Indicate by check mark whether the registrant (1) has 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.~~days

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ~~[X]~~ ☒ No ~~[ ]~~☐

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. ~~34,017,796~~ 41,290,065shares as of May ~~6, 2021.~~10, 2022.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in 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”). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “forecasts,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to statements regarding our future results of operations and financial position, industry and business trends, equity compensation, business strategy, plans, market growth and our objectives for future operations.

The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to: the success of its digital currency mining activities; the volatile and unpredictable cycles in the emerging and evolving industries in which we operate, increasing difficulty rates for bitcoin mining; bitcoin halving; new or additional governmental regulation; the anticipated delivery dates of new miners; the ability to successfully deploy new miners; the dependency on utility rate structures and government incentive programs; the successful deployment of energy solutions for residential and commercial applications; the expectations of future revenue growth may not be realized; ongoing demand for the Company's software products and related services; the impact of global pandemics (including COVID-19) on logistics and shipping and the demand for our products and services; and other risks described in the Company's prior press releases and in its filings with the Securities and Exchange Commission (SEC), including under the heading "Risk Factors" in the Company's Annual Report on Form 10-K and any subsequent filings with the SEC. The forward-looking statements in this Quarterly Report on Form 10-Q are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report on Form 10-Q, whether as a result of any new information, future events or otherwise.

As used in this Quarterly Report on Form 10-Q, unless otherwise stated or the context requires otherwise, references to “CleanSpark,” the “Company,” “we,” “us,” and “our,” refer to CleanSpark, Inc. and its consolidated subsidiaries.

We may announce material business and financial information to our investors using our investor relations website at https://www.cleanspark.com/investor-relations/. We therefore encourage investors and others interested in CleanSpark to review the information that we make available on our website, in addition to following our filings with the SEC, webcasts, press releases and conference calls. Information contained on our website is not part of this Quarterly Report on Form 10-Q.

All reports we file with the SEC are available for download free of charge via the Electronic Data Gathering Analysis and Retrieval (EDGAR) System on the SEC’s website at www.sec.gov. We also make electronic copies of our reports available for download, free of charge, through our website at https://www.cleanspark.com/investor-relations/ as soon as reasonably practicable after filing such material with the SEC. Information contained on our website is not part of this Quarterly Report on Form 10-Q.

Our consolidated financial statements included in this Form 10-Q are as follows:

This report on Form 10-Q for the quarter ended March 31, ~~2021,~~2022, should be read in conjunction with the Company's annual report on Form 10-K for the year ended September 30, ~~2020,~~2021, filed with the Securities and Exchange Commission (“SEC”) on December ~~17, 2020.~~14, 2021.

The accompanying consolidated financial statements and footnotes have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended March 31, ~~2021~~2022 are not necessarily indicative of the results that can be expected for the full year.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

ORGANIZATION AND LINE OF BUSINESS

Organization

The Company ~~- CleanSpark, Inc.~~

– CleanSpark, Inc. (“~~CleanSpark”, “we”, “our”,~~CleanSpark,” “we,” “our,” or the "Company") was incorporated in the state of Nevada on October 15, 1987 ~~under the name,~~ as SmartData Corporation. In October 2016, the Company changed its name to CleanSpark, Inc. ~~in order~~

CleanSpark, Inc. is a bitcoin mining and energy technology company. The Company sustainably mines bitcoin and provides advanced energy technology solutions to ~~better reflect the Company’s brand identity.~~

commercial and residential customers to solve modern energy challenges. The Company, through itself and its wholly owned subsidiaries, has operated in the ~~alternative energy sector since March 2014, and in the~~ digital currency mining sector since December ~~2020.~~2020, and in the alternative energy sector since March 2014.

Lines of Business

~~Acquisitions Related to Subsidiaries and/or Assets of the Company~~Digital Currency Mining Segment

~~CleanSpark, LLC~~

On July 1, 2016, the Company entered into an Asset Purchase Agreement, as amended (the “Purchase Agreement”), with CleanSpark Holdings LLC, CleanSpark LLC, CleanSpark Technologies LLC, and Specialized Energy Solutions, Inc. (together, the “Seller”). Pursuant to the Purchase Agreement, the Company acquired CleanSpark, LLC and all the assets related to the Seller and its line of business.

~~CleanSpark Critical Power Systems, Inc.~~

On January 22, 2019, CleanSpark entered into an agreement with Pioneer Critical Power, Inc., whereby it acquired certain intellectual property assets and client lists. As a result of the transaction, Pioneer Critical Power Inc. became aThrough our wholly owned ~~subsidiary of the Company. On February 1, 2019, Pioneer Critical Power, Inc. was renamed to CleanSpark Critical Power Systems, Inc.~~

~~p2klabs, Inc.~~

On January 31, 2020, the Company entered into a Stock Purchase Agreement with p2klabs, Inc (“p2k”), and its sole stockholder, whereby the Company purchased all of the issued and outstanding shares of p2k from its sole stockholder. As a result of the transaction, p2k became a wholly owned subsidiary of the Company.

~~GridFabric, LLC~~

On August 31, 2020, the Company entered into a Membership Interest Purchase Agreement with GridFabric, LLC, (“GridFabric”), and its sole member, whereby the Company purchased all of the issued and outstanding membership units of GridFabric from its sole member. As a result of the transaction, GridFabric a wholly owned subsidiary of the Company.

~~ATL Data Centers LLC~~

~~On December 9, 2020, the Company entered into an Agreement and Plan of Merger (the “Merger”) with~~subsidiaries, ATL Data Centers LLC (“ATL”), and ~~its members whereby~~CleanBlok, Inc. (“CleanBlok”), the Company ~~purchased all of~~mines bitcoin. The Company entered the ~~issued and outstanding membership units~~bitcoin mining industry through our acquisition of ATL ~~from its members. As~~in December 2020. It acquired a ~~result of~~second data center in August 2021 and has had a co-location agreement with New York-based Coinmint, LLC in place since July 2021. Bitcoin mining has now become the ~~transaction,~~Company’s principal revenue generating business activity. We currently intend to acquire additional facilities, equipment and infrastructure capacity to continue to expand our bitcoin mining operations.

Through our subsidiaries CSRE Properties Norcross, LLC, CSRE Property Management Company, LLC and CSRE Properties, LLC, we maintain real property holdings for ATL ~~became a~~Data Centers LLC and CleanBlok Inc.

Energy Segment

The Company provides energy solutions through our wholly owned ~~subsidiary of the Company. (See Note 3 for details.)~~

~~Solar Watt Solutions,~~subsidiaries CleanSpark, LLC, CleanSpark Critical Power Systems, Inc.

~~On February 23, 2021, the Company entered into an Agreement~~, GridFabric, LLC, and ~~Plan of Merger (the “Merger”) with~~ Solar Watt Solutions, Inc. ~~(“SWS”), and its owners whereby the Company purchased all~~These solutions consist of ~~the issued and outstanding shares of SWS from its owners. As a result of the transaction, SWS became a wholly owned subsidiary of the Company. (See Note 3 for details.)~~

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~~Table of Contents~~

~~Lines of Business~~

~~Energy Business Segment~~

~~Through CleanSpark, LLC, we provide microgrid~~ engineering, design and software solutions, custom hardware solutions, Open Automated Demand response (“OpenADR”), solar, energy storage for microgrid and distributed energy systems to military, commercial and residential ~~customers. Our services consist of distributed energy microgrid system engineering~~customers in Southern California and ~~design, and project consulting services. The work is generally performed under fixed price bid contracts and negotiated price contracts.~~throughout the world.

~~Through CleanSpark Critical Power Systems, Inc., we provide custom hardware~~The Company’s solutions ~~for distributed energy systems that serve military and commercial residential properties. The equipment is generally sold under negotiated fixed price contracts.~~

~~Through GridFabric, LLC, we provide Open Automated Demand Response (“OpenADR”) and other middleware communication protocol~~are supported by a proprietary suite of software solutions ~~to commercial~~that include microgrid energy modeling, energy market communications and ~~utility customers.~~energy management solutions.

Other business activities

~~Through Solar Watt Solutions, Inc., which we acquired in February 2021, we provide solar and alternative energy solutions for homeowners and commercial businesses in Southern California.~~

Through ATL, ~~Data Centers LLC,~~ we also provide traditional data center services, such as providing customers with rack space, power and equipment, and offer several ~~cloud services~~cloud-based service solutions including virtual services, virtual storage, and data backup services.

~~Digital Agency Segment~~

Through p2kLabs, Inc., the Company provides design, software development, and other technology-based consulting services. The services provided are generally an hourly arrangement or fixed-fee project-based arrangements.

~~Digital Currency Mining Segment~~

Through ATL Data Centers LLC and our recently formed subsidiary, CleanBlok, LLC, we mine Bitcoin. We entered the Bitcoin mining industry through our recent acquisition of ATL Data Centers LLC, and we have recently acquired additional equipment and infrastructure capacity in order to expand our Bitcoin mining operations.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and ~~Liquidity~~Principles of Consolidation

The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission and should be read in conjunction with the audited financial statements and notes thereto contained in

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the Company’s most recent annual report on Form 10-K for the year ended September 30, ~~2020,~~2021, filed with the SEC on December ~~17, 2020~~14, 2021 (“Form 10-K”). In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented in this quarterly report on Form 10-Q have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted.

The ~~Company has incurred losses in the past while it developed its infrastructure and software platforms. As shown in the~~ accompanying unaudited ~~consolidated financial statements, the Company incurred operating losses of~~ ~~$8.7~~ ~~millionand produced net income of~~ ~~$232,510~~during the six months ended March 31, 2021. The Company has sufficient capital for ongoing operations from raising additional capital through the registered sale of equity securities pursuant to a registration statement on Form S-3. (See Note 11 for additional details.) As of March 31, 2021, the Company had working capital of ~~$171,118,618~~.

~~F-6~~

~~Table of Contents~~

~~Principles of Consolidation~~

~~The accompanying~~ consolidated financial statements include the accounts of CleanSpark, Inc., and its wholly owned operating subsidiaries, CleanSpark, LLC, CleanSpark II, LLC, CleanSpark Critical Power Systems Inc., p2kLabs, Inc, GridFabric, LLC, ATL Data Centers LLC, CleanBlok, Inc., CSRE Properties, LLC, ~~and~~ Solar Watt Solutions, ~~Inc.~~Inc, CSRE Properties Norcross, LLC and CSRE Property Management Company, LLC. All ~~material~~ intercompany transactions have been eliminated upon consolidation of these entities.

Liquidity

As shown in the accompanying unaudited consolidated financial statements, the Company generated a net income (loss) of ($170,735) and $14,315,020 respectively during the three months and six months ended March 31, 2022. While the Company has experienced negative cash flows from investing and operating activities due to its continued investments in capital expenditures in support of its bitcoin mining operations, it has generated positive cash flows from financing activities. The Company has sufficient working capital to support its ongoing operations for the next twelve months. In addition, the Company has access to equity financing through its At-the-Market offering facility and debt financing through the lending arrangement the Company entered into in April 2022 (see Note 15). As of March 31, 2022, the Company had working capital of $19,378,547.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities atas of the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. ~~Actual results could differ from those estimates.~~ Significant estimates include estimates used to review the Company’s goodwill and digital currency impairment, intangible assets acquired, impairments and estimations of long-lived assets, revenue recognition on percentage of completion type contracts, revenue recognition from digital currency mining, valuation of derivative assets and liabilities, available-for-sale investments, allowances for uncollectible accounts, valuation of digital currencies, valuation of contingent consideration, warranty, and the valuations of ~~non-cash capital stock issuances.~~share based awards. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions including, but not limited to, the ultimate impact that the ongoing COVID-19 pandemic may have on the Company’s operations.

Revenue Recognition

We recognize revenue in accordance with generally accepted accounting principles as outlined in the Financial Accounting Standard Board's (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue From Contracts with Customers, which requires that five steps be followed in evaluating revenue recognition: (i) identify the contract with the customer; (ii) identity the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price; and (v) recognize revenue when or as the entity satisfied a performance obligation.

Our accounting policy on revenue recognition by type of revenue is provided below.

Revenues from digital currency mining

The Company has entered into contracts with digital asset mining pool operators to provide computing power to the mining pools. The contracts are terminable at any time by either party and the Company’s enforceable right to

F-10

compensation only begins when the Company starts providing computing power to the mining pool operator. In exchange for providing computing power, the Company is entitled to a fractional share of the fixed cryptocurrency award the mining pool operator receives (less net digital asset transaction fees to the mining pool operator), for successfully adding a block to the blockchain, plus a fractional share of the transaction fees attached to that blockchain. The Company’s fractional share is based on the proportion of computing power the Company contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm. The transaction consideration the Company receives is noncash consideration, in the form of digital currency, which the Company measures at fair value on the date received which is not materially different than the fair value at contract inception or time the Company has earned the award from the mining pools. Fair value of the digital currency award received is determined using the spot price of the related digital currency on the date earned.
There is currently no definitive guidance under GAAP or alternative accounting framework for the accounting for digital currencies recognized as revenue or held, and management has exercised significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is enacted by the FASB, the Company may be required to change its policies, which could have an effect on the Company’s consolidated financial position and results from operations.

Engineering ~~Service~~ & ~~Installation or~~ Construction Contracts and Service Contracts

The Company recognizes engineering and construction contract revenue over time, as performance obligations are satisfied, due to the continuous transfer of control to the customer. Engineering and construction contracts are generally accounted for as a single unit of account (a single performance obligation) and are not segmented between types of services. The Company recognizes revenue based primarily on contract cost incurred to date compared to total estimated contract cost (an input method). The input method is the most faithful depiction of the Company’s performance because it directly measures the value of the services transferred to the customer. Customer-furnished materials, labor and equipment and, in certain cases, subcontractor materials, labor and equipment, are included in revenue and cost of revenue when management believes that the Company is acting as a principal rather than as an agent (i.e., the Company integrates the materials, labor and equipment into the deliverables promised to the customer). Customer-furnished materials are only included in revenue and cost when the contract includes construction activity and the Company has visibility into the amount the customer is paying for the materials or there is a reasonable basis for estimating the amount. The Company recognizes revenue, but not profit, on certain uninstalled materials that are not specifically produced, fabricated, or constructed for a project. Revenue on these uninstalled materials is recognized when the cost is incurred (when control is transferred). Changes to total estimated contract cost or losses, if any, are recognized in the period in which they are determined as assessed at the contract level. Pre-contract costs are expensed as incurred unless they are expected to be recovered from the client. Project mobilization costs are generally charged to project costs as incurred when they are an integrated part of the performance obligation being transferred to the client. Customer payments on engineering and construction contracts are typically due within 30 to 45 days of billing, depending on the contract.

The Company recognizes energy (solar panel and battery) installation contractrevenue for residential customers at a point in time upon completion of the installation. The revenues associated with energy installations for ~~commercial~~commercial customers are recognized over a period of time as noted in the engineering and construction contract revenue disclosure above.

For service contracts (including maintenance contracts) in which the Company has the right to consideration from the customer in an amount that corresponds directly with the value to the customer of the Company’s performance completed to date, revenue is recognized when services are performed and contractually billable. Service contracts that include multiple performance obligations are segmented between types of services.

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~~Table of Contents~~

For contracts with multiple performance obligations, the Company allocates the transaction price to each performance obligation using an estimate of the stand-alone selling price of each distinct service in the contract. Revenue recognized on service contracts that have not been billed to clients is classified as a current asset under contract assets on the Consolidated Balance Sheets. Amounts billed to clients in excess of revenue recognized on service contracts to date are classified as a current liability under contract liabilities. Customer payments on service contracts are typically due within 30 days of billing, depending on the contract.

F-11

Revenues from Sale of Equipment

Performance Obligations Satisfied at a point in time.

We recognize revenue on agreements for ~~non-customized~~ equipment we sell on a standardized basis to the market at a point in time. We recognize revenue at the point in time that the customer obtains control of the good, which is generally upon shipment or when the customer has physical possession of the product depending on contract terms. We use proof of delivery for certain large equipment with more complex logistics, whereas the delivery of other equipment is estimated based on historical averages of in-transit periods (i.e., time between shipment and delivery). Generally, shipping costs are included in the price of equipment unless the customer requests a non-standard shipment. In situations where an alternative shipment arrangement has been made, the Company recognizes the shipping revenue upon customer receipt of the shipment.

In situations where arrangements include customer acceptance provisions based on seller or customer-specified objective criteria, we recognize revenue when we have concluded that the customer has control of the goods and that acceptance is likely to occur. We generally do not provide for anticipated losses on point in time transactions prior to transferring control of the equipment to the customer.

Our billing terms for these point in time equipment contracts vary and generally coincide with shipment to the customer; however, within certain businesses, we receive progress payments from customers for large equipment purchases, which is generally to reserve production slots with our manufacturing partners, which are recorded as contract liabilities.

Due to the customized nature of the equipment, the Company does not allow for customer returns.

Service Performance obligations satisfied over time.

We enter into long-term product service agreements with our customers primarily within our microgrid segment. These agreements require us to provide preventative maintenance, and standby support services that include certain levels of assurance regarding system performance throughout the contract ~~periods;~~periods, and these contracts will generally range from 1 to 10 years. We account for items that are integral to the maintenance of the equipment as part of our service-related performance obligation, unless the customer has a substantive right to make a separate purchasing decision (e.g., equipment upgrade). Contract modifications that extend or revise contract terms are not uncommon and generally result in our recognizing the impact of the revised terms prospectively over the remaining life of the modified contract (i.e., effectively like a new contract). Revenues are recognized for these arrangements on a straight-line basis consistent with the nature, timing and extent of our services, which primarily relate to routine maintenance and as needed product repairs. Our billing terms for these contracts vary, but we generally invoice periodically as services are provided.

Contract assets represent revenue recognized in excess of amounts billed and include unbilled receivables (typically for cost reimbursable contracts) of $0and contract work in progress (typically for fixed-price contracts) of . There were $0 ~~and~~ ~~$4,103~~ contracts assets as of March 31, ~~2021~~2022 and September 30, ~~2020, respectively.~~2021. Unbilled receivables, which represent an unconditional right to payment subject only to the passage of time, are reclassified to accounts receivable when they are billed under the terms of the contract. ~~Advances~~There are no advances that are payments on account of contract assets of $0 ~~and~~ $0 ~~as of March 31, 2021 and September 30, 2020, respectively,~~that have been deducted from contract ~~assets.~~assets as of March 31, 2022 and September 30, 2021. Contract liabilities represent ~~amounts billed to clients in excess~~deferred revenues as of ~~revenue recognized to date.~~March 31, 2022. The Company recorded $~~$551,977~~188,929 and $~~$64,198~~296,964 in contract liabilities as of March 31, ~~2021~~2022 and September 30, ~~2020,~~2021, respectively.

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~~Table of Contents~~

Revenues from software

The Company derives its software revenue from both subscription fees from customers for access to its ~~(i)~~ energy software offerings and software license sales and ~~(ii)~~ support services. Revenues from software licenses are generally recognized upfront when the software is made available to the customer and revenues from the related support is generally recognized ratably over the contract term. The Company’s policy is to exclude sales and other indirect taxes when measuring the transaction price of its subscription agreements.

