholes fair value
option-pricing model with key input variables provided by management, as of the date of issuance: volatility of 224.03 %,
estimated life of 3.5
 years, risk-free rate of 4.127 %
For the year ended December 31, 2023, the Company recorded compensation expenses of approximately $ 8,000,
which was capitalized as data center cost.

OF STOCK OPTION ACTIVITIES

 Number of Shares

 Weighted Average Strike Price/Share

 Weighted Average Remaining Contractual Term (Years)

 Weighted Average Grant Date Fair Value/Share

 Aggregate
 Intrinsic
 Value

 Balance, January 1, 2021

 -

 $
 -

 -

 $
 -

 $
 –

 -

 -

 -

 -

 -

 Forfeited

 –

 –

 –

 –

 –

 Exercised

 –

 –

 –

 –

 –

 Expired

 –

 –

 –

 –

 –

 Balance, December 31, 2022

 -

 -

 -

 -

 -

 6,854,000

 0.53

 7.00

 0.51

 2,980,000

 Forfeited

 –

 –

 –

 –

 –

 Exercised

 –

 –

 –

 –

 –

 Expired

 -

 -

 -

 -

 -

 Balance, December 31, 2023

 6,854,000

 0.53

 7.00

 0.51

 2,980,000

 Vested and exercisable, December 31, 2023

 1,654,000

 0.54

 7.00

 0.52

 695,000

 Unvested, December 31, 2023

 5,200,000

 $
 0.52

 7.00

 $
 0.50

 $
 2,285,000

 F- 16

 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).

OF WARRANTS ACTIVITY

 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, 2022

 2,021,304

 $

 1.84

 2.28

 $

 1.80

 $

 -

 -

 -

 -

 -

 -

 Forfeited

 –

 –

 –

 –

 –

 Exercised

 –

 –

 –

 –

 –

 Expired

 ( 253,000

)

 1.50

 -

 1.37

 –

 Balance,
 December 31, 2022

 1,768,304

 1.84

 1.58

 1.86

 -

 5,545,801

 0.54

 0.66

 –

 –

 Forfeited

 ( 1,567,500

)

 1.86

 –

 –

 –

 Exercised

 -

 –

 –

 –

 –

 Expired

 ( 100,804

)

 1.50

 2.98

 1.14

 0.17

 Balance,
 December 31, 2023

 5,645,801

 1.84

 3.00

 1.49

 1,118,000

 Vested
 and exercisable, December 31, 2022

 5,645,801

 1.84

 3.00

 1.49

 1,118,000

 Unvested,
 December 31, 2023

 –

 $

 –

 –

 $

 –

 $

 –

 Note
8 – Income Taxes

 INCOME TAXES

 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:

OF INCOME TAX (BENEFIT) EXPENSE

 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:

 SCHEDULE OF RECONCILIATION OF INCOME TAX

 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

 %

 %

 F- 17

 The
tax effects, rounded to thousands, of temporary differences that give rise to significant portions of the deferred tax assets at December
31, are presented below:

 SCHEDULE OF COMPONENTS OF DEFERRED TAX ASSETS

 2023

 2022

 Deferred tax assets

 Net operating loss carryforwards

 $
 1,786,000

 $
 1,661,000

 Stock based compensation

 328,000

 9,000

 Intangible assets

 1,000

 1,000

 Impairment loss

 38,000

 38,000

 Total deferred tax assets

 2,153,000

 1,709,000

 Deferred tax liability

 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

 $
 —

 $
 —

 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.

 For
financial reporting purposes, the Company has incurred a loss in each period since its inception. Based on all available evidence, including
the Company's history of losses, management believes it is more likely than not that the net deferred tax assets will not be fully
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.

 On
December 31, 2023, the Company has federal and state net operating loss carryforwards, which are available to offset future taxable income,
of approximately $ 6,295,000 which for federal purposes has an unlimited carryforward period and $ 6,330,000 which for state purposes begins
to expire in 2037. These carryforwards may be subject to an annual limitation under Section 382 and 383 of the Internal Revenue Code
of 1986, and similar state provisions if the Company experienced one or more ownership changes that would limit the amount of NOL and
tax credit carryforwards that can be utilized to offset future taxable income and tax, respectively. In general, an ownership change,
as defined by Sections 382 and 383, results from transactions increasing ownership of certain stockholders or public groups in the stock
of the corporation by more than 50 percentage points over a three-year period. The Company has not completed an IRC Section 382/383 analysis.
If a change in ownership were to have occurred, NOL and tax credit carryforwards could be eliminated or restricted. If eliminated, the
related asset would be removed from the deferred tax asset schedule with a corresponding reduction in the valuation allowance. 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.

 The
Company files income tax returns in the United States and the state of California. The statute of limitation is 3 and 4 years for Federal
and California, respectively. The first year that remains open is tax year ended December 31, 2020 and December 31, 2019 for Federal
and California, respectively. As of December 31, 2023 and 2022, there are no unrecognized tax benefits, and there are no significant
accruals for interest related to unrecognized tax benefits or tax penalties.

 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
 9 – Subsequent Events

 SUBSEQUENT EVENTS

 The
Company evaluated all events that occurred after the balance sheet date through the date the financial statements were issued to determine
if they must be reported. The management determined there are no reportable events except for the following.

 In
January and February 2024, the remaining convertible promissory notes principal balance and accrued interest of $ 341,000 and $ 115,000,
respectively were converted into 884,942 shares of the Company's common stock.

 In February 2024, the Company issued 100,000 shares of the Company's
common stock to an individual who held a promissory note issued on August 31, 2018 by M1 Advisors LLC.

 In February 2024, issued a promissory note in the principal amount of $ 1,000,000
that bears interest at the rate of 10 % per annum and matures on May 30, 2024 and a five -year warrant to purchase up to 200,000 shares
of common stock with an initial exercise price of $ 0.50 per share.

 In February 2024, the Company hired a consulting firm
to develop an environmental health and safety program compliant with ISO 45001 requirements for an estimated fee of $ 200,000.

 On March 1, 2024, the Company hired an individual
as vice president of data center development with an annual salary of $ 225,000. The salary increases to $ 240,000 and $ 250,000 on the
1st and 2nd anniversary dates, respectively. Also, the individual is eligible for an annual bonus of up to 25%, 35%, and 40% of the annual
salary for the 1st, 2nd, and 3 rd calendar years, respectively.

 F- 18