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The Company’s subscription agreements generally have monthly or annual contractual terms. Revenue is recognized ratably over the related contractual term beginning on the date that the platform is made available to a customer. Access to the platform represents a series of distinct services as the Company continually provides access to, and fulfills its obligation to the end customer over the subscription term. The series of distinct services represents a single performance obligation that is satisfied over time.

Revenues from design, software development and other technology-based consulting services

For service contracts performed under Master Services Agreements (“MSA”) and accompanying Statement(s) of Work (“SOW”), revenue is recognized based on the performance obligation(s) outlined in the SOW which is typically hours worked or specific deliverable milestones. In the case of a milestone-based SOW, the Company recognizes ~~revenue~~revenues as each deliverable is signed off by the customer.

Revenues from data center services

The Company provides data services such as providing its customers with rack space, power and equipment, and cloud services such as virtual services, virtual storage, and data backup services, generally based on monthly services provided at a defined price included in the contracts. The performance obligations are the services provided to a customer for the month based on the contract. The transaction price is the price agreed with the customer for the monthly services provided and the revenues are recognized monthly based on the services rendered for the month.

~~Revenues from digital currency mining~~

The Company has entered into a digital asset mining pool to provide computing power to the mining pool. Providing computing power is the only performance obligation in the Company’s contracts with pool operators. When the Company successfully places a block (by being the first to solve an algorithm) and the Company receives confirmation of the consideration it will receive, at which time revenue is recognized. The transaction consideration the Company receives is noncash consideration, in the form of digital currency, which the Company measures at fair value on the date received. The consideration is dependent on the number of digital assets mined on any given day. Fair value of the digital currency award received is determined using the spot price of the related digital currency at the time of receipt.

There is currently no specific definitive guidance under GAAP or alternative accounting framework for the accounting for digital currencies recognized as revenue or held, and management has exercised significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is enacted by the FASB, the Company may be required to change its policies, which could have an effect on the Company’s consolidated financial position and results from operations.

Variable Consideration

The nature of the Company’s contracts gives rise to several types of variable consideration, including claims and unpriced change ~~orders,~~orders; awards and incentive ~~fees,~~fees; and liquidated damages and penalties. The Company recognizes revenue for variable consideration when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. The Company estimates the amount of revenue to be recognized on variable consideration using the expected value (i.e., the sum of a probability-weighted amount) or the most likely amount method, whichever is expected to better predict the amount. Factors considered in determining whether revenue associated with claims (including change orders in dispute and unapproved change orders in regard to both scope and price) should be recognized include the following: (a) the contract or

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~~Table of Contents~~

other evidence provides a legal basis for the claim, (b) additional costs were caused by circumstances that were unforeseen at the contract date and not the result of deficiencies in the Company’s performance, (c) claim-related costs are identifiable and considered reasonable in view of the work performed, and (d) evidence supporting the claim is objective and verifiable. If the requirements for recognizing revenue for claims or unapproved change orders are met, revenue is recorded only when the costs associated with the claims or unapproved change orders have been incurred. Back charges to suppliers or subcontractors are recognized as a reduction of cost when it is determined that recovery of such cost is probable and the amounts can be reliably estimated. Disputed back charges are recognized when the same requirements described above for claims accounting have been satisfied.

The C~~ompany~~Company generally provides limited warranties for work performed under its engineering and construction contracts. The warranty periods typically extend for a limited duration following substantial completion of the Company’s work on a project. Historically, warranty claims have not resulted in material costs incurred.

Practical Expedients

If the Company has a right to consideration from a customer in an amount that corresponds directly with the value of the Company’s performance completed to date (a service contract in which the Company bills a fixed amount for each hour of service provided), the Company recognizes revenue in the amount to which it has a right to invoice for services performed.

The Company does not adjust the contract price for the effects of a significant financing component if the Company expects, at contract inception, that the period between when the Company transfers a service to a customer and when the customer pays for that service will be one year or less.

F-13

The Company has made an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by governmental authorities that are collected by the Company from its customers (use taxes, value added taxes, some excise taxes).

Cost of Revenues

~~For~~The Company includes the ~~six months ended March 31, 2021~~following in cost of revenues: energy costs, materials costs, manufacturing and ~~2020,~~logistics costs, freight costs, inventory write-downs, hosting services costs. The recognition of cost of revenue for our energy segment is dependent upon the revenue stream that it pertains to, refer below:

Products and related services delivered at a point in time. Cost of revenue from these products and related services is recognized when the Company ~~reported revenues~~transfers control of the product to the customer, which is generally upon shipment.

~~$10,377,258~~2.

Products and ~~$4,635,107, respectively.~~

related services delivered over time. Cost of revenue from these products and related services is recognized over the related service period.

Cash and cash equivalents

~~For purposes~~Cash and cash equivalents include cash and amounts due from banks and restricted cash. The Company’s restricted cash represents amounts held in trust for certain construction projects. The following table sets forth a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheet that agrees to the total of those amounts as presented in the consolidated statements of cash ~~flows,~~flows.


	March 31, 2022		September 30, 2021
Cash and cash equivalents, excluding restricted cash	$	1,695,718	$	14,571,198
Restricted cash - construction escrow account		217,229		3,469,129
Cash and cash equivalents, including restricted cash	$	1,912,947	$	18,040,327

Accounts receivable

Accounts receivable is comprised of uncollateralized customer obligations due under normal trade terms. They are initially recorded at the invoiced amount upon the sale of goods or services to customers, and do not bear interest. The Company performs ongoing credit evaluation of its customers and management closely monitors outstanding receivables based on factors surrounding the credit risk of specific customers, historical trends, and other information. The carrying amount of accounts receivable is reviewed periodically for collectability. If management determines that collection is unlikely, an allowance that reflects management’s best estimate of the amounts that will not be collected is recorded.

Accounts receivable, net consists of the following:


	March 31, 2022			September 30, 2021
Accounts Receivable, gross	$	6,796,293		$	2,891,784
Other receivables		733,468			421,681
Provision for doubtful allowances		(693,508	)		(693,508	)
Total Accounts Receivable, net	$	6,836,253		$	2,619,957

Inventory

Inventory is stated at the lower of cost or net realizable value with cost being measured on a first-in, first-out basis. For solar panel and battery installations, the Company ~~considers all highly liquid investments~~transfers component parts from inventories to cost of goods sold once installation is complete. The Company periodically reviews inventories for unusable and ~~short-term debt instruments with original maturities~~obsolete items based on assumptions about future demand and market conditions. Based on this evaluation, provisions are made to write inventories down to their net realizable value. There were 0 write-downs of ~~three months or less to be cash equivalents. There was~~ ~~$157,274,542~~ ~~and~~ ~~$3,126,202~~ ~~in cash and cash equivalents~~inventory as of March 31, ~~2021~~ 2022

F-14

and September 30, ~~2020,~~2021, respectively.The composition of inventory as of March 31, 2022 and September 30, 2021 are as follows:


	March 31, 2022		September 30, 2021
Batteries and solar panels	$	595,432	$	1,819,398
Supplies and other		663,992		853,346
Total inventory	$	1,259,423	$	2,672,744

Prepaid expense and other current assets

The Company records a prepaid expense for costs paid but not yet incurred. Those expected to be incurred within one year are recognized and shown as a short-term pre-paid expense. Any costs expected to be incurred outside of one year would be considered other long-term assets.

Other current assets are assets that consist of deposits and interest receivable. Deposits and interest we expect to receive within one year are shown as short-term. Those we expect to receive outside of one year are shown as other long-term assets.

Concentration Risk

At times throughout the year, the Company may maintain cash balances in certain bank accounts in excess of FDIC limits. The cash balance, in excess of the FDIC limits was $1,098,786 and $17,790,327 as of March 31, 2022 and September 30, 2021, respectively. The accounts offered by custodians of the Company’s bitcoin are not insured by the FDIC. The fair market value of bitcoin held in accounts not covered by FDIC limits was $17,045,640 and $23,603,210 as of March 31, 2022 and September 30, 2021, respectively. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk in these accounts.

The Company has certain customers and vendors who individually represented 10% or more of the Company’s revenue or capital expenditures. Please refer to Note 13 - Major Customers and Vendors.

Stock-based compensation

The Company follows the guidelines in FASB Codification Topic ASC 718-10 Compensation-Stock Compensation, which requires companies to measure the cost of employee and non-employee services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. Stock-based compensation expense for stock options is recognized on a straight-line basis over the requisite service period. The Company may issue compensatory shares for services including, but not limited to, executive, management, accounting, operations, corporate communication, financial and administrative consulting services. The Company determines the grant date fair value of the options using the Black-Scholes option-pricing model. For equity awards granted by the Company that are contingent upon market-based conditions, the Company fair values these awards using the Monte Carlo simulation model. For discussion of accounting for restricted stock units (RSUs), please refer Note 11 – Stock-Based Compensation.

Earnings (loss) per share

The Company reports earnings (loss) per share in accordance with FASB ASC 260-10 “Earnings Per Share,” which provides for calculation of “basic” and “diluted” earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income or loss available to common stockholders by the weighted average common shares outstanding during the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity. The calculation of diluted net loss per share gives effect to common stock equivalents; however, potential common shares are excluded if their effect is anti-dilutive.As of March 31, 2022, 489,282 units of common stock equivalents that consist of options, warrants and restricted stock units were excluded from the

F-15

calculation of the diluted (loss) per share calculation for the three months ended March 31, 2022 as their effect is anti-dilutive.


	For the Three Months Ended March 31,					For the Six Months Ended March 31,
	2022			2021		2022		2021
Numerator
Consolidated net income (loss) attributable to common shareholders	$	(191,563	)	$	7,222,535	$	13,979,581	$	55,005
Denominator
Weighted- average common shares outstanding, basic		41,336,342			25,925,259		40,802,319		24,025,557
Dilutive impact of stock options and other share-based awards		0			6,772,604		58,733		6,772,604
Weighted- average common shares outstanding, diluted		41,336,342			32,697,863		40,861,052		30,798,161
Net income (loss) per common share attributable
Basic	$	(0.00	)	$	0.28	$	0.34	$	0.00
Diluted	$	(0.00	)	$	0.22	$	0.34	$	0.00

Property and equipment

Property and equipment are stated at cost less accumulated depreciation. Construction in progress is the construction or development of assets that have not yet been placed in service for its intended use. Depreciation for machinery and equipment, mining equipment, buildings, furniture and fixtures and leasehold improvements commences once they are ready for its intended use. Leasehold improvements are depreciated on a straight-line basis over the shorter of their estimated useful lives or the terms of the related leases. Land is not depreciated.

Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:


	Useful life (years)
Building		30
Land Improvements		15
Machinery and equipment	1-10
Office Equipment	3-7
Mining equipment	3-15
Miners	3-5
Infrastructure asset	Shorter of estimated lease term or 15 years
Leasehold improvements	Shorter of estimated lease term or 5 years
Furniture and fixtures	1-5

In accordance with the FASB ASC 360-10, "Property, Plant and Equipment” the carrying value of property and equipment, and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value. During the three and six months ended March 31, 2022 and March 31, 2021 the Company did 0t record an impairment expense.

Digital Currency

Digital currencies are included in current assets in the consolidated balance sheets. Digital currencies are recorded at cost less impairment. ~~Digital currencies held~~They are classified as indefinite-lived intangible assets in accordance with ASC 350, Intangibles — Goodwill and Other, and are accounted for ~~as intangible assets~~in connection with ~~indefinite useful lives.~~the Company’s revenue recognition policy detailed above and in Note 2 – Summary of Significant Accounting Policies. An intangible asset with an indefinite useful life

F-16

is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair ~~value, which is measured using the quoted price of the digital currency at the time its fair value is being measured.~~value. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. Quantitative impairment is measured using the quoted price of the digital currency at the time its fair value is being measured in accordance with ASC 820, Fair Value Measurement. Quoted prices are obtained from the principal market. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not ~~permitted.~~permitted as per ASC 350, Intangibles – Goodwill and Other.

Digital currencies ~~awarded to~~earned by the Company through its mining activities are included within operating activities on the accompanying consolidated statements of cash flows. The sales of digital currencies are included within investing activities in the accompanying consolidated statements of cash flows and any realized gains or losses from such sales are included in other income (expense) in the consolidated statements of ~~operations.~~operations and comprehensive income (loss). The Company accounts for its gains or losses in accordance with the first in first out ~~(FIFO)~~(“FIFO”) method of accounting.

~~F-10~~

~~Table of Contents~~

The following table presents the activities of the digital currencies for the six months ended March 31, ~~2021:~~

Amount
Balance at September 30, 2020 $ —
Additions of digital currencies 7,449,202
Realized gain on sale of digital currencies 635,627
Sale of digital currencies (2,422,282)
Balance at March 31, 2021 $ 5,662,547

~~Accounts receivable~~

Accounts receivable is comprised of uncollateralized customer obligations due under normal trade terms. The Company performs ongoing credit evaluation of its customers and management closely monitors outstanding receivables based on factors surrounding the credit risk of specific customers, historical trends, and other information. The carrying amount of accounts receivable is reviewed periodically for collectability. If management determines that collection is unlikely, an allowance that reflects management’s best estimate of the amounts that will not be collected is recorded. Accounts receivable are presented net of an allowance for doubtful accounts of ~~$693,508~~ ~~and~~ ~~$42,970~~ ~~at March 31, 2021, and September 30, 2020, respectively.~~

~~Retention receivable is the amount withheld by a customer until a contract is completed. Retention receivables of~~ $0 ~~and~~ ~~$615~~ ~~were included in the balance of trade accounts receivable as of March 31, 2021 and September 30, 2020, respectively.~~

~~Inventories~~

Inventories are stated at the lower of cost or net realizable value on a first-in, first-out basis. For solar panel and battery installations, the Company transfers component parts from inventories to cost of goods sold once installation is complete. The Company periodically reviews inventories for unusable and obsolete items based on assumptions about future demand and market conditions. Based on this evaluation, provisions are made to write inventories down to their net realizable value.

~~Investment securities~~

Investment securities include debt securities and equity securities. Debt securities are classified as available for sale (“AFS”) and are reported as an asset in the Consolidated Balance Sheet at their estimated fair value. As the fair values of AFS debt securities change, the changes are reported net of income tax as an element of OCI, except for other-than-temporarily-impaired securities. When AFS debt securities are sold, the unrealized gains or losses are reclassified from OCI to non-interest income. Securities classified as AFS are securities that the Company intends to hold for an indefinite period of time, but not necessarily to maturity. Any decision to sell a security classified as AFS would be based on various factors, including significant movements in interest rates, changes in the maturity mix of the Company’s assets and liabilities, liquidity needs, decline in credit quality, and regulatory capital considerations.

~~Interest income is recognized based on the coupon rate and increased by accretion of discounts earned or decreased by the amortization of premiums paid over the contractual life of the security.~~

For individual debt securities where the Company either intends to sell the security or more likely than not will not recover all of its amortized cost, the OTTI is recognized in earnings equal to the entire difference between the security's cost basis and its fair value at the balance sheet date. For individual debt securities for which a credit loss has been recognized in earnings, interest accruals and amortization and accretion of premiums and discounts are suspended when the credit loss is recognized. Interest received after accruals have been suspended is recognized in income on a cash basis.

The Company holds investments in both publicly held and privately held equity securities. However, as described in Note 1, the Company primarily operates in the alternative energy sector and in the digital currency mining sector, and thus, it is not in the business of investing in securities.

Privately held equity securities are recorded at cost and adjusted for observable transactions for same or similar investments of the issuer (referred to as the measurement alternative) or impairment. All gains and losses on privately held equity securities, realized or unrealized, are recorded through gains or losses on equity securities on the consolidated statement of operations.

~~F-11~~

~~Table of Contents~~

Publicly held equity securities are based on fair value accounting with unrealized gains or losses resulting from changes in fair value reflected as unrealized gains or losses on equity securities in our consolidated statements of operations.

~~Concentration Risk~~

~~At times throughout the year, the Company may maintain cash balances in certain bank accounts in excess of FDIC limits. As of March 31, 2021, the cash balance in excess of the FDIC limits was~~ ~~$157,024,542~~. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk in these accounts. The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue. (See Note 15 for details.)

~~Warranty Liability~~

The Company establishes warranty liability reserves to provide for estimated future expenses as a result of installation and product defects, product recalls, and litigation incidental to the Company’s business. Liability estimates are determined based on management’s judgment, considering such factors as historical experience, the likely current cost of corrective action, manufacturers’ and subcontractors’ participation in sharing the cost of corrective action, consultations with third party experts such as engineers, and discussions with the Company’s general counsel and outside counsel retained to handle specific product liability cases. The Company’s manufacturers and service providers currently provide substantial warranties between ten to twenty-five years with full reimbursement to replace and install replacement parts. Warranty costs and associated liabilities were $0 ~~and~~ $0 ~~at March 31, 2021 and September 30, 2020, respectively.~~

~~Stock-based compensation~~

The Company follows the guidelines in FASB Codification Topic ASC 718-10 “Compensation-Stock Compensation,” which requires companies to measure the cost of employee and non-employee services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period. The Company may issue compensatory shares for services including, but not limited to, executive, management, accounting, operations, corporate communication, financial and administrative consulting services.

~~Earnings (loss) per share~~

The Company reports earnings (loss) per share in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 260-10 “Earnings Per Share,” which provides for calculation of “basic” and “diluted” earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income or loss available to common stockholders by the weighted average common shares outstanding the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity. The calculation of diluted net loss per share gives effect to common stock equivalents; however, potential common shares are excluded if their effect is anti-dilutive. As of March 31, 2021, there are ~~1,522,604shares issuable upon exercise of outstanding options and warrants, the dilutive effect of which is computed using the treasury stock method.~~2022:

~~The following table sets forth the computation of basic and diluted Net income (loss) attributable to the Company’s common shareholders:~~

For three months ended For six months ended
March 31, 2021 March 31, 2020 March 31, 2021 March 31, 2020
Numerator:
Net Income (Loss) attributable to the Company $ 7,400,040 $ (5,815,098 ) $ 232,510 $ (7,731,352)

Numerator for basic and diluted EPS - Income (loss) attributable to the Company's common shareholders $ 7,222,535 $ (5,815,098 ) $ 55,005 $ (7,731,352)

Denominator:
Denominator for basic EPS - Weighted average shares 25,925,259 5,135,802 24,025,557 4,957,491
Dilutive effect of warrants and options 1,522,604 — 1,522,604 —
Dilutive effect of preferred stock conversions 5,250,000 — 5,250,000 —
Denominator for diluted EPS - Adjusted weighted average shares 32,697,863 5,135,802 30,798,161 4,957,491
Basic Income (Loss) per common share $ 0.28 $ (1.13 ) $ 0.00 $ (1.56)
Diluted Income (Loss) per common share $ 0.22 $ (1.13 ) $ 0.00 $ (1.56)


	Amount
Balance as on September 30, 2021	$	23,603,210
Addition of digital currencies		73,940,317
Sale of digital currencies		(80,430,113	)
Digital currencies issued for services		(294,992	)
Realized gain on sale of digital currencies		7,260,909
Impairment loss		(7,033,691	)
Balance as on March 31, 2022	$	17,045,640

~~Property and equipment~~

~~Property and equipment are stated at cost. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:~~

	~~Useful life~~
~~Machinery and equipment~~		1 - 7 ~~years~~
~~Mining equipment~~		3 - 15 ~~years~~
~~Leasehold improvements~~		~~Shorter of estimated lease term or~~ 5 ~~years~~
~~Furniture and fixtures~~		1 - 5 ~~years~~

~~Long-lived Assets~~

In accordance with the Financial Accounting Standards Board ("FASB") Accounts Standard Codification (ASC) ASC 360-10, "Property, Plant and Equipment," the carrying value of intangible assets and other long-lived assets is reviewed on a regular

~~F-12~~

~~Table of Contents~~

basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes impairment when the sum of the expected undiscounted future cash flow is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value. For the six months ended March 31, 2021 and 2020, the Company did not record an impairment expense.

~~Intangible Assets and Goodwill~~

The Company accounts for business combinations under the acquisition method of accounting in accordance with ASC 805, “Business Combinations,” where the total purchase price is allocated to the tangible and identified intangible assets acquired and liabilities assumed based on their estimated fair values. The purchase price is allocated using the information currently available, and may be adjusted, up to one year from acquisition date, after obtaining more information regarding, among other things, asset valuations, liabilities assumed, and revisions to preliminary estimates. The purchase price in excess of the fair value of the tangible and identified intangible assets acquired less liabilities assumed is recognized as goodwill.

The Company reviews its indefinite lived intangibles and goodwill for impairment annually or whenever events or circumstances indicate that the carrying amount of the asset exceeds its fair value and may not be recoverable. In accordance with its policies, the Company performed an assessment of indefinite lived intangibles and goodwill and determined there was no impairment for the six months ended March 31, 2021 and 2020.

~~Software Development Costs~~

The Company capitalizes software development costs under guidance of ASC 985-20 “Costs of Software to be Sold, Leased or Marketed” for our mPulse platform and under ASC 350-40 “Internal Use Software” for our mVSO, Canvas & Plaid products. Software development costs include payments made to independent software developers under development agreements, as well as direct costs incurred for internally developed products. Software development costs are capitalized once the technological feasibility of a product is established and such costs are determined to be recoverable. Technological feasibility of a product requires both technical design documentation and infrastructure design documentation, or the completed and tested product design and a working model. Significant management judgments and estimates are utilized in the assessment of when technological feasibility is established, and the evaluation is performed on a product-by-product basis. For products where proven technology exists, this may occur early in the development cycle. Prior to a product's release, if and when we ~~believe capitalized costs are not recoverable,~~ we expense the amounts as part of "Product development." Capitalized costs for products that are cancelled or are expected to be abandoned are charged to "Product development" in the period of cancellation. Amounts related to software development, such as product enhancements to existing features, which are not capitalized are charged immediately to "Product development."

Commencing upon a product's release, capitalized software development costs are amortized to "Cost of revenues—software amortization" based on the ratio of current revenues, to total projected revenues for the specific product, generally resulting in an amortization period of seven years for our current product offerings. In recognition of the uncertainties involved in estimating future revenue, amortization will never be less than straight-line amortization of the products remaining estimated economic life.

We evaluate the future recoverability of capitalized software development costs on a quarterly basis. For products that have been released in prior periods, the primary evaluation criterion is the actual performance of the software platform to which the costs relate. For products that are scheduled to be released in future periods, recoverability is evaluated based on the expected performance of the specific products to which the costs relate. Criteria used to evaluate expected product performance include: historical performance of comparable products developed with comparable technology, market performance of comparable software, orders for the product prior to its release, pending contracts, and general market conditions.

Significant management judgments and estimates are utilized in assessing the recoverability of capitalized costs. In evaluating the recoverability of capitalized costs, the assessment of expected product performance utilizes forecasted sales amounts and estimates of additional costs to be incurred. If revised forecasted or actual product sales are less than the originally forecasted amounts utilized in the initial recoverability analysis, the net realizable value may be lower than originally estimated in any given quarter, which could result in an impairment charge. Material differences may result in the amount and timing of expenses for any period if matters resolve in a manner that is inconsistent with management's expectations. If an impairment occurs, the reduced amount of the capitalized software costs that have been written down to the net realizable value at the close of each annual fiscal period will be considered the cost for subsequent accounting purposes.

~~F-13~~

~~Table of Contents~~

Fair ~~value~~Value Measurement of financial instruments, ~~and~~ derivative asset and contingent consideration

The carrying value of cash, accounts payable and accrued expenses, and debt (See Note 8) approximate their fair values because of the short-term nature of these instruments. Management believes the Company is not exposed to significant interest or credit risks arising from these financial instruments.

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 on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company utilizes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable.

•

Level 1 Quoted prices in active markets for identical assets or liabilities. These are typically obtained from real-time quotes for transactions in active exchange markets involving identical assets.

•

Level 2 Quoted prices for similar assets and liabilities in active markets; quoted prices included for identical or similar assets and liabilities that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. These are typically obtained from readily-available pricing sources for comparable instruments.

•

Level 3 Unobservable inputs, where there is little or no market activity for the asset or liability. These inputs reflect the reporting entity’s own beliefs about the assumptions that market participants would use in pricing the asset or liability, based on the best information available in the circumstances.

The carrying value of cash, accounts payable and accrued expenses, and debt approximate their fair values because of the short-term nature of these instruments. Management believes the Company is not exposed to significant interest or credit risks arising from these financial instruments.

F-17

The following table presents the Company’s financial instruments that are measured and recorded at fair value on the Company’s balance sheets on a recurring basis, and their level within the fair value hierarchy as of March 31, ~~2021~~2022 and September 30, ~~2020, respectively:~~2021:


March 31, 2022
	Amount		Level 1		Level 2		Level 3
Derivative asset	$	3,794,359	$	0	$	0	$	3,794,359
Investment in debt security		541,200		0		0		541,200
Total	$	4,335,559	$	0	$	0	$	4,335,559

September 30, 2021
	Amount		Level 1		Level 2		Level 3
Derivative asset	$	4,905,656	$	0	$	0	$	4,905,656
Investment in equity security		10,772		10,772		0		0
Investment in debt security		494,608		0		0		494,608
Contingent cash consideration		820,802		0		0		820,802
Total	$	6,231,838	$	10,772	$	0	$	6,221,066

~~Fair value measured at March 31, 2021:~~

Amount Level 1 Level 2 Level 3
Derivative asset $ 9,495,404 $ —   $ —   $ 9,495,404
Investment in equity security 729,500 729,500 —   —
Investment in debt security 500,000 —   —   500,000
Total $ 10,724,904 $ 729,500 $ —   $ 9,995,404

~~Fair value measured at September 30, 2020:~~

Amount Level 1 Level 2 Level 3
Derivative asset $ 2,115,269 $ —   $ —   $ 2,115,269
Investment in equity security 210,000 210,000 —   —
Investment in debt security 500,000 —   —   500,000
Total $ 2,825,269 $ 210,000 $ —   $ 2,615,269

~~F-14~~

~~Table of Contents~~

~~The below table presents the change in the fair value of the derivative asset and investment in debt security~~There were no transfers between Level 1, 2 or 3 during the three and six months ended March 31, ~~2021:~~2022 and 2021.

Income taxes

Amount
Balance at September 30, 2020 $ 2,615,269
Gain/(loss) on derivative asset 7,380,135
Balance at March 31, 2021 $ 9,995,404

The Company’s calculation of its tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in various taxing jurisdictions. The Company recognizes tax liabilities for uncertain tax positions based on management’s estimate of whether it is more likely than not that additional taxes will be required. The Company had no uncertain tax positions as of March 31, 2022 and September 30, 2021.

Deferred income taxes are recognized in the consolidated financial statements for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates. Temporary differences arise from net operating losses, differences in depreciation methods of archived images, and property and equipment, stock-based and other compensation, and other accrued expenses. A valuation allowance is established when it is determined that it is more likely than not that some or all of the deferred tax assets will not be realized.

The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws and regulations themselves are subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings. Therefore, the actual liability for U.S., or the various state jurisdictions, may be materially different from managements estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities. Interest and penalties are included in tax expense.

The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operation in the provision for income taxes. As of March 31, 2022 and September 30, 2021, the Company had 0 accrued interest or penalties related to uncertain tax positions.

Income tax expense/(benefit) from operations for the three and six months ended March 31, 2022 and 2021 was $0 in each period, which resulted primarily from maintaining a full valuation allowance against the Company's deferred tax assets.

Reclassifications

Certain prior year amounts have been reclassified for consistency with the current ~~period~~year presentation. These reclassifications had no effect on the reported results of operations or net assets of the Company.

Segment Reporting

Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding the method to allocate resources and assess performance. The Company ~~currently~~ has ~~three~~two reportable segments, ~~for financial reporting purposes.~~namely, (1) Digital Currency Mining Segment and (2) Energy Segment.

Recently issued accounting pronouncements

In ~~August 2018,~~October 2021, the FASB issued ASU ~~2018-15, "Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40)~~2021-08, Business Combinations (Topic 805): ~~Customer’s~~ Accounting for ~~Implementation Costs Incurred~~Contract Assets and Contract Liabilities from Contracts with Customers, which requires contract assets and contract liabilities acquired in a ~~Cloud Computing Arrangement That Is a Service Contract," which allows~~business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers, as if it had originated the contracts. Under the current business combinations guidance, such assets and liabilities are recognized by the acquirer at fair value on the acquisition date. This new guidance is effective for the ~~capitalization~~Company for its fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company is evaluating its potential impact but does not expect the new standard to have a material impact on the Company's results of ~~certain implementation costs incurred~~operations or cash flows.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments on October 1, 2020 (“ASU 2016-13”). ASU 2016-13 requires entities to use a new forward-looking “expected loss” model that reflects expected credit losses, including credit losses related to trade receivables, and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates, which generally will result in the earlier recognition of allowances for losses. As the Company was a ~~hosting arrangement~~Smaller Reporting Company at the time of issuance of the ASU, the Company expects to adopt the ASU effective October 1, 2023, including the interim periods within the fiscal year. Early application of the adoption is permitted. The Company is evaluating its potential impact but does not expect the new standard to have a material impact on the Company's results of operations or cash flows.

In August 2020, the FASB issued ASU2020-06, “Debt - Debt with Conversion and Other Options (subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (subtopic 815-40),” which reduces the number of accounting models in ASC 470-20 that isrequire separate accounting for embedded conversion features. As a ~~service contract. ASU 2018-15 allows~~result, a convertible debt instrument will be accounted for ~~either retrospective adoption or prospective adoption~~as a single liability measured at its amortized cost as long as no other features require bifurcation and recognition as derivatives. By removing those separation models, the effective interest rate of convertible debt instruments will be closer to ~~all implementation costs incurred after~~ the ~~date of adoption. ASU 2018-15 is~~coupon interest rate. Further, the diluted net income per share calculation for convertible instruments will require the Company to use the if-converted method. The treasury stock method should no longer be used to calculate diluted net income per share for convertible instruments. The amendment will be effective for the Company for fiscal years beginning after December 15, ~~2019. The new standard did~~2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. We expect the adoption of ASU 2020-06 to not have a material impact on the Company’s ~~results of operations~~financial statements or ~~cash flows.~~disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The purpose of the standard is to improve the overall usefulness of fair value disclosures to financial statement users and reduce unnecessary costs to companies when preparing the disclosures. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019 and requires the application of the prospective method of transition (for only the most recent interim or annual period presented in the initial fiscal year of adoption) to the new disclosure requirements for (1) changes in unrealized gains and losses included in other comprehensive income and (2) the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASU 2018-13 also requires prospective application to any modifications to disclosures made because of the change to the requirements for the narrative description of measurement uncertainty. The effects of all other amendments made by ASU 2018-13 must be applied retrospectively to all periods presented. The new standard did not have a material impact on the Company’s results of operations or cash flows.

In January 2017, the FASB issued guidance within ASU 2017-04, Intangibles-Goodwill and Other. The amendments in ASU 2017-04 simplify the subsequent measurement of goodwill by comparing the fair value of a reporting unit with its carrying amount. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019. The new standard did not have a material impact on the Company’s results of operations or cash flows.

In June 2016, the FASB issued guidance within ASU 2016-13, Financial Instruments – Credit Losses. The amendments in ASU 2016-13 require assets measured at amortized cost and establishes an allowance of credit losses for available for sale debt securities. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022. We are currently evaluating the impact the adoption of this new standard will have on our financial position and results of operations.

The Company has evaluated all other recent accounting pronouncements and believes that none of them will have a material effect on the Company's financial position, results of operations, or cash flows.

~~F-15~~

~~Table of Contents~~

ACQUISITIONS

~~3. ACQUISITIONS~~

SOLAR WATT SOLUTIONS, ~~INC~~INC.

On February 23, 2021, the Company entered into an Agreement and Plan of Merger (the ~~“Merger~~“SWS Merger Agreement”) with ~~SWS~~Solar Watt Solutions, Inc. (“SWS”) and its owners (the “Sellers”).

The Company accounted for the acquisition of SWS as an acquisition of a business under ASC 805 – Business Combination.

At the closing on February 24, 2021, SWS became a wholly owned subsidiary of the Company. In exchange, the Company issued (i) 477,703 shares of restricted common stock with a deemed value of $15,640,000 calculated based on the five-day average closing price of the ~~Company’s~~Company's common stock ~~(as reflected on Nasdaq.com)~~ for the ~~five~~ trading days including and immediately preceding the closing date of $$32.74 per share to the ~~sellers,~~Sellers, of which (a) 167,685 shares with a deemed value of $5,490,000 would be fully earned on closing, and (b) an additional 310,018 shares with a deemed fair value of $10,150,000~~shares~~ were issued to an escrow agent and ~~held in escrow,~~only earned by Sellers, subject to holdback pending Sellers’ satisfaction of certain future milestones with all such shares subject to a lock up of no less than 180 days and a leak

F-19

out of no more than 10% of average daily trading value of the prior 30 days for a period of 36 months following the closing, and (ii) up to $3,850,000 in cash ~~was remitted~~ to the Sellers, ~~of which: (c)~~minus the Sellers’ debt, minus the difference between the Actual Amount and Expected Amount consisting of: (a) $1,350,000 ~~was remitted to Sellers~~(no changes post acquisition date) in cash payable on a pro rata basis to Sellers at closing, less payment of $500,000 in(no changes post acquisition date) to settle Sellers’ debt at closing, ~~(d)~~which includes (x) $200,000 (no changes post acquisition date) in cash ~~was~~ held back by the Company ~~for a period of nine months~~ to satisfy potential damages from indemnification claims and any amounts owed pursuant to post-closing adjustments, ~~(e)~~(y) an additional $100,000 (no changes post acquisition date) in cash ~~was~~ held back by the Company ~~for a period of 90 days~~ to satisfy any amounts owed pursuant to post-closing adjustments, and ~~(f)~~(b) up to $2,500,000 (fair valued at $155,000 at acquisition date) in cash ~~was~~ held back by the Company ~~pending the Sellers’~~and only payable pro rata to Sellers upon meeting certain future milestones and subject to satisfaction of ~~certain future milestones.~~any amounts owing from SWS to the Company resulting from damages required to be indemnified under the SWS Merger Agreement.

The Company determined the fair value of the consideration given to the sellers of SWS in connection with the transaction in accordance with ASC 820 was as follows:


Consideration:	Fair Value
Cash	$	1,350,000
Contingent consideration		155,000
310,018 shares of common stock as contingent equity consideration	$	533,002
167,685 shares of common stock		4,649,905
Total Consideration	$	6,687,907

Consideration: Fair Value
Cash $ 1,350,000
Contingent consideration 2,500,000
477,703 shares of common stock 13,246,704
Total Consideration $ 17,096,704


	Preliminary Allocation at Acquisition Date			Adjustments to Fair Value			Final Allocation at Acquisition Date
Customer List	$	5,122,733		$	(4,932,733	)	$	190,000
Goodwill		1,642,409			5,178,126			6,820,535
Other Assets and Liabilities assumed, net		(77,235	)		(245,393	)		(322,628	)
Total	$	6,687,907		$	0		$	6,687,907

The goodwill recorded as result of the acquisition represents the strategic benefits of growing the Company’s service portfolio and the expected revenue growth from increased market penetration. Acquired goodwill is not deductible for income tax purposes. The total purchase price was allocated to identifiable assets deemed acquired, and liabilities assumed, based on their estimated fair ~~values as indicated below.~~ values.

The ~~business combination accounting~~amortization period for customer list is estimated to be 1.5 years. The Company estimated the fair value of the identified customer list using a discounted cash flow model. These fair value measurements were based on significant inputs not ~~yet final~~observable in the market and thus represent a Level 3 measurement. Key assumptions include the ~~amounts assigned~~level and timing of expected incremental future cash flows over its remaining useful life, and discount rates the Company believe to be consistent with the inherent risks associated with customer list, which is 14%. The Company believes the level and timing of expected future cash flows appropriately reflects market participant assumptions.

On January 31, 2022, the Company entered into a Merger Satisfaction and Release Agreement (the "Merger Satisfaction Agreement") with the Sellers of SWS. In consideration of fully satisfying the terms under the SWS Merger Agreement, the Company paid the Sellers $625,000 and released from escrow 77,500 shares of the Company's common stock. Additionally, the Sellers agreed to release back to the ~~assets acquired~~Company 232,518 shares of the Company's common stock held in escrow. Upon delivery of such consideration, the parties agreed that the shares and cash holdbacks contained in the liabilities assumed are provisional. Therefore, this may result in future adjustments to the provisional amounts as new information is obtained about the facts and circumstances that existed at the acquisition date.original merger agreement were fully satisfied.

F-20

Purchase Price Allocation:
Customer List $ 5,122,733
Goodwill $ 12,051,206
Other assets and liabilities assumed, net $ (77,235)
Total $ 17,096,704

~~F-16~~

~~Table of Contents~~

ATL DATA CENTERS, LLC

On December 9, 2020, the Company entered into an Agreement and Plan of Merger (the ~~“Merger”~~“ATL Merger”) with ATL Data Centers LLC (“ATL”) and its members. The Company accounted for the acquisition of ATL as an acquisition

of a business under ASC 805 – Business Combination.

At the closing, ATLATL became a wholly owned subsidiary of the Company. In exchange, the Company issued 1,618,285 shares of restricted common stock ~~based on the average closing price of the Company’s common stock (as reflected on Nasdaq.com) for the five trading days including and immediately preceding the closing date of~~ ~~$11.988~~ ~~per share,~~ to the selling members of ATL, of which: (i) 642,309 shares were fully earned on closing, and (ii) an additional 975,976 shares were issued and held in escrow, subject to holdback pending satisfaction of certain indemnification claims and future milestones, with all such shares subject to a lock up of no less than 180 days and a leak out of no more than 10% of the average daily trading value of the prior 30 days.

Of the 975,976 shares held in escrow, 515,724 shares were released to the selling members of ATL and 68,194 shares were returned to the Company and canceled due to satisfy nonsatisfaction of certain indemnification matters during the year ended September 30, 2021. The remaining 392,058 shares held in escrow consist of 72,989 shares subject to holdback pending satisfaction of further indemnification matters and 319,069 shares subject to satisfaction of future milestones.

In connection with the return of the 68,194 shares held in escrow that were cancelled to satisfy certain indemnification matters, total consideration and the related goodwill, decreased by $892,659 during the year ended September 30, 2021.

The consideration remitted in connection with the ATL Merger is subject to adjustment based on post-closing adjustments to closing cash, indebtedness, and transaction expenses of ATL within 90 days of closing. The Company also assumed approximately $~~$6.9~~6,900,000 ~~million~~ in debts of ATL at closing. As part of the transaction costs, the Company issued 41,708 shares of common stock for an aggregate value of $$545,916 to the ~~broker.~~broker which were expensed upon issuance of the shares.


Purchase Price Allocation	Preliminary Allocation at Acquisition Date			Adjustments to Fair Value			Final Allocation at Acquisition Date
Strategic Contract	$	7,457,970		$	2,342,000		$	9,799,970
Goodwill		14,205,245			(1,264,167	)		12,941,078
Other Assets and Liabilities assumed, net		(479,864	)		(1,077,833	)		(1,557,697	)
Total	$	21,183,351		$	0		$	21,183,351

The Company ~~accounted for~~made measurement period adjustments, primarily to strategic contract and goodwill, to better reflect the facts and circumstances that existed at the acquisition ~~of ATL~~date.

The goodwill recorded as ~~an acquisition of~~ a ~~business under ASC 805.~~

~~The Company determined the fair value~~result of the ~~consideration given to~~acquisition represents the ~~selling members~~strategic benefits of ~~ATL in connection with~~growing the ~~transaction in accordance with ASC 820 was as follows:~~

Consideration: Fair Value
1,618,285 shares of common stock $ 21,183,351
Total Consideration $ 21,183,351

Company’s service portfolio and the expected revenue growth from increased market penetration. Acquired goodwill is not deductible for income tax purposes. The total purchase price was allocated to identifiable assets deemed acquired, and liabilities assumed, based on their estimated fair values as indicated below. The business combination accounting is not yet final and the amounts assigned to the assets acquired and the liabilities assumed are provisional. Therefore, this may result in future adjustments to the provisional amounts as new information is obtained about the facts and circumstances that existed at the acquisition date.values.

Purchase Price Allocation:
Strategic contract $ 7,457,970
Goodwill $ 14,079,712
Other assets and liabilities assumed, net $ (354,331)
Total $ 21,183,351

The strategic contract relates to supply of a critical input to our digital currency mining business. The other assets and liabilities assumed ~~includes~~ include $~~$5.475~~5,670,000 ~~million in~~ of digital currency mining equipment and approximately $5,475,000 of notes payable related to this equipment, which was settled by the Company ~~during~~in December 2020. In connection with the ~~six months ended March 31, 2021.~~

~~P2K LABS, INC~~

~~On January 31, 2020,~~acquisition, the Company ~~entered into~~had acquired an ~~Agreement~~operating lease related to a rental building, which had a purchase option associated with ~~p2k,~~the lease agreement. The Company exercised the purchase option to buy the property in May 2021 and, ~~its sole stockholder, Amer Tadayon (the “Seller”), whereby~~as a result, terminated the ~~Company purchased all of the issued and outstanding shares of p2k in exchange~~lease.

The amortization period for ~~an aggregate adjusted purchase price of cash and equity of~~ strategic contracts is estimated to be ~~$1,688,935~~5 years. The ~~transaction closed simultaneously upon the execution of the Agreement by the parties on January 31, 2020.~~

~~As a result of the transaction, p2k became a wholly owned subsidiary of the Company.~~

~~F-17~~

~~Table of Contents~~

~~Pursuant to the terms of the Agreement, the purchase price was as follows:~~

	a)	~~$1,039,500~~ ~~in cash was paid to the Seller;~~

	b)	~~31,183~~ ~~restricted shares of the Company’s common stock, valued at~~ ~~$145,000, were issued to the Seller (the “Shares”). The Shares are subject to certain lock-up and leak-out provisions whereby the~~ ~~Seller may sell an amount of Shares equal to ten percent (10%) of the daily dollar trading volume of the Company’s common stock on its principal market for the prior 30 days~~ ~~(the “Leak-Out Terms”);~~

	c)	~~$115,500~~ ~~in cash was paid to an independent third-party escrow where such cash is subject to offset for adjustments to the purchase price and indemnification purposes; and~~

	d)	~~64,516~~ ~~restricted shares of the Company’s common stock, valued at~~ ~~$300,000~~, were issued to an independent third-party escrow agent (the “Holdback Shares”) and will be released to the Seller upon achievement of certain revenue milestones. As of March 31, 2021, based on actual revenue milestones achieved, 56,444 restricted shares of the Company’s common stock were released to the Seller and the balance of 8,072 shares of the Company’s common stock were returned and cancelled. The Holdback Shares are subject to the Leak-Out Terms. ~~The Shares and Holdback Shares were deemed to have a fair market value of~~ ~~$4.65~~ ~~per share which was the closing price of the Company’s common stock on January 31, 2020.~~

	e)	~~26,950~~ ~~common stock options which were deemed to have a fair market value of~~ ~~$88,935~~ ~~on the date of the closing of the transaction.~~

~~The~~ Company ~~accounted for the acquisition of p2k as an acquisition of a business under ASC 805.~~

~~The Company determined~~estimated the fair value of the ~~consideration given~~identified strategic contract using a discounted cash flow model. These fair value measurements were based on significant inputs not observable in the market and thus represent a Level 3 measurement. Key assumptions include

F-21

the level and timing of expected future cash flows, conditions and demands over its remaining useful life, and discount rates the Company believe to ~~the Seller in connection~~be consistent with the ~~Transaction in accordance~~inherent risks associated with ~~ASC 820 was as follows:~~

Consideration: Fair Value
Cash $ 1,155,000
95,699 shares of common stock $ 445,000
26,950 common stock options $ 88,935
Total Consideration $ 1,688,935

~~The total purchase price of the Company’s acquisition of p2k was allocated to identifiable assets deemed acquired, and liabilities assumed, based on their estimated fair values as indicated below.~~

Purchase Price Allocation:
Customer list $ 730,000
Design and other assets $ 123,000
Goodwill $ 957,388
Other assets and liabilities assumed, net $ (121,453)
Total $ 1,688,935

strategic contract, which is ~~GRIDFABRIC, LLC~~6.4

On August 31, 2020, the Company entered into a Membership Interest Purchase Agreement (the “Agreement”) with GridFabric, and its sole member, Dupont Hale Holdings, LLC (the “Seller”), whereby the Company purchased all of the issued and outstanding membership units of GridFabric from the Seller (the “Transaction”) in exchange for an aggregate purchase price of cash and stock of up to ~~$1,400,000~~ ~~(the “Purchase Price”)~~%. The ~~Transaction closed simultaneously with execution on August 31, 2020. As a result~~Company believes the level and timing of ~~the Transaction, GridFabric, became a wholly owned subsidiary~~expected future cash flows appropriately reflects market participant assumptions.

Pro forma of ~~the Company.~~Consolidated Financial Statements (Unaudited)

~~Pursuant to the terms of the Agreement, the Purchase Price was as follows:~~

	a)	~~$360,000~~ ~~in cash was paid to the Seller at closing;~~
	b)	~~$400,000~~ ~~in cash was delivered to an independent third-party escrow agent where such cash is subject to offset for adjustments to the Purchase Price and indemnification purposes for a period of 12 months;~~

~~F-18~~

~~Table of Contents~~

	c)	~~26,427~~ ~~restricted shares of the Company’s common stock, valued at~~ ~~$250,000, were issued to the Seller (the “Shares”). The Shares are subject to certain leak-out provisions whereby the~~ ~~Seller may sell an amount of Shares equal to no more than ten percent (10%) of the daily dollar trading volume of the Company’s common stock on its principal market for the prior 30 days~~ ~~(the “Leak-Out Terms”); and~~
	d)	~~additional shares of the Company’s common stock, valued at up to~~ ~~$750,000~~, will be issuable to Seller if GridFabric achieves certain revenue and product release milestones related to the future performance of GridFabric (the “Earn-out Shares”). The Earn-Out Shares are also subject to the Leak-Out Terms.

~~The Shares were issued at a fair market value of~~ ~~$9.46~~T per share. The Earn-Out Shares are accounted for as contingent consideration and the number of shares to be issued will be determined based on the closing price of the Company’s common stock on the date such milestone event occurs.

~~The Agreement contains standard representations, warranties, covenants, indemnification and other terms customary in similar transactions.~~

In connection with the transaction, the Company also entered into employment relationships and non-compete agreements with GridFabric’s key employees for a period of 36 months and plans to issue future equity compensation to said employees, subject to approval of the Company’s board of directors.

~~The Company accounted for the acquisition of GridFabric as an acquisition of a business under ASC 805.~~

~~The Company determined the fair value of the consideration given to the Seller in connection with the Transaction in accordance with ASC 820 was as follows:~~

Consideration: Fair Value
Cash $ 400,000
26,427 shares of common stock $ 250,000
Contingent consideration - common stock issuable upon achievement of milestone(s) $ 750,000
Total Consideration $ 1,400,000

The total purchase price of the Company’s acquisition of GridFabric was allocated to identifiable assets deemed acquired, and liabilities assumed, based on their estimated fair values as indicated below.

Purchase Price Allocation:
Software $ 1,120,000
Customer list $ 60,000
Non-compete $ 190,000
Goodwill $ 26,395
Net Assets $ 3,605
Total $ 1,400,000

~~The~~he following is the unaudited pro forma information assuming the acquisition of ~~GridFabric, p2k Labs,~~ ATL and SWS occurred on October 1, ~~2019:~~2020:


	For the three months ended		For the six months ended
	March 31, 2021		March 31, 2021
Net sales	$	8,907,200	$	12,967,229
Net income (loss)	$	7,208,568	$	(551,184	)
Net income / (loss) per common share – basic	$	0.27	$	(0.02	)
Weighted average common shares outstanding – basic		26,402,962		26,121,545
Net income / (loss) per common share – diluted	$	0.22	$	(0.02	)
Weighted average common shares outstanding – diluted		33,175,566		26,121,545

For the Three Months Ended For the Six Months Ended
March 31, 2021 March 31, 2020 March 31, 2021 March 31, 2020
Net sales $ 8,907,200 $ 4,928,256 $ 12,967,229 $ 6,736,346

Net income/ (loss) $ 7,208,568 $ (5,531,940 ) $ (551,184 ) $ (7,962,293)

Earnings/(loss) per common share - basic $ 0.27 $ (0.97 ) $ (0.02 ) $ (1.43)

Weighted average common shares outstanding - basic 26,402,962 5,727,560 26,121,545 5,549,249

Earnings/(loss) per common share - diluted
$ 0.22 $ (0.97 ) $ (0.02 ) $ (1.43)

Weighted average common shares outstanding - diluted 33,175,566 5,727,560 26,121,545 5,549,249

The unaudited pro forma consolidated financial results have been prepared for illustrative purposes only and do not purport to be indicative of the results of operations that ~~actually~~ would have actually resulted had the acquisition occurred on the first day of the earliest period presented, or of future results of the consolidated entities. The unaudited pro forma consolidated financial information does not reflect any operating efficiencies and cost savings that may be realized from the integration of the acquisition. All ~~transitions~~transactions that would be considered inter-company transactions for ~~proforma~~pro forma purposes have been eliminated.

~~The Company amortizes intangible assets with finite lives over their estimated useful lives, which range between two and twenty years as follows:~~

~~Useful life~~
~~Patents~~			13-20 ~~years~~
~~Websites~~			3 ~~years~~
~~Customer list and non-compete agreement~~			~~1.5~~-4 ~~years~~
~~Design assets~~			2 ~~years~~
~~Trademarks~~			14 ~~years~~
~~Engineering trade secrets~~			1-7 ~~years~~
~~Strategic contract~~			5 ~~years~~
~~Software~~			4 ~~years~~

Intangible assets consist of the following as of March 31, ~~2021~~2022 and September 30, ~~2020:~~2021:

March 31, 2021 September 30, 2020
Patents $ 74,112 $ 74,112
Websites 8,115 8,115
Customer list and non-compete agreement 11,824,757 6,702,024
Design assets 123,000 123,000
Trademarks 5,928 5,928
Trade secrets 4,370,269 4,370,269
Software 1,120,000 1,120,000
Strategic contract 7,457,970 —
Intangible assets: 24,984,151 12,403,448
Less: accumulated amortization (7,651,331 ) (5,353,792)
Intangible assets, net $ 17,332,820 $ 7,049,656

F-23


March 31, 2022
	Intangible assets		Accumulated amortization		Total
Patents	$	74,113	$	34,552	$	39,561
Websites		23,115		8,915		14,200
Customer list and non-compete agreement		6,892,024		5,981,767		910,257
Design assets		123,000		123,000		0
Trademarks		5,928		2,480		3,448
Engineering trade secrets		4,370,269		3,282,677		1,087,592
Software		870,000		344,375		525,625
Strategic Contract		9,799,970		2,568,129		7,231,841
mPulse software		741,846		291,609		450,237
Total	$	22,900,265	$	12,637,504	$	10,262,761


September 30, 2021
	Intangible assets		Accumulated amortization		Total
Patents	$	74,112	$	28,329	$	45,783
Websites		8,115		8,115		0
Customer list and non-compete agreement		6,892,024		4,940,456		1,951,568
Design assets		123,000		123,000		0
Trademarks		5,928		2,236		3,692
Engineering trade secrets		4,370,269		2,943,173		1,427,096
Software		870,000		325,519		544,481
Strategic Contract		9,799,970		1,577,098		8,222,872
mPulse software		741,846		238,161		503,685
Total	$	22,885,264	$	10,186,087	$	12,699,177

Amortization expense for the three and six months ended March 31, 2022 was $1,225,873 and $2,451,417, respectively. Amortization expense for the three and six months ended March 31, 2021 was $1,403,483and ~~2020 was~~ $~~$2,225,991~~2,309,974 ~~and~~ ~~$1,269,293~~, respectively.

The Company expects to record amortization expense of intangible assets over the next 5 years and thereafter as follows:


2021 (six months remaining)	$	3,882,949
Year			March 31, 2022
2022		7,072,469	$	2,063,365
2023		2,492,479		2,908,616
2024		2,065,344		2,827,374
2025		1,495,888		2,000,726
2026				439,811
Thereafter		323,691		22,869
Total	$	17,332,820
			$	10,262,761

Property and equipment ~~net~~ consist of the ~~following as of~~following:


	March 31, 2022			September 30, 2021
Mining equipment	$	11,782,820		$	2,823,218
Miners		256,063,805			120,330,769
Land Improvements		1,529,937			0
Office Equipment		167,329			126,584
Land and building		12,624,608			11,048,299
Machinery and equipment		331,172			323,682
Leasehold improvements		158,110			69,056
Furniture and fixtures		82,601			30,934
Infrastructure		12,439,515			81,868
Construction in progress		4,172,407			10,498,311
Less: accumulated depreciation		(23,022,215	)		(7,657,982	)
Property and equipment, net	$	276,330,089		$	137,674,739

Depreciation expense for the three months ended March 31, 2022 and 2021 was $10,435,760and ~~September 30, 2020:~~

$706,417, respectively. Depreciation expense for the six months ended March 31, 2022 and 2021 was $16,907,784and ~~2020 was~~ $$930,324 ~~and~~ ~~$32,071~~, respectively.

For the three months ended March 31, 2022, $3,978,676 of property and equipment was sold for a gain of $920,861. For the six months ended March 31, 2022, $4,390,160 of property and equipment was disposed of for a gain of $642,691, which included $411,484 of property and equipment that was written-off resulting in a loss of $278,170. There were 0 disposals during the three and six months ended March 31, 2021.

The Company ~~has purchase commitments for approximately~~ placed-in service property and equipment of $~~$146.5~~160,345,487 ~~million related to purchase~~ during the six months ended March 31, 2022. This increase in fixed assets primarily consisted of miners asamounting to $135,733,036, which also includes miners received in-kind under miner purchase agreements valued at approximately $308,038, mining equipment of $8,959,602, and infrastructure of $12,357,647.

As of March 31, ~~2021, and~~2022, the Company has outstanding deposits totaling $69,902,321. These deposits are in prepayments paid ~~$42.8~~ ~~million towards these commitments as of the end of this period.~~

~~On May 7, 2020, the Company~~to premier suppliers and manufacturers to purchase mining ASICs and equipment. The prepayments will be applied ~~for a loan from Celtic Bank Corporation, as lender, pursuant~~ to the ~~Paycheck Protection Program of~~purchase price when the ~~Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) as administered by~~vendor ships the ~~U.S. Small Business Administration (the "SBA"). On May 15, 2020, the loan was approved and the Company received the proceeds from the loan in the amount of~~ ~~$531,169~~miners. ~~(the “PPP Loan”). The PPP Loan, which took the form of a promissory note issued by the Company (the “PPP Note”) matures on May 7, 2022 and bear interest at a rate of~~ ~~1.0%~~ ~~per annum.~~

~~The Company applied for and received loan forgiveness from the SBA on March 23, 2021. The entire principal balance and interest charges were forgiven.~~

~~Table of Contents~~

LEASES

~~9. LEASES~~

~~Effective~~On October 1, 2019, the Company ~~accounts for its leases under~~adopted the amendments to ASC 842, Leases, which requires lessees to recognize lease assets and liabilities arising from operating leases on the balance sheet. The Company adopted the new lease guidance using the modified retrospective approach and elected the transition option issued under ASU 2018-11, Leases (Topic 842) Targeted Improvements,, allowing entities to continue to apply the legacy guidance in ASC 840, Leases,, to prior periods, including disclosure requirements. ~~Accordingly, prior period financial results and disclosures have not been adjusted.~~

The ~~Company has~~Company’s operating leases ~~under~~are office spaces and finance leases which ~~it leases~~are primarily related to equipment used at its ~~branch offices, corporate headquarters,~~data center.

F-25

The Company's lease costs recognized during the three and ~~data center, one of which is with a related party. As of~~six months ended March 31, ~~2021, the Company's operating lease right of use asset~~2022 and ~~operating lease liability totaled~~ ~~$713,158~~ ~~and~~ ~~$713,023, respectively. A weighted average discount rate of~~ ~~10%~~ ~~was used~~2021 in the ~~measurement~~Consolidated Statements of Operations and Comprehensive Income (Loss) consist of the ~~right of use asset~~following:


	For the three months ended				For the six months ended
	March 31, 2022		March 31, 2021		March 31, 2022		March 31, 2021
Operating lease cost (1)	$	83,237	$	152,848	$	166,475	$	189,006
Finance lease cost:
Amortization of right-of-use assets	$	94,815	$	90,981	$	189,630	$	112,729
Interest on lease obligations	$	10,125	$	14,645	$	21,512	$	18,223

(1) Included in general and administrative expenses

Other lease ~~liability. As the rate implicit in the lease~~information is not readily determinable, the Company's incremental collateralized borrowing rate is used to determine the present value of lease payments. This rate gives consideration to the applicable Company collateralized borrowing rates and is based on the information available at the commencement date. The Company has elected to apply the short-term lease measurement and recognition exemption to leases with an initial term of 12 months or less; therefore, these leases are not recorded on the Company’s Consolidated Balance Sheet, but rather, lease expense is recognized over the lease term on a straight-line basis.as follows:


	For the six months ended
	March 31, 2022		March 31, 2021
Cash paid for amounts included in measurement of lease obligations:
Operating cash flows from operating leases	$	157,780	$	158,874
Financing cash flows from finance leases	$	206,063	$	124,644


	March 31, 2022			September 30, 2021
Weighted-average remaining lease term - operating leases	4.54 years			5 years
Weighted-average remaining lease term - finance leases	1.78 years			3.2 years
Weighted-average discount rate - operating leases		4.50	%		4.50	%
Weighted-average discount rate - finance leases		5.50	%		5.50	%

~~The Company's operating leases have remaining lease terms between~~ ~~one year~~ to

~~two years, with a weighted average lease term of~~ ~~1.15~~ years at March 31, 2021. Some leases include multiple year renewal options. The Company’s decision to exercise these renewal options is based on an assessment of its current business needs and market factors at the time of the renewal. Currently, the Company has no leases for which the option to renew is reasonably certain and therefore, options to renew were not factored into the calculation of its right of use asset and lease liability as of March 31, 2021. These operating leases also have a weighted average discount rate of ~~10%~~ ~~at March 31, 2021.~~

The following is a schedule of the Company's ~~operating~~ lease liabilities by contractual maturity as of March 31, ~~2021:~~2022:

Fiscal year ending September 30, 2021 (six months remaining) $ 335,094
Fiscal year ending September 30, 2022 420,931
Total Lease Payments 756,025
Less: imputed interest (43,002)
Total present value of lease liabilities $ 713,023


Fiscal Year	Operating Leases			Finance Leases
2022	$	159,125		$	198,047
2023		324,949			295,541
2024		333,234			131,164
2025		341,767			11,092
2026		299,039			0
Thereafter		37,301			0
Gross lease liabilities		1,495,415			635,844
Less: imputed interest		(129,884	)		(32,075	)
Present value of lease liabilities	$	1,365,531		$	603,769
Less: Current portion of lease liabilities		(321,600	)		(345,817	)
Total lease liabilities, net of current portion	$	1,043,931		$	257,952

8. RELATED PARTY TRANSACTIONS

Zachary K. Bradford - Chief Executive Officer and ~~$48,459 for~~Director

During the three and six months ended March 31, ~~2021~~2022, the Company paid Blue Chip Accounting, LLC (“Blue Chip”) $0 and ~~2020,~~$47,075, respectively, ~~were included as part of~~for accounting, tax, administrative ~~expense.~~

~~The Company has financing leases in relation to~~services and reimbursement for office supplies. During the ~~equipment used at its data center. The following is a schedule of the Company’s financing lease liabilities by contractual maturity as of March 31, 2021:~~

Fiscal year ending September 30, 2021 (six months remaining) $ 208,818
Fiscal year ending September 30, 2022 417,636
Fiscal year ending September 30, 2023 325,100
Fiscal year ending September 30, 2024 128,089
Fiscal year ending September 30, 2025 12,320
Thereafter 1,854
Total Lease Payments 1,093,817
Less: imputed interest (141,284)
Total present value of lease liabilities $ 952,533

~~These financing leases have a weighted average lease term of~~ ~~3.13~~ ~~years~~three and ~~a weighted average discount rate of~~ ~~10.0%~~ ~~at March 31, 2021.~~

~~F-23~~

~~Table of Contents~~

~~10. RELATED PARTY TRANSACTIONS~~

~~Zachary Bradford – Chief Executive Officer and Director~~

~~During the~~ six months ended March 31, 2021, the Company paid Blue Chip Accounting, LLC (“Blue Chip”) $50,675 and $~~90,365~~80,675, respectively, for accounting, tax, administrative services and reimbursement for office supplies. Blue Chip is ~~50%~~50% beneficially owned by Mr. Bradford. None of the services were associated with work performed by Mr. Bradford. The services consisted of preparing and filing tax returns, bookkeeping, accounting and administrative support assistance. The Company also sub-leases office space from Blue ~~Chip (see Note 15 for additional details).~~Chip. During the three and six months ended March 31, 2022, $0 and $4,575, respectively, was paid to Blue Chip for rent. During the three and six months ended March 31, 2021, $4,575 and $9,150, respectively, was paid to Blue Chip for rent.

~~Matthew Schultz - Chairman of the Board~~

The ~~Company entered into an agreement on November 15, 2019 with an organization to provide general investor relations~~sublease and ~~consulting~~engagement for accounting services ~~that Mr. Schultz is affiliated with. The Company paid the organization~~ ~~$49,500~~ ~~in fees plus~~ ~~$176,000~~ ~~in expense reimbursements for the six months ended March 31, 2020. The agreement~~ was terminated ~~in March 2020.~~on December 31, 2021.

STOCKHOLDERS’ EQUITY

Overview

~~11. STOCKHOLDERS EQUITY~~

~~Overview~~

The Company’s authorized capital stock consists of ~~50,000,000~~100,000,000 shares of common stock and 10,000,000 shares of preferred stock, par value $$0.001 per share. As of March 31, ~~2021,~~2022, there were ~~33,874,152~~41,290,587 shares of common stock issued and outstanding and 1,750,000 shares of preferred stock issued and outstanding.

~~Amendment to Articles~~As of ~~Incorporation~~September 30, 2021, there were

~~On October 4, 2019, pursuant to Article IV~~37,395,945 shares of ~~our Articles of Incorporation, our Board of Directors voted to increase the number of~~common stock issued and outstanding and 1,750,000 shares of preferred stock ~~designated as Series A Preferred Stock from one million (1,000,000) shares to two million (2,000,000) shares, par value~~ ~~$0.001~~.

~~Under the Certificate of Designation, holders of Series A Preferred Stock will be entitled to quarterly dividends on 2% of our earnings before interest, taxes~~issued and amortization. The dividends are payable in cash or common stock. The holders will also have a liquidation preference on the state value of $0.02 per share plus any accumulated but unpaid dividends. The holders are further entitled to have us redeem their Series A Preferred Stock for three shares of common stock in the event of a change of control and they are entitled to vote together with the holders of our common stock on all matters submitted to shareholders at a rate of forty-five (45) votes for each share held.outstanding.

~~The rights of the holders of Series A Preferred Stock are defined in the relevant Amendment to the Certificate of Designation filed with the Nevada Secretary of State on October 9, 2019.~~

~~On October 7, 2020, the Company executed that certain first amendment to 2017 Equity Incentive Plan to increase its option pool from~~ ~~300,000~~ to ~~1,500,000~~ ~~shares of common stock (the “Plan Amendment”).~~

~~On March 16, 2021, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Nevada Secretary of State to increase its authorized shares of common stock to~~ ~~50,000,000~~.

~~F-24~~

~~Table of Contents~~

Common Stock issuances during the six months ended March 31, ~~2021~~2022

The Company issued ~~4,444,445~~99,230 common shares in relation to exercise of ~~the Company’s~~options.

The Company issued 1,874 common ~~stock~~shares valued at $30,032 as compensation for Director services.

The Company issued 8,404 common shares valued at $150,011 for settlement of contingent consideration related to business acquisition.

The Company issued 4,017,652 common shares in ~~connection with~~relation to equity raises through its ~~underwritten equity~~At-the-Market offering ~~at a price~~facility, net of ~~$9.00~~ ~~per share~~offering costs, for net proceeds of $~~37.05~~ ~~million.~~

~~The Company issued~~ ~~236,000~~ ~~shares of common stock as settlement of accrued bonus compensation related to the year ended September 30, 2020. The fair value of these shares is~~ ~~$1.9~~ ~~million and was fully expensed for in the prior year. The Company issued~~ ~~222,725~~ ~~shares of common stock for the current year related to bonus compensation. The fair value of these shares is~~ ~~$1.07~~ ~~million and~~ ~~$582 thousand~~ ~~has been expensed during the six months ended March 31, 2021.~~

~~The Company issued~~ ~~1,618,285~~ ~~shares of common stock in relation to the acquisition of ATL (See Note 3 for additional details.)~~

~~The Company issued~~ ~~43,749~~ ~~shares of common stock for services rendered for a total fair value of~~ ~~$576~~ ~~thousand and has been fully expensed during the six months ended March 31, 2021.~~

~~The Company issued~~ ~~339,035~~ ~~shares of common stock in relation to the exercise of stock options and warrants. (See Notes 12 and 13 for additional details.)~~

~~The Company issued~~ ~~477,703~~ ~~shares of common stock in relation to the acquisition of SWS (See Note 3 for additional details.)~~

~~The Company issued~~ ~~18,392~~ ~~restricted stock units for a total fair value of~~ ~~$510,000~~ ~~of common shares to certain SWS employees as part of the transaction to incentivize the employees for retention purposes. These restricted stock units vest over a period of~~ ~~one year~~ ~~and we have expensed~~ ~~$42,500~~ ~~during the six months ended March 31, 2021.~~

~~The Company issued~~ ~~9,090,910~~ ~~shares of the Company’s common stock in connection with its underwritten public equity offering at a price of~~ ~~$22.00~~ 67,988,993~~per share for net proceeds of~~ ~~$187.2~~ .~~million.~~

Common stock returned during the six months ended March 31, ~~2021~~2022

~~As a result of an adjustment of holdback shares to actual milestones earned in relation to the p2k acquisition,~~ ~~8,072~~ ~~shares were returned and cancelled. (See Note 3 for additional details.)~~

~~Common Stock issuances during the six months ended March 31, 2020~~

The Company ~~issued~~ had ~~997,605~~232,518 shares of common stock ~~in accordance with~~returned back to the ~~terms~~Company as part of the ~~convertible debt agreement due to the decrease in stock price.~~

~~The Company issued~~ ~~2,000~~ ~~shares~~settlement of ~~common stock for services rendered to an independent consultant.~~

~~The Company issued~~ ~~793~~ ~~shares of common stock as a result of rounding~~contingent consideration and holdbacks related to ~~the reverse stock split.~~business acquisition.

~~The Company issued~~ ~~95,699~~ ~~shares of common stock in relation to the acquisition of p2k~~

~~Common stock returned during the six months ended March 31, 2020~~

~~As a result of a note payoff on December 5, 2019,~~ ~~5,000~~ ~~shares common stock were returned to treasury and cancelled on January 13, 2020.~~

~~As a result of the cancellation of an investor relations services contract,~~ ~~25,000~~ ~~shares were returned to treasury and cancelled on February 10, 2020.~~

~~F-25~~

~~Table of Contents~~

~~Series A Preferred Stock issuances during the six months ended March 31, 2020~~10.

~~On October 4, 2019, the Company authorized the issuance of a total of seven hundred and fifty thousand (750,000) shares of its designated Series A Preferred Stock to three members of its board of directors for services rendered.A fair value of~~ ~~$0.02~~ ~~per share was determined by the Company. Director fees of~~ ~~$15,000~~ ~~was recorded as a result of the stock issued.~~

~~We accrued~~ ~~$177,505~~ ~~in preferred stock dividends payable for the three months ended March 31, 2021.~~

~~12.~~

STOCK WARRANTS

The following is a summary of stock warrant activity during the six months ended March 31, ~~2021.~~2022:

	Number of Warrant Shares		Weighted Average Exercise Price
Balance, September 30, 2020		1,299,065	$	21.78
					Number of Warrant Shares			Weighted Average Exercise Price ($)
Balance, September 30, 2021						615,704		$	30.72
Warrants granted		—		—		0			0
Warrants expired		—		—		(183,334	)	40.91
Warrants canceled		—		—		0			0
Warrants exercised		243,196		11.08		0			0
Balance, March 31, 2021		1,055,869	$	24.16
Balance, March 31, 2022						432,370		26.39

F-27

~~During the six months ended March 31, 2021, a total of~~ ~~166,396~~ ~~shares of the Company’s common stock were issued in connection with the exercise of~~

~~166,396~~ ~~common stock warrants at exercise prices ranging from~~ ~~$3.36~~ ~~and~~ ~~$20.00, for a total consideration of~~ ~~$2,774,812~~.

~~On March 31, 2021, a total of~~ ~~74,437~~ ~~shares of the Company’s common stock were issued in connection with the cashless exercise of~~ ~~76,800~~ ~~common stock warrants at exercise prices ranging from~~ ~~$0.83~~ to ~~$3.67~~.

As of March 31, ~~2021,~~2022, there are warrants exercisable to purchase 432,370 shares of common stock in the Company and there are 0 warrants that are unvested. As of March 31, 2022, the outstanding warrants have a weighted average remaining term of ~~was~~ ~~0.77~~1.62 years and an intrinsic value of $~~$6,073,392~~467,940.

~~As of~~During the three and six months ended March 31, ~~2021,~~ 2022, there ~~are warrants exercisable to purchase~~ were ~~1,048,012~~ ~~shares of common stock in the Company and~~ ~~7,857~~0 ~~unvested warrants outstanding that cannot be exercised until vesting conditions are met.~~ ~~858,699~~exercise of ~~the warrants require a cash investment to exercise as follows,~~ ~~2,500~~ ~~require a cash investment of~~ ~~$8.00~~ ~~per share,~~ ~~439,865~~ ~~require a cash investment of~~ ~~$15.00~~ ~~per share,~~ ~~103,000~~ ~~require a cash investment of~~ ~~$25.00~~ ~~per share,~~ ~~200,000~~ ~~require an investment of~~ ~~$35.00~~ ~~per share,~~ ~~10,000~~ ~~require an investment of~~ ~~$40.00~~ ~~per share,~~ ~~60,000~~ ~~require an investment of~~ ~~$50.00~~ ~~per share,~~ ~~38,333~~ ~~require a cash investment of~~ ~~$75.00~~ ~~per share and~~ ~~5,000~~ ~~require a cash investment of~~ ~~$100.00~~ ~~per share.~~ ~~197,170~~ ~~of the outstanding warrants contain provisions allowing a cashless exercise at their respective exercise prices.~~warrants.

11.

STOCK-BASED COMPENSATION

~~13. STOCK OPTIONS~~

The Company sponsors a stock-based incentive compensation plan known as the 2017 Incentive Plan (the “Plan”), which was established by the Board of Directors of the Company on June 19, 2017. On October 7, 2020, the Company executed a first amendment to the Plan to increase its share pool from 300,000 to 1,500,000 shares of common stock.

Effective September 15, 2021, following approval by our stockholders, the Plan was amended to (i) increase the number of shares of common stock authorized for issuance under the Plan by an additional 2,000,000 shares, resulting in an aggregate of 3,500,000 shares of common stock authorized for issuance under the Plan, and (ii) revise Section 19 of the Plan to more closely align with the provisions of Section 422 of the Internal Revenue Code of 1986, as amended, and Section 17.2 of the Plan.

As of March 31, ~~2021,~~2022, there were ~~461,767~~370,821 shares available for issuance under the Plan.

The Plan allows the Company to grant incentive stock options, non-qualified stock options, stock appreciation ~~right,~~rights, common stock, units of common stock, restricted stock, performance shares and performance units. Other than incentive stock options that are granted to participants who owns more than 10% of the total combined voting power of all classes of the stock of the Company or ~~restricted stock. The incentive~~of its parent or subsidiary corporations (a “Ten Percent Stockholder”), stock options are exercisable for up to ten years, at an option price per share not less than the fair market value on the date the option is granted. The incentive stock options are limited to persons who are regular full-time employees of the Company or Ten Percent Stockholders at the date of the grant of the option. Non-qualified stock options and the other types of awards issuable under the Plan may be granted to any person, including, but not limited to, employees, independent agents, consultants and attorneys, who the Company’s ~~Board~~Compensation Committee believes have contributed, or will contribute, to the success of the Company. ~~Non-qualified options may be issued at option prices of less than fair market value on the date of grant and may be exercisable for up to ten years from date of grant.~~ The option vesting schedule for options granted is determined by the ~~Board of Directors~~Compensation Committee at the time of the grant. The Plan provides for accelerated vesting of unvested options if there is a change in control, as defined in the Plan.

The Company granted 64,000 non-qualified options pursuant to the Plan during the six months ended March 31, 2022.

The Company recognized $6,553,984 and $12,303,091 respectively for the three and six months ended March 31, 2022 in stock-based compensation under the Plan. The Company recognized $231,361 and $1,163,401 respectively for the three and six months ended March 31, 2021 in stock-based compensation under the Plan.

STOCK OPTIONS

~~F-26~~

~~Table of Contents~~

The following is a summary of stock option activity during the six months ended March 31, ~~2021.~~2022:

	Number of Option Shares		Weighted Average Exercise Price
Balance, September 30, 2020		277,948	$	6.34
					Number of Option Shares			Weighted Average Exercise Price ($)
Balance, September 30, 2021						1,547,029			18.35
Options granted		298,500		9.03		197,250			15.29
Options expired		11,511		8.65		0			0
Options cancelled		—		—
Options canceled/forfeited						(157,885	)		18.59
Options exercised		98,202		5.82		(99,230	)		7.39
Balance, March 31, 2021		466,735	$	8.11
Balance, March 31, 2022						1,487,164		18.69

F-28

As of March 31, ~~2021,~~2022, there are options exercisable to purchase ~~338,191~~632,753 shares of common stock in the ~~Company.~~Company and 854,508 unvested options outstanding that cannot be exercised until vesting conditions are met. As of March 31, ~~2021,~~2022, the outstanding options have a weighted average remaining term of ~~was~~ ~~2.43~~1.61 years and an intrinsic value of $~~$7,345,720~~1,303,773.

During the six months ended March 31, ~~2021,~~2022, a total of ~~98,202~~99,230 shares of the Company’s common stock were issued in connection with the exercise of ~~98,202~~common stock options at exercise prices ranging from $$4.65 ~~and~~ to $~~24.40~~15.10, for a total consideration of $~~$571,747~~733,170.

~~During~~ For the six months ended March 31, ~~2021,~~2022, the Company ~~issued~~ also granted ~~298,500~~197,250 options with a total fair value of $~~$2,696,715~~2,958,367 to purchase shares of common stock to employees. ~~The Company offset~~ ~~$953,125~~ ~~of stock compensation expense against bonuses accrued during the prior year. The shares were granted at quoted market prices ranging from~~ ~~$7.55~~ to ~~$34.67~~ ~~and were valued at issuance using the Black Scholes model.~~

The Black-Scholes model utilized the following inputs to value the options granted during the six months ended March 31, ~~2021:~~2022:


Fair value assumptions – Options:	March 31, ~~2021~~ 2022
Risk free interest rate	0.10% - 2.55%		~~0.18~~-~~0.22~~%
Expected term (years)	1.50 - 6.02		3
Expected volatility	140% - 533%		~~167%~~-~~172%~~
Expected dividends		0	0%%

~~During the six months ended March 31, 2021 and 2020, the Company recognized of~~ ~~$1,163,401and~~ ~~$716,740~~ ~~of stock compensation expense respectively.~~ As of March 31, ~~2021,~~2022, the Company expects to recognize $~~$742,865~~13,096,168 of stock-based compensation for the non-vested outstanding options over a weighted-average period of ~~1.01~~ 2.05years.

The Company grants RSUs that contain (a) service conditions, (b) performance conditions, or (c) market performance conditions. RSUs containing service conditions vest monthly or annually. RSUs containing performance conditions generally vest over 1 year, and the number of shares earned depends on the achievement of predetermined Company metrics.

When the criteria for vesting is met, the Company recognizes the expense equal to the total fair value of the common stock price on the grant date. All of the RSUs issued prior to September 30, 2021 were either vested or forfeited and cancelled.

The following table summarizes the performance-based restricted stock units at the maximum award amounts based upon the respective performance share agreements. Actual shares that will vest depend on the attainment of the performance-based criteria.

~~Option activity for the six months ended March 31, 2020~~


	Number of Shares			Weighted Average Fair Value Per Share		Aggregate Intrinsic Value
Outstanding at September 30, 2021		10,995		$	11.59	$	84,839
Granted		1,106,250			14.68		13,684,313
Vested		(77,885	)		20.15		1,569,280
Forfeited		(40,759	)		20.48		458,729
Outstanding at March 31, 2022		998,601		$	14.15	$	12,352,694

During the six months ended March 31, ~~2020,~~2022, the Company ~~issued~~ granted ~~233,233~~1,106,250 ~~options~~ RSUs, which comprised of 90,000 that are service period based, 146,250 that are performance condition based, and 870,000 that are market condition based awards. The market condition based RSUs consist of 60,000 units that are perpetual in nature, and therefore, are given a derived service period of 5 years. The remaining 810,000 RSUs have a stated service period of 1 year. The fair value of the market based RSUs are determined using the Monte Carlo simulation and is in the following range: $11.03 - $17.89 per unit. The risk free rate, volatility, expected term, and cost of equity of these market based RSUs are as follows: 0.14-1.26%, 111.37-172.18%, 1-5 years, and 20.00-21.00%.

As of March 31, 2022, the Company had $7,755,679 in unrecognized compensation costs related to RSU awards that it expects to recognize over a weighted average period of 0.75 years.

12.

COMMITMENTS AND CONTINGENCIES

Purchase of bitcoin mining equipment

The Company has cancellable purchase commitments totaling approximately $87,300,000 related to purchase ~~shares~~ of ~~common stock~~miners and approximately $10,600,000 related to ~~employees,~~purchase of mining operations related equipment and construction projects as of March 31, 2022, and the ~~shares were granted at quoted market prices ranging from~~ Company has paid approximately $~~$4.50~~73,700,000 to ~~$8.50. The options were valued at issuance using the Black Scholes model and stock compensation expense of~~ ~~$716,740~~ ~~was recorded~~ towards these commitments as ~~a result~~ of the ~~issuances.~~

~~The Black-Scholes model utilized the following inputs to value the options granted during the six months ended~~end of this period. As of March 31, ~~2020:~~

~~Fair value assumptions – Options:~~	~~March 31, 2020~~
~~Risk free interest rate~~		~~0.85~~2022, the remaining commitment for future payments was approximately $24,200,000.-~~1.73~~%
~~Expected term (years)~~		3-5
~~Expected volatility~~		~~124~~%-~~209~~%
~~Expected dividends~~		0%

~~F-27~~

~~Table of Contents~~

~~14. COMMITMENTS AND CONTINGENCIES~~

~~Office leases~~

Future hosting agreements

~~Utah Corporate Office~~

On ~~November 22, 2019,~~March 29, 2022, the Company entered into a ~~lease~~Hosting Agreement (the "Lancium Agreement") with Lancium LLC (“Lancium”). Pursuant to ~~relocate~~ the ~~corporate office~~Lancium Agreement, Lancium has agreed to ~~1185 South 1800 West, Suite 3, Woods Cross, UT 84047. The agreement calls~~host, power and provide maintenance and other related services to the Company’s cryptocurrency mining equipment to be placed at Lancium facilities. Pursuant to the Agreement, Lancium will provide 200 megawatts in support of Company’s mining equipment. In addition, for a period of two and a half years following the operations commencement date under the Agreement, the Company will have an option to increase the power capacity supplied to the Company up to 500 MW or 40% of the aggregate capacity of all facilities owned and operated by Lancium, whichever is lesser. As consideration for the Services, the Company shall pay Lancium a power charge fee based on kilowatt hours consumed by the Company’s equipment and a hosting fee based on power consumed, subject to service level adjustments and credits, if any.

The Agreement further provides that through December 31, 2023, Lancium, subject to certain limited exceptions, will not enter into any all-in fixed price agreements with other customers with the same or less power draw as the Company that contains more favorable terms for the fixed all-in price than those in the Lancium Agreement, unless the Company is provided with the same lower fixed price under the Lancium Agreement. The Agreement has an initial term of five years from the operations commencement date (unless terminated earlier in accordance with the terms of the Agreement), after which it will renew automatically for two-year periods unless either party provides notice of non-renewal at least ninety days prior to the expiration of the term or renewal term, as applicable. As of March 31, 2022, the Company did 0t have any contractual future payment obligations under the terms of the Agreement.

Contractual future payments

The following table sets forth certain information concerning our obligations to make contractual future payments towards our agreements as of ~~$2,300~~March 31, 2022: ~~in base rent per month through February 28, 2021. The lease renewed and is on an annual basis through February 28, 2022.~~


	2022		2023		2024		2025		2026		Thereafter		Total
Recorded contractual obligations:
Operating lease obligations	$	159,125	$	324,949	$	333,234	$	341,767	$	299,039	$	37,301	$	1,495,415
Finance Lease obligations		198,047		295,541		131,164		11,092		0		0		635,844
Mining equipment		20,396,770		-		-		-		-		-		20,396,770
Mining operations related equipment		3,774,435		-		-		-		-		-		3,774,435
Total	$	24,528,377	$	620,490	$	464,398	$	352,859	$	299,039	$	37,301	$	26,302,464

~~San Diego Office~~F-30

~~On May 15, 2018, the Company executed a~~ 37 ~~month lease agreement, which commenced on July 1, 2018 at 4360 Viewridge Avenue, Suite C, San Diego, California. The agreement calls for the Company to make payments of~~ ~~$4,057~~ ~~in base rent per month through July 31, 2021 subject to an annual~~ 3% ~~rent escalation.~~

~~Las Vegas Offices~~

On January 2, 2020, the Company entered into a sublease agreement with Blue Chip for office space at 8475 S. Eastern Ave., Suite 200, Las Vegas, NV 89123. The agreement calls for the Company to make monthly payments of ~~$1,575~~ ~~in base rent through January 1, 2021. The lease term is on an annual basis beginning January 2, 2020.~~

~~The Company assumed p2k’s lease agreement entered into on October 17, 2017 at 7955 W. Badura Ave., Suite 1040, Las Vegas, NV 89113. The agreement calls for~~ ~~$1,801~~ ~~in base rent through October 31, 2020. The lease expired on October 31, 2020. The Company did not renew this lease.~~

~~Atlanta Offices~~

~~The Company assumed ATL’s lease agreement entered into on June 6, 2020 at 2380 Godby Road, Atlanta GA 30349. The agreement calls for~~ ~~$52,958~~ ~~per month in base rent through June 4, 2022.~~

Contingent consideration

GridFabric

On August 31, 2020, the Company acquired ~~GridFabric.~~GridFabric, LLC. Pursuant to the terms of the purchase agreement, additional shares of the Company’s common stock valued at up to $$750,000 ~~will be~~ were issuable if GridFabric achieves certain revenue and product release milestones. On September 30, 2021, the contingent consideration was re-measured to $500,000.

On November 23, 2021, the Company settled all contingent consideration due to GridFabric resulting in a payment of 8,404 shares of common stock valued at $150,000.

Solar Watt Solutions

On February 24, 2021, the Company acquired ~~SWS.~~Solar Watt Solutions, Inc. Pursuant to the terms of the purchase agreement, additional cash consideration of up to $$2,500,000 ~~will~~ (fair valued at $155,000 at acquisition date) in cash held back by the Company and only payable pro rata to Sellers upon meeting certain future milestones and subject to satisfaction of any amounts owing from SWS to the Company resulting from damages required to be ~~payable if Solar Watt Solutions achieves certain revenue milestones.~~indemnified under the SWS Merger Agreement. The contingent cash consideration was re-measured to $615,249 at December 31, 2021.

On January 31, 2022, the Company settled all contingent consideration due to the SWS sellers, resulting in a payment of $625,000, 77,500 shares of common stock released out of escrow to the SWS sellers, and SWS sellers releasing 232,518 shares of common stock back the Company.

Legal contingencies

From time to time we may be subject to ~~litigation.~~litigation arising in the ordinary course of business. The Company accrues a liability when a loss is considered probable and the amount can be reasonably estimated. When a material loss contingency is reasonably possible but not probable, the Company does not record a liability, but instead discloses the nature and the amount of the claim, and an estimate of the loss or range of loss, if such an estimate can be made. Legal fees are expensed as incurred. Based on the opinion of legal counsel and other factors, management believes that the final disposition of these existing matters will not have a material adverse effect on the business, results of operations, financial condition, or cash flows of the Company. The Company has identified certain claims as a result of which a loss may be incurred, but in the aggregate the loss is expected to be insignificant. This assessment is based on our current understanding of relevant facts and circumstances. As such, our view of these matters is subject to inherent uncertainties and may change in the future. Significant judgment is required in both the determination of probability and the determination as to whether an exposure is reasonably estimable. Actual outcomes of these legal and regulatory proceedings may materially differ from our current estimates. For other claims regarding proceedings that are in an initial phase, the Company is unable to estimate the range of possible loss, if any, but at this time believes that any loss related to such claims will not be material. Risks associated with legal liability are difficult to assess and quantify, and their existence and magnitude can remain unknown for significant periods of time. We ~~have acquired~~maintain liability insurance to reduce such risk exposure to the Company. Despite the measures taken, such policies may not cover future litigation, or the damages claimed may exceed our coverage which could result in contingent liabilities.

~~For~~Bishins v. CleanSpark, Inc. et al.

On January 20, 2021, Scott Bishins (“Bishins”), individually, and on behalf of all others similarly situated (together, the “Class”), filed a ~~description~~class action complaint (the “Class Complaint”) in the United States District Court for the Southern District of ~~our~~New York against the Company, its Chief Executive Officer, Zachary Bradford (“Bradford”), and its Chief Financial Officer, Lori Love (“Love”) (such action, the “Class Action”). The Class Complaint alleged that, between December 31, 2020 and January 14, 2021, the Company, Bradford, and Love “failed to disclose to investors: (1) that the Company had overstated its customer and contract figures; (2) that several of the Company’s recent acquisitions involved undisclosed related party transactions; and (3) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a

F-31

reasonable basis.” The Class Complaint sought: (a) certification of the Class, (b) an award of compensatory damages to the Class, and (c) an award of reasonable costs and expenses incurred by the Class in the litigation.

On December 2, 2021, the Court appointed Darshan Hasthantra as lead Plaintiff (together, with Bishins, the “Plaintiffs”), and Glancy, Prongay and Murray LLP as class counsel.

Hasthantra filed an Amended Complaint on February 28, 2022 (the “Amended Class Complaint”). In the Amended Class Complaint, Love is no longer a defendant and S. Matthew Schultz (“Schultz”) has been added as a defendant (the Company, Bradford and Schultz, collectively, the “Defendants”). The Amended Class Complaint alleges that, between December 10, 2020 and August 16, 2021 (the “Class Period”), Defendants made material misstatements and omissions regarding the Company’s acquisition of ATL Data Centers, Inc. (“ATL”) and its anticipated expansion of bitcoin mining operations. In particular, Plaintiffs allege that Defendants: (1) were misleading in their various public announcements related to the timeline for expanding ATL’s mining capacity; and (2) failed to disclose other material conditions purportedly related to the Company’s acquisition of ATL, including that an ATL predecessor had filed for bankruptcy about six months prior to the acquisition, that another bitcoin miner had declined to acquire ATL, and that a related party had performed an audit of ATL for the Company. The Amended Class Complaint seeks: (a) certification of the Class, (b) an award of compensatory damages to the Class, and (c) an award of reasonable costs and expenses incurred by the Class in the litigation.

To date, no class has been certified in the Class Action.

The Company filed its Motion to Dismiss on April 28, 2022. The Motion to Dismiss seeks dismissal of all claims asserted in the Amended Class Complaint with prejudice and without leave to amend on the grounds that Plaintiffs fail to state a claim upon which relief can be granted under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 promulgated thereunder. Plaintiffs’ opposition is due on June 27, 2022, and Defendants’ reply in further support of their Motion to Dismiss is due on August 11, 2022.

Although the ultimate outcome of the Class Action cannot be determined with certainty, the Company stands behind all of its prior statements and disclosures and believes that the claims raised in the Amended Class Complaint and the Class Complaint are entirely without merit. The Company intends to both defend itself vigorously against these claims and to vigorously prosecute any counterclaims.

Notwithstanding Plaintiffs’ allegations’ lack of merit, however, the Class Action may distract the Company and cost the Company’s management time, effort and expense to defend against the claims made in the Amended Class Complaint. Notwithstanding the Company’s belief that the Company and its management have complied with all of their obligations under applicable securities regulations, no assurance can be given as to the outcome of the Class Action, and in the event the Company does not prevail in such action, the Company, its business, financial condition and results of operations could be materially and adversely affected.

Ciceri, derivatively on behalf of CleanSpark, Inc., v. Bradford, Love, Schultz, Beynon, McNeill, and Wood (consolidated with Perna, derivatively on behalf of CleanSpark, Inc., v. Bradford, Love, Schultz, Beynon, McNeill, and Wood)

On May 26, 2021, Andrea Ciceri (“Ciceri”), derivatively on behalf of CleanSpark, Inc., filed a verified shareholder derivative action (the “Ciceri Derivative Action”) in the United States District Court in the District of Nevada against Chief Executive Officer, Zachary Bradford (“Bradford”), Chief Financial Officer, Lori Love (“Love”) and Directors Matthew Schultz, Roger Beynon, Larry McNeill and Tom Wood (Bradford, Love and Directors collectively referred to as “Ciceri Derivative Defendants.”) On June 22, 2021, Mark Perna (“Perna”) (Ciceri, Perna, and Ciceri Derivative Defendants collectively referred to as the “Parties”) filed a verified shareholder derivative action (the “Perna Derivative Action”) in the same Court against the same Ciceri Derivative Defendants, making substantially similar allegations. On June 29, 2021, the Court consolidated the Ciceri Derivative Action with the Perna Derivative Action in accordance with a stipulation among the parties (the consolidated case referred to as the “Derivative Action”). The Derivative Action alleges that Ciceri Derivative Defendants: (1) made materially false and misleading public statements about the Company’s business and prospects; (2) did not maintain adequate internal controls; and (3) did not disclose several related party transactions benefitting insiders, questionable uses of corporate assets, and excessive compensation. The claims asserted against all Ciceri Derivative Defendants include breach of fiduciary duties, unjust

F-32

enrichment, abuse of control, gross mismanagement, and waste of corporate assets. A claim for contribution under Sections 10(b) and 21D of the Securities and Exchange Act is asserted against only Bradford and Love. The Derivative Action seeks declaratory relief, monetary damages, and imposition of adequate corporate governance and internal controls. Plaintiffs were given the opportunity to submit an Amended Complaint by November 25, 2021, but elected not to. In January 2022, the Parties agreed to stay the entirety of the case pending ~~legal proceedings, please see Part II, Item I~~the outcome of ~~this Quarterly Report~~the Motion to Dismiss in the Class Action. Any of the Parties may also terminate the stay on ~~Form 10Q.~~20 days’ notice.

Although the ultimate outcome of the Derivative Action cannot be determined with certainty, the Company stands behind all of its prior statements and disclosures, and believes that the claims raised in that case are entirely without merit. The Company intends to both defend itself vigorously against these claims and to vigorously prosecute any counterclaims.

~~F-28~~

Notwithstanding the Derivative Action’s lack of merit, however, it may distract the Company and cost the Company’s management time, effort and expense to defend against the claims. Notwithstanding the Company’s belief that the Company and its management have complied with all of their obligations under applicable securities regulations, no assurance can be given as to the outcome of the Derivative Action, and in the event the Company does not prevail in such action, the Company, its business, financial condition and results of operations could be materially and adversely affected.

Solar Watt Solutions, Inc., v. Pathion, Inc.

On January 6, 2022, Solar Watt Solutions, Inc., (“SWS”) filed suit in the Superior Court of the State of California in the County of Santa Clara against Pathion, Inc., (“Pathion”) for breach of contract, conversion, unjust enrichment and negligent misrepresentation. Prior to its acquisition by the Company, SWS paid Pathion $418,606 for solar batteries and related equipment for delivery in August 2019, later amended to November 2019. Pathion never delivered any of the items purchased by SWS. Pathion’s breach resulted in SWS being unable to complete a separate contract and cost the end-user client over $15,000 per month in electricity costs. SWS is seeking an award of compensatory damages totaling over $500,000. Pathion filed an answer on or around February 16, 2022, generally denying the claims asserted by SWS. A case management conference is scheduled for May 31, 2022, and discovery has commenced.

~~Table of Contents~~

~~15.~~

13.

MAJOR CUSTOMERS AND VENDORS

Digital Currency Mining Segment

For the ~~six~~three months ended March 31, 2022 and 2021, ~~and 2020,~~ the ~~Company~~digital currency mining business had the following customers that represented more than ~~10%~~10% of ~~our sales.~~revenue. For these purposes customers are defined as the Company’s mining pool operators.


	Three Months Ended
		March 31, 2022			March 31, 2021
Mining Pool Operator A			99.99	%		0
Mining Pool Operator B			0.01	%		100.00	%

March 31, 2021 March 31, 2020
Customer A 10.3 % 55.5%
Customer B — 24.4%

For the six months ended March 31, 2022 and 2021, the digital currency mining business had the following customers that represented more than 10% of revenue. For these purposes customers are defined as the Company’s mining pool operators.


	Six Months Ended
		March 31, 2022			March 31, 2021
Mining Pool Operator A			99.95	%		0
Mining Pool Operator B			0.05	%		100.00	%

F-33

For the three months ended March 31, 2022 and 2021, the Company had the following significant suppliers of mining equipment.


	Three Months Ended
		March 31, 2022			March 31, 2021
Vendor A			90.85	%		0
Vendor B			0			57.94	%
Vendor C			0			23.69	%
Vendor D			0			18.37	%

For the six months ended March 31, 2022 and ~~2020,~~2021, the Company had the following significant suppliers of mining equipment.


	Six Months Ended
		March 31, 2022			March 31, 2021
Vendor A			71.70	%		0
Vendor B			24.03	%		0
Vendor C			0			46.77	%
Vendor D			0			27.49	%
Vendor E			0			14.91	%

Energy Segment

For the three months ended March 31, 2022 and 2021, the energy business had the following customers that represented more than 10% of revenue.


	Three Months Ended
		March 31, 2022			March 31, 2021
Customer A			37.39	%		39.06	%
Customer B			—			12.47	%
Customer C			—			10.17	%

For the six months ended March 31, 2022 and 2021, the energy business had the following customers that represented more than 10% of revenue.


	Six Months Ended
		March 31, 2022			March 31, 2021
Customer A			30.01	%		56.00	%
Customer B			0			12.25	%

For the three months ended March 31, 2022 and 2021, the Company had the following suppliers that represented more than 10% of direct material costs.


	Three Months Ended
		March 31, 2022			March 31, 2021
Vendor A			20.23	%		22.24	%
Vendor B			17.82	%		0
Vendor C			12.06	%		0
Vendor D			0			23.90	%

F-34

For the six months ended March 31, 2022 and 2021, the Company had the following suppliers that represented more than ~~10%~~10% of ~~our~~ direct material costs. ~~Internally developed product costs and labor for services rendered are excluded from the calculation.~~

March 31, 2021 March 31, 2020
Vendor A 34.62 % 92.27%


	Six Months Ended
		March 31, 2022			March 31, 2021
Vendor A			38.87	%		0
Vendor B			11.76	%		0
Vendor C			0			15.62	%
Vendor D			0			14.54	%
Vendor E			—			12.91	%

14.

SEGMENT REPORTING

We disclose segment information that is consistent with the way in which management operates and views the business. Our operating structure contains ~~the following~~2 reportable segments: Digital Currency and Energy. The Company measures the results of its segments using, among other measures, each segment's sales and operating income, which includes certain corporate overhead allocations.

Digital Currency: This segment consists of operations related to Bitcoin mining. The Company provides computing power through ATL Data Centers LLC and CleanBlok Inc. to the mining pools. This segment also includes operation related to maintenance of real property holdings for company purposes through CSRE properties Norcross LLC and CSRE properties LLC. This segment revenue represents fractional share of the fixed cryptocurrency award received from the mining pool operator in exchange of computing power.

~~Energy Segment~~ ~~– Consisting of our CleanSpark, LLC, CleanSpark Critical Power Systems, Inc., GridFabric, and SWS. lines of business, this~~Energy: This segment provides services, equipment, and software to the energy industry. This segment includes revenue from providing engineering and construction services, selling equipment such as residential battery, residential solar, commercial solar and non-customized equipment and providing access to its energy software offerings and software license sales and support services.

~~Digital Agency Segment~~ ~~– p2k~~ ~~provides~~Other Revenue and Eliminations: This includes revenue from providing design, software development, and other technology-based consulting ~~services.~~services through p2k Labs and data center services through ATL Data Center. Corporate items and eliminations consist of corporate overhead and other items not allocated to any of the Company's segments as in the table below. Intersegment transactions, which were at market price, are included in the “Other revenue and eliminations” and “Corporate items and eliminations” in the table below.


	Three Months Ended
		March 31, 2022			March 31, 2021
Revenue
Energy		$	4,585,971		$	1,313,530
Digital Currency Mining			36,965,739			6,715,792
Total segment revenues			41,551,710			8,029,322
Other revenue and eliminations			86,282			90,366
Consolidated Revenues			41,637,992			8,119,688
Profit
Energy			945,534			292,023
Digital Currency Mining			28,476,493			6,251,287
Total segment profit			29,422,027			6,543,310
Corporate items and eliminations (including depreciation and amortization)			(29,592,762	)		856,730
Net income/(loss)		$	(170,735	)	$	7,400,040

~~Digital Currency Mining Segment~~ ~~– Consisting of~~ ~~ATL and CleanBlok, LLC, this segment mines digital currency assets, namely Bitcoin.~~

F-35

Three Months Ended March 31, 2021

Energy Digital Agency Digital Currency Mining Inter-segment Consolidated

Revenues $ 1,103,368 $ 425,881 $ 6,715,792 $ (125,353 ) $ 8,119,688

Total cost and expenses 10,327,198 (197,048 ) 611,863 (125,353 ) 10,616,660

Income/(loss) from operations (9,223,830 ) 622,929 6,103,929 —   (2,496,972)

Capital expenditures 12,565 972 9,025,392 —   9,038,929

Depreciation and amortization $ 844,018 $ 285,718 $ 987,436 —   $ 2,117,172


	Six Months Ended
	March 31, 2022			March 31, 2021
Revenue
Energy	$	8,556,181		$	2,827,233
Digital Currency Mining		73,940,317			7,449,202
Total segment revenues		82,496,498			10,276,435
Other revenue and eliminations		383,463			100,824
Consolidated Revenues		82,879,961			10,377,259
Profit
Energy		1,931,774			389,853
Digital Currency Mining		59,809,483			7,107,416
Total segment profit		61,741,257			7,497,269
Corporate items and eliminations (including depreciation and amortization)		(47,426,237	)		(7,264,759	)
Net income	$	14,315,020		$	232,510

For details on major customers of Digital currency and Energy segment, see Note 13.

A summary of segment assets is as follows:


	March 31, 2022		September 30, 2021
Digital Currency Mining	$	375,183,757	$	270,995,942
Energy		25,267,292		17,507,314
Other and Corporate assets		24,346,255		28,969,865
Total	$	424,797,304	$	317,473,121

~~F-29~~

~~Table of Contents~~

Three Months Ended March 31, 2020

Energy Digital Agency Digital Currency Mining Inter-segment Consolidated

Revenues $ 3,426,424 $ 296,530 $ —   $ (64,671 ) $ 3,658,283

Total cost and expenses 5,750,335 244,671 —   (64,671 ) 5,930,335

Income/(loss) from operations (2,323,911 ) 51,859 —   —   (2,272,052)

Capital expenditures 15,463 —   —   —   15,463

Depreciation and amortization $ 645,484 $ 69,521 $ —   —   $ 715,005

Six Months Ended March 31, 2021

Energy Digital Agency Digital Currency Mining Inter-segment Consolidated

Revenues $ 2,327,990 $ 807,207 $ 7,449,202 $ (207,141 ) $ 10,377,258

Total cost and expenses 18,181,086 179,863 890,520 (207,141 ) 19,044,328

Income/(loss) from operations (15,853,096 ) 627,334 6,558,682 —   (8,667,070)

Capital expenditures 27,740 4,879 9,025,392 —   9,058,011

Depreciation and amortization $ 1,592,357 $ 362,126 $ 1,271,780 —   $ 3,226,263

~~F-30~~

~~Table of Contents~~

Six Months Ended March 31, 2020

Energy Digital Agency Digital Currency Mining Inter-segment Consolidated

Revenues $ 4,403,247 $ 296,530 $ —   $ (64,670 ) $ 4,635,107

Total cost and expenses 9,718,619 244,671 —   (64,470 ) 9,898,620

Income/(loss) from operations (5,315,372 ) 51,859 —   —   (5,263,513)

Capital expenditures 24,910 0 —   —   24,910

Depreciation and amortization $ 1,311,548 $ 69,521 $ —   —   $ 1,381,069

March 31, 2021

Energy Digital Agency Digital Currency Mining Consolidated

Accounts Receivable $ 1,436,435 $ 319,687 $ — $ 1,756,122

Goodwill $ 16,975,703 $ 939,853 $ 14,119,003 $ 32,034,559

Total Assets $ 232,380,406 $ 2,546,822 $ 57,685,368 $ 292,612,596

September 30, 2020

Energy Digital Agency Digital Currency Mining Consolidated

Accounts Receivable $ 919,500 $ 127,854 $ —   $ 1,047,353

Goodwill $ 4,926,253 $ 977,388 $ —   $ 5,903,641

Total Assets $ 20,212,873 $ 2,127,190 $ —   $ 22,340,063

~~F-31~~

~~Table of Contents~~

~~17. SUBSEQUENT EVENTS~~

~~On April 1, 2021, the Company issued~~ ~~7,144~~ ~~shares of common stock in connection with a Common Stock warrant exercise at an exercise price of~~ ~~$15.00~~ ~~per share.~~ The Company ~~received~~ ~~$107,160~~ ~~as a result of~~operates its business only in the ~~issuance.~~

~~During April 2021, the Company received approximately 900 S19 pro mining servers against the orders it placed during the months of March and April 2021.~~

United States.

Total additions in long-lived assets for the three months and six months ended March 31, 2022 and 2021:


	Three Months Ended						Three Months Ended
	March 31, 2022						March 31, 2021
	Digital Currency		Energy		Corporate		Digital Currency		Energy		Corporate
Property and Equipment		97,273,057		13,939		78,393		9,001,813		70,688		1,945
Intangibles		-		-		15,000		-		190,000		-
Total		97,273,057		13,939		93,393		9,001,813		260,688		1,945


	Six Months Ended						Six Months Ended
	March 31, 2022						March 31, 2021
	Digital Currency		Energy		Corporate		Digital Currency		Energy		Corporate
Property and Equipment		168,566,562		29,993		148,202		10,259,396		83,554		8,160
Intangibles		-		-		15,000		-		190,000		-
Total		168,566,562		29,993		163,202		10,259,396		273,554		8,160

15.

SUBSEQUENT EVENTS

On April ~~2, April 6, April 9, April 14, and April 29, 2021~~22, 2022, theCompany entered into ~~agreements~~a Master Equipment Financing Agreement with ~~cryptocurrency mining equipment suppliers~~Trinity Capital Inc., as the Lender (the “Financing Agreement”). The Financing Agreement provides for up to ~~purchase an aggregate~~$35 million of ~~approximately 23,900 mining servers for an aggregate purchase price~~borrowings to finance the Company’s acquisition of blockchain computing equipment. The Company received a loan of $~~$192,307,550~~.20 ~~We paid~~ ~~$90,164,750~~ ~~towards these miner purchases in April 2021.~~

~~On April 16, 2021, as more specifically described in that certain Current Report on Form 8-K filed by the Company~~million at closing, with the ~~SEC~~remaining $15 million fundable upon the Company's request, if requested no later than December

F-36

31, 2022, subject to certain customary conditions. The loan draws have a term of 36 months from issuance with a monthly rate factor of at least 0.032198 payable monthly on ~~April 16, 2021, at~~ the ~~recommendation~~total cost of the ~~Company’s Compensation Committee, the Company’s board~~equipment purchased with such borrowing. The Financing Agreement contains standard financial reporting requirements and certain other affirmative obligations, failure of ~~directors approved certain executive compensation matters~~which to comply with ~~key executives Zachary Bradford, Lori Love and S. Matthew Schultz (the “Executives”). Specifically, amendments to the employment agreements~~could result in an event of the Executives were approved which provided (i) an additional cash bonus incentive for Ms. Love based on the Company achieving certain annual gross revenues plus realized gains/losses for the current fiscal year, (ii) the addition of non-cash components to the base salaries of Mr. Bradford and Mr. Schultz in the form of certain monthly payments of Bitcoin, and (iii) additional cash and equity bonus incentives for Mr. Bradford and Mr. Schultz based on the Company achieving certain annual gross revenues plus realized gains/losses in the current fiscal year as well as certain market capitalization milestone targets for the current fiscal year. Additionally, the Executives received (i) one-time cash incentive bonuses, (ii) one-time grants of fully vested RSUs and (iii) option grants to acquire shares of common stock that vest over 36 months.

~~Certain of the additional equity incentive grants set forth above will be granted to the extent there are available shares~~default under the ~~Company’s 2017 Equity Incentive Plan (the “Plan”) with any remaining equity grants~~Financing Agreement. In such an event, the Lender could exercise certain remedies including, but not limited to, ~~be granted when the Company obtains shareholder approval to increase the shares available~~declaring that all amounts outstanding under the ~~Plan.~~Financing Agreement, together with accrued interest, be declared immediately due and payable. The Company received funding of $20 million at close, which included closing costs of $701,624 and security deposit of $643,960.

~~F-32~~

~~Table of Contents~~

F-37

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~Forward-Looking Statements~~

~~Certain~~The following discussion and analysis of our financial condition and results of operations should be read together with the interim condensed consolidated financial statements ~~other than purely historical information, including estimates, projections,~~and related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements ~~relating to~~and related notes as disclosed in our ~~business plans, objectives, and expected operating results, and~~Annual Report on Form 10-K for the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Thesefiscal year ended September 30, 2021 ("Form 10-K"). This discussion contains forward-looking statements ~~generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,”~~ ~~“may,”~~ ~~“will,” “would,”~~ ~~“will~~ ~~be,”~~ ~~“will~~ ~~continue,”~~ ~~“will~~ likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based onupon current expectations ~~and assumptions~~ that ~~are subject to~~involve risks and ~~uncertainties which may cause~~uncertainties. Our actual results tomay differ materially from ~~the~~those anticipated in these forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements ~~and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether~~ as a result of ~~new information, future events~~various factors, including those set forth under Part II, Item 1A “Risk Factors” or ~~otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and~~ in ~~our~~ other ~~filings with the SEC.~~

~~Company Overview~~

~~We are~~parts of this Quarterly Report on Form 10-Q, as well as those identified in the ~~business~~“Risk Factors” section of ~~providing~~our Form 10-K. Our historical results are not necessarily indicative of the results that may be expected for any period in the future. See “Forward-Looking Statements.”

Company Overview

CleanSpark, Inc. is a leading bitcoin mining and diversified energy company incorporated in Nevada, whose common stock is listed on the Nasdaq Capital Market. We sustainably mine bitcoin; we also provide advanced ~~software~~energy technology solutions to commercial and ~~controls technology solutions~~residential customers to solve modern energy challenges. ~~We have a suite of software solutions that provide end-to-end microgrid~~The Company, through itself and its wholly owned subsidiaries, has operated in the digital currency mining sector since December 2020, and in the alternative energy modeling, energy market communications, and energy management solutions. Our offerings consist of intelligent energy monitoring and controls, intelligent microgrid design software, middleware communications protocols for the energy industry, energy system engineering, and software consulting services.

~~The software platforms (the “Platforms”) which are integral to our business are summarized as follows:~~

•sector since March 2014.

~~mVSO Platform:~~ ~~Energy modeling software for microgrid design and sales~~

•

~~mPulse Platform:~~ ~~Patented, proprietary controls platform that enables integration and optimization of multiple energy sources.~~

•

~~Canvas:~~ ~~Middleware used by Grid Operators and Aggregators to administrate load shifting programs.~~

•

~~Plaid:~~ ~~Middleware used by Controls and IoT Product Companies to participate in load shifting programs~~

~~In addition, following our acquisition~~We are currently working with industry leaders and other advisors in developing a long-term sustainability and clean energy plan. As part of ~~Solar Watt Solutions, Inc. (“Solar Watt”) in February 2021,~~this plan, we are using the available clean and renewable energy resources that we currently have reasonable access to at our bitcoin mining locations in ~~the process of developing~~order to further support our ~~mVoult platform, which we expect will be a proprietary platform that would enable integration and optimization of solar, energy storage and back-up generators for residential applications.~~sustainability efforts.

The Platforms are designed to allow customers to design, build, and operate distributed energy systems and microgrids which efficiently manage energy generation assets, energy storage assets, and energy consumption assets. Our software products enable users to implement software solutions to execute on these strategies. These strategies are generally targeted to operate distributed energy assets in a manner that provides resiliency and economic optimization and/or revenue generation through wholesale market activities.

~~We also own patented gasification technologies. Our technology converts any organic material into SynGas, which can be used as fuel for a variety~~Lines of applications and as feedstock for the generation of DME (Di-Methyl Ether). As previously disclosed, we plan to continue to focus on our other product offerings, as opposed to expending significant efforts on the Gasifier side of the business.

~~Table of Contents~~

~~Distributed Energy Management and Microgrid Industry~~

Integral to our business is our Distributed Energy Management (or “DER”) business. The main assets of our DER business include our proprietary software systems (“Systems”) and our engineering and methodology trade secrets. The distributed energy systems and microgrids that utilize our Systems are capable of providing secure, sustainable energy with significant cost savings for energy customers. Through the Systems, customers are able to design, engineer, and then efficiently communicate with and manage renewable energy generation, storage and consumption. By having autonomous control over the multiple facets of energy usage and storage, customers are able to reduce their dependency on utilities, thereby keeping energy costs relatively constant over time. The overall aim is to transform energy consumers into intelligent energy producers that supply and manage power in a manner that avoids interruptions.

Around the world, aging energy grids are becoming unstable and unreliable due to increases in loads and the widespread lack of new large-scale generation facilities. This inherent instability in existing energy grids is compounded by pressure to integrate a growing number and variety of renewable but intermittent energy generation assets and advanced technologies into outdated electrical grid systems. Simultaneously, defense installations, industrial complexes, communities, campuses and other aggregators across the world are turning to virtual power plants and microgrids as a means to decrease their reliance on existing energy grid, reduce utility costs, utilize cleaner power and enhance energy security and surety.

The convergence of these factors has created, and is expected to continue to create significant opportunities in the power supply optimization and energy management industry. Efficiently operating and managing the distributed energy management systems and microgrids of tomorrow, while maximizing the use of sustainable energy to produce affordable, stable, predictable and reliable power on a large scale, is a significant opportunity that early-movers can leverage to capture a large share of this emerging global industry.Business

A microgrid is comprised of any number of energy generation, energy storage, and smart distribution assets that serve a single or multiple load, both connected to the utility grid and “islanded,” separate from the utility grid. In the past, distributed energy management systems and microgrids have consisted of off-grid generators organized with controls to provide power where utility lines cannot run. Today, modern distributed energy management systems and microgrids integrate renewable energy generation systems (REGS) with advanced energy storage devices and interoperate with the local utility grid. Advanced autonomous cyber-secure microgrid controls relay information between intelligent hardware and servers to make decisions in real-time that deliver optimum power where it is needed, when it is needed.

~~mPulse Software Suite~~

mPulse is a modular platform that provides intelligent control of a Microgrid based on a system’s operational goals, energy assets and forecasted energy load and generation. mPulse performs high-frequency calculations, threshold-based alarming, execution of domain-specific business rules, internal and external health monitoring, historical data persistence, and system-to-operator notifications. The modular design of mPulse increases system flexibility and extensibility. In addition, the deployment of the mPulse system follows a security-conscious posture by deploying hardware-based firewalls as well as encryption across communication channels. mPulse allows configuration for site-specific equipment and operation and provides a clean, informative user interface to allow customers to monitor and analyze the data streams that describe how their microgrid is operating.

Our mPulse software also serves as an integrated distributed energy management control platform that seamlessly integrates and controls all forms of energy generation with energy storage devices to provide energy security in real time, free of cyber threats to service facility loads. As a DER system, mPulse is able to interoperate with the local utility grid and bring users the ability to choose when to buy or sell power to and from the utility grid. mPulse is designed and intended for commercial, industrial, defense, campus and residential users and ranges in capacity from 4 kilowatts to 100 megawatts and beyond.

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mPulse supports our innovative fractal approach to microgrid design, which enables multiple microgrids on a single site to interact in a number of different ways, including as peers, in a parent-child relationship, and in parallel or completely disconnected. Each grid can have different operational objectives, and those operational objectives can change over time. Any microgrid can be islanded from the rest of the microgrid as well as the larger utility grid. The mPulse software can control the workflow required in both the islanding steps as well as the reconnecting steps of this maneuver and coordinate connected equipment such that connections are only made when it is safe to do so.

~~mVoult — Residential Platform~~

mVoult is a smart power system that is under development and is expected to provide a single solution for resilient, reliable and cost-effective energy for residential properties of all sizes. Our systems will be able to be configured to a homeowner’s needs upon installation, with flexibility for future expansion.

Our mVoult software will direct microgrid system operations to manage solar, battery, and utility power. It will be capable of providing resilient, sustainable and low-cost energy for a residential microgrid, allowing a home to stay powered during utility outages or during events, such as fires and natural disasters, when a utility may otherwise shut down or be unable to provide service.

~~Microgrid Value Stream Optimizer (mVSO)~~

Our Microgrid Value Stream Optimizer (mVSO) software platform provides a robust distributed energy and microgrid system modeling solution. mVSO takes utility rate data and load data for our customers’ sites and helps automate the sizing and analysis of potential microgrid solutions, as well as providing a financial analysis around each grid configuration. mVSO uses historical data to generate projected energy performance of generation assets and models the way in which energy storage responds to varying operational modes and command logics based upon predicted generation and load curves. mVSO analyzes multiple equipment combinations and operational situations to determine the optimal configuration for a customer’s site based on factors, including, among others, the financial and economic results, equipment outlay and utility cost savings, to arrive at payback and internal rate of return values. This ultimately provides our customers with data to design a distributed energy and/or microgrid system that will meet the customers’ performance benchmarks. The mVSO also provides users with business development and proposal generation tools to more efficiently present the results to end-customers.

~~Critical power switchgear and hardware solutions — CleanSpark Critical Power Systems~~

Through our wholly-owned subsidiary, CleanSpark Critical Power Systems, Inc., we provide parallel switchgear, automatic transfer switches and related control and circuit protective equipment solutions for commercial, industrial, defense, campus and residential users. We utilize Pioneer Power Solutions, Inc. for contract manufacturing of our parallel switchgear, automatic transfer switches and related control and circuit protective equipment.

~~OpenADR and communication protocol software solutions — GridFabric~~

Digital Currency Mining Segment

Through our ~~wholly-owned subsidiary, GridFabric, LLC~~, (“GridFabric”) we offer Open Automated Demand Response (or OpenADR) solutions to commercial and utility customers. We provide middleware software solutions for utilities and IoT products that manage energy loads. OpenADR 2.0b is now the basis for the standard to be developed by the International Electrotechnical Commission, which is an organization that prepares and publishes international standards for all electrical, electronic and related technologies. Our core products in this area of our business are Canvas and Plaid.

Canvas is an OpenADR 2.0b Virtual Top Node (or VTN) built for testing and managing Virtual End Nodes (or VENs) that pilot and run load shifting programs. Canvas is offered to customers in the cloud as a software as a service (SaaS) solution or as a licensed software.

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~~Plaid~~

Plaid is a licensed software solution that allows any internet-connected product that uses energy (i.e., solar, storage & inverters, demand response, electric vehicle charging, lighting, industrial controls and building management systems) to add load shifting capabilities by translating load shifting protocols into their existing application programing interface (or API). Companies that implement Plaid receive a Certified OpenADR 2.0b Virtual End Node upon completion of the implementation process.

~~Bitcoin Mining — ATL Data Centers and CleanBlok~~

~~Through our wholly-owned~~wholly owned subsidiaries, ATL Data Centers LLC (“ATL”) and ~~our recently-formed subsidiary,~~ CleanBlok, ~~LLC,~~Inc. (“CleanBlok”), we mine bitcoin. We entered the bitcoin mining industry through our acquisition of ATL in December 2020. We acquired a second data center in August 2021 and have had a co-location agreement with New York-based Coinmint in place since July 2021. In March 2022, we entered into a colocation agreement with Lancium LLC pursuant to which we have access to up to 500 MWs of power. Bitcoin mining has now become our principal revenue generating business activity, and consistent with our current business strategy, we intend to explore and opportunistically continue to acquire additional facilities, equipment and infrastructure capacity as well as evaluate other colocation opportunities, with the intention of expanding our bitcoin mining operations.

Bitcoin was ~~first~~ introduced in 2008 with the goal of serving as a digital means of exchanging and storing value. Bitcoin is a ~~new~~ form of digital currency that depends upon a consensus-based network and a public ledger called a “blockchain,” which contains a record of every bitcoin transaction ever processed. The bitcoin network ~~was~~is the first decentralized peer-to-peer payment network, powered by ~~those~~ users participating in the consensus protocol, with no central authority or middlemen, that has wide network participation. The authenticity of each bitcoin transaction is protected through digital signatures that correspond with addresses of users that send and receive bitcoin. Users have full control over remitting bitcoin from their own sending addresses. All transactions on the bitcoin blockchain are transparent, allowing those running the appropriate software to confirm the validity of each transaction. ~~In order to~~To be recorded on the blockchain, each bitcoin transaction is validated through a proof-of-work consensus method, which entails solving complex mathematical problems to validate transactions and post them on the ~~blockchain, which~~blockchain. This process is ~~often~~ called ~~“mining.” For successfully solving the problems and providing computing power to the network, the computer is~~mining. Miners are rewarded with bitcoins, both in the form of newly-created bitcoins and fees in ~~bitcoin.~~bitcoin, for successfully solving the mathematical problems and providing computing power to the network.

Factors such as access to computer processing capacity, interconnectivity, electricity cost, environmental factors (such as cooling capacity) and geographic location play an important ~~role~~roles in mining. ~~Our current facilities~~As of the date of this filing, our mining units are currently capable of producing an over ~~300 PH/s in hash rate capacity.~~2.4 exahash per second (“EH/s”). In cryptocurrency mining, “hash rate” is a measure of the processing capacity and speed by which a mining computer ~~to mine~~mines and ~~process~~processes transactions on

the bitcoin network. Our activities in this area ~~in addition to generating revenue in the form of bitcoin, creates an advantageous business opportunity for us to operate a full-scale, demonstration facility of~~are complemented by our ~~energy-related products~~energy background and ~~solutions. We plan~~planning is underway to deploy ~~our~~certain energy technologies ~~and trade secrets in~~from our portfolio to advance our bitcoin mining ~~operations~~business, with the goal of maximizing energy savings, ~~expanding~~increasing total power capacity, providing resilient electricity, and reducing greenhouse gas emissions. We ~~anticipate that implementing this strategy will involve the design and installation of multiple microgrids at the ATL Data Center facility. We~~ are ~~in the process of actively expanding this aspect of our business and are working toward~~ expanding our ~~hash rate capacity,~~bitcoin mining business with the goal of ~~exceeding 1.0~~reaching 4.0 to 5.0 EH/s in hash rate capacity at or near the end of December 31, 2022. We expect to exceed 3 EH/s in ~~fiscal year 2021.~~capacity at or near the end of September 30, 2022. Hash rate capacity is one of the most important metrics for evaluating bitcoin mining companies.

AsWe obtain bitcoin as a result of our mining ~~operations, we acquire bitcoin, and,~~operations; while we ~~have to date retained~~retain a ~~significant~~ portion of the bitcoin ~~from our mining operations (typically maintaining the bitcoin at a digital asset exchange),~~we mine, we have sold, and ~~may~~intend to sell bitcoin from time to time, ~~sell, bitcoin from~~to support our ~~inventory.~~operations and strategic growth. We do not currently plan to engage in regular trading of bitcoin (other than as necessary to convert our bitcoin to U.S. dollars) or. We do expect in the near future to engage in hedging and yield generating activities related to our holding of bitcoin; however, our decisions to hold or sell bitcoin at any given time may be impacted by the bitcoin market, which has been historically characterized by significant volatility. Currently, we do not use a formula or specific methodology to determine whether or when we will sell bitcoin that we hold, or the number of bitcoins we will sell. Rather, decisions to hold or sell bitcoins ~~in our inventory~~ are currently determined by ~~individuals~~ analyzing forecasts, our operating needs and monitoring the market in real time.

~~As with many new~~Through our wholly-owned subsidiaries, CSRE Properties, LLC, CSRE Property Management Company LLC, and ~~emerging technologies,~~CSRE Properties Norcross, LLC, we maintain real property holdings for ATL and CleanBlok.

Energy Segment

We provide energy solutions through our ~~bitcoin mining activities present potentially significant risks to our business. Businesses (including ours) that seek to develop, promote, adopt, transact or rely upon blockchain technologies~~wholly-owned subsidiaries CleanSpark, LLC, CleanSpark Critical Power Systems, Inc., GridFabric, LLC, and bitcoin may have a limited track record and operate within novel and developing environments. These risks are not only related to the businesses we are pursuing, but also the industry as a whole and the concept behind blockchain and cryptocurrency as value creation. In addition, our holding and selling of bitcoin may subject us to additional risks, including the possibility that our activities may become subject to additional regulation or regulatory scrutiny.

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~~Energy system integration and installation — Solar Watt Solutions~~

~~Following our acquisition of~~ Solar Watt Solutions, Inc. ~~in February 2021, we provide~~These solutions consist of engineering, design and software solutions, custom hardware solutions, Open Automated Demand response (“OpenADR”), solar, energy storage for microgrid and ~~alternative~~distributed energy ~~solutions for homeowners~~systems to military, commercial and ~~commercial businesses~~residential customers in Southern California. These energy solutions include implementation and installation services for solar panels, energy storage and electric vehicle charging station systems. Solar Watt has historically been focused on serving the communities throughout California and ~~we intend to work to further expand those services to other regions outside of Southern California. Through these efforts, we expect to leverage those services and capacities to further expand~~globally.

Our solutions are supported by our ~~residential and commercial initiatives, including our mVoult product line for residential microgrids and our mPulse product line for commercial microgrids.~~

~~Digital Agency Products and Services — p2kLabs~~

~~Through our wholly-owned subsidiary, p2kLabs, Inc., we provide a~~proprietary suite of ~~digital services from creative~~software platforms (collectively, the “Platforms”) that include microgrid energy modeling, energy market communications and energy management solutions as summarized below:


	·	mPulse and mVoult: Patented, proprietary controls platforms that enable integration and optimization of multiple energy sources.


	·	Canvas: Middleware used by grid operators and aggregators to administrate load shifting programs.


	·	Plaid: Middleware used by controls and IoT (internet-of-things) product companies to participate in load shifting programs.


	·	mVSO: Energy modeling software for internal microgrid design .

The Platforms were developed to ~~technical development for products~~enable the designing, building, and ~~services through the entire product/service lifecycle. Such services~~operating of distributed energy systems and microgrids which efficiently manage energy assets. These strategies are ~~provided through “labs,” with each lab containing its own unique offering, including design, marketing/digital content, engineering~~generally targeted to achieve resiliency and ~~SalesForce development, and strategy services.~~economic optimization.

~~Legacy Gasifier Business~~

We also own patented gasification ~~technologies that convert any~~energy technologies. Our technology converts organic material into synthesis gas, (“SynGas”). Our patents protect our gasification technology and process for using feedstock comprising gaseous fuel. Our patented process involves the grinding, drying, separating, mixing, and then pelletizing of solid waste. These pellets constitute the feedstock for the gasifier. Gasifying feedstock using our technology converts waste and organic material into SynGas, which can ~~then~~ be ~~converted into multiple forms of~~used as fuel for ~~power plants, motor vehicles, jets, duel-fuel diesel engines, gas turbines, and steam boilers~~a variety of applications and as feedstock for the generation of DME (Di-Methyl Ether). ~~The SynGas produced is mostly hydrogen~~As previously disclosed, we currently plan to continue to focus on our other offerings.

Because we view Bitcoin mining as our core focus, we are taking steps to strategically streamline and ~~carbon monoxide, which~~maximize our capital, as part of this process we are ~~primary building blocks for many fuels~~evaluating strategic opportunities and ~~chemicals. SynGas is sufficiently clean that, if processed directly, it generally does not require costly hot-gas cleanup.~~alternative to best utilize this segment.

Other business activities

~~Our gasification technologies~~Through ATL, we also provide traditional data center services, such as providing customers with rack space, power and prototype will require additional testing to further establish their commercial capability of producing large volumes of clean, renewable energy from any carbon compound (municipal solid waste (MSW), coal, sewage sludge) into clean SynGas. Our prototype gasifier is still under developmentequipment, and ~~a commercially viable gasifier is not expected to be viable for sale until we expend additional resources on its testing~~offer several cloud services including virtual services, virtual storage, and development. A third-party consulting firm has independently tested the gasifier’s performance and certified the results of its performance. Upon completion of the testing, an initial white paper was published outlining the results and suggested improvements for commercialization. We anticipate that the investment to complete these improvements would be approximately $500,000. Upon completion of the improvements, we would be required to conduct an extended test run with an independent third party to verify the results needed to prove its commercial viability, at which time we could begin to actively market our gasifier units. We do not anticipate deploying significant resources on the gasification business at this time. As opportunities arise, we may utilize the gasification assets and intellectual properties through licensing or sales agreements.

~~At this time, we are not engaged in any negotiations to sell or license our gasifier products to any customers.~~data backup services.

~~Government Regulation~~

As described above, following our acquisition of ATL Data Centers in December 2020, we are engaged in the business of mining and selling bitcoin. As a result, we may become subject to government regulation of blockchain and cryptocurrency, including bitcoin, which has been developing rapidly in the United States federal government through a number of federal agencies and regulatory bodies, as well as in other countries by similar entities. State government regulations also may apply to our current operations and activities as well as other activities in which we participate or may participate in the future. Furthermore, transnational organizations and semi-governmental agencies have shown an interest in regulating or investigating companies engaged in the blockchain or cryptocurrency business. We expect regulation in this space to continue to evolve.

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These and other regulations, including regulations that may become applicable to our business in the future, may substantially change in the future, and it is presently not possible to know how or when any such regulations will apply to our businesses. We may also become subject to new laws and further regulation by the SEC and other agencies. Various bills have been proposed in Congress related to the industries in which we operate, which, if adopted, may have a significant impact on us. For additional discussion regarding our beliefs about the potential risks existing and future regulation as well as other conditions pose to our business, see the “Risk Factors” section below and in the documents incorporated by reference therein.

Results of operations for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021

Revenues

Revenues increased to $41,637,992 during the three months ended March 31, 2022, as compared with $8,119,688 in revenues for the same period ended 2021 primarily due to increase in revenues from our digital currency mining segment.

For the three months ended March 31, 2022, our revenue was derived from digital currency mining, the sale of equipment, solar panels, batteries, design, engineering, energy services, and data center services. Income from our mining segment of $36,965,739 is a result of bitcoin mining activities in the United States. Income from our Energy segment of $4,585,971 is the result of contracts to sell switchgear equipment, perform engineering and design services, provide software for distributed energy and microgrid systems, and solar and battery installation services.

Costs and Expenses

We had costs and expenses of $38,305,184 for the three months ended March 31, 2022, as compared with $10,616,660 for the three months ended March 31, 2021.

Our cost of revenues was $12,127,120 for the three months ended March 31, 2022, as compared with cost of revenues of $1,537,683 for the three months ended March 31, 2021. Our cost of revenues during the three months ended March 31, 2022 was primarily the result of mining energy costs at owned facilities of $2,539,146, mining hosting and associated energy fees of $5,205,369, and energy hardware related cost of inventory of $2,949,422. Our cost of revenues during the three months ended March 31, 2021 ~~as compared with $3,658,283~~was primarily the result of mining energy costs at owned facilities of $724,374, and energy hardware related cost of inventory of $543,330. The increase in cost of revenues ~~for~~between the comparative periods was mainly the result of revenue growth over the same ~~period ended 2020 primarily due to revenues from our digital agency and digital currency mining segments.~~period.

~~Loss from Operation~~

~~Our cost and expenses were $10,616,660~~Professional fees decreased to $900,976 for the three months ended March 31, ~~2021, resulting in loss~~2022 from ~~operations of ($2,496,972), as compared with cost and expenses of $5,930,335 for the three months ended March 31, 2020, resulting in loss from operations of $(2,272,052).~~

~~The decrease in our cost of revenues for the three months ended March 31, 2021 was mainly the result of a decrease in manufacturing and hardware expenses.~~

~~Professional fees increased to~~ $2,456,554 for the three months ended March 31, ~~2021, from $1,005,991 for the same period ended March 31, 2020.~~2021. Our professional fees expenses for the three months ended March 31, 2022 consisted primarily of legal expenses of $583,742 and subcontractor expenses of $315,064. Our professional fees for the three months ended March 31, 2021 consisted ~~mainly~~primarily of legal fees of ~~$1,625,715,~~$1,608,671 and consulting ~~fees~~expenses of ~~$469,029, external marketing fees of $206,923, and accounting, audit and review fees of $149,872.~~$203,688.

Payroll expenses increased to $10,542,025 for the three months ended March 31, 2022 from $3,262,097 for the three months ended March 31, 2021. Our ~~professional fees~~payroll expenses for the three months ended March 31, ~~2020~~2022 consisted ~~mainly~~primarily of ~~officers~~salary and ~~directors’ consulting fees~~wages expense of ~~$184,115, consulting fees of $286,903,~~$2,608,458, and ~~accounting, audit~~employee and ~~review fees of $77,684 and~~officer stock-based compensation of ~~$245,231.~~

~~Payroll expenses increased to $3,262,097 for the three months ended March 31, 2021, from $984,380 for the same period ended 2020.~~$6,509,964. Our payroll expenses for the three months ended March 31, 2021 consisted ~~mainly~~primarily of salary and wages ~~expense~~expenses of ~~$2,428,083~~$1,781,039 and employee and officer stock-based compensation of $834,014.

General and administrative expenses increased to $3,182,946 for the three months ended March 31, 2022 from $1,243,154 for the three months ended March 31, 2021. Our ~~payroll~~general and administrative expenses for the three months ended March 31, ~~2020~~2022 consisted ~~mainly~~primarily of ~~salary~~insurance expenses of $970,965, marketing expenses of $697,374, dues and ~~wages~~subscriptions expenses of $271,886, utilities expense of ~~$955,680~~$165,117, and ~~employee stock-based compensation~~travel expenses of ~~$28,700.~~

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~~General and administrative fees increased to $1,243,154 for the three months ended March 31, 2021, from $311,131 for the same period ended 2020. The increase in our~~$197,944. Our general and administrative expenses for the three months ended March 31, 2021 consisted ~~mainly as a result~~primarily of ~~an increase in our~~ marketing expenses of ~~$87,276,~~$294,069, dues and subscriptions expenses of ~~$233,608,~~$233,307, bad debt expenses of $231,932, rent expenses of $226,843, and insurance expenses of ~~$172,482,~~$172,483.

Our gain on disposal of assets increased to $920,861 for the three months ended March 31, 2022 from $0 for the three months ended March 31, 2021. The gain on disposal is from the sale of miners and ~~rent~~there were no such disposals for the three months ended March 31, 2021.

Impairment expenses recorded for the three months ended March 31, 2022 were $811,345, and $0 impairment expenses were recorded for the three months ended March 31, 2021. Impairment expense for the three months ended March 31, 2022 consisted of ~~$286,904.~~bitcoin impairment of $811,345.

Depreciation and amortization expense increased to $11,661,633 for the three months ended March 31, 2022, from $2,117,172 for the three months ended March 31, 2021.

Other income (expenses)

Other expense increased to $3,503,543 for the three months ended March 31, 2022 compared to other income of $9,897,012 for the three months ended March 31, 2021. Our ~~general and administrative~~other expenses for the three months ended March 31, ~~2020~~2022 consisted ~~mainly~~primarily of ~~travel expenses~~a realized loss on sales of ~~$48,378, rent expenses of $27,141, insurance expenses of $50,785, dues and subscriptions of $117,671 and office expense of $10,755.~~

Depreciation and amortization expense increased to $2,117,172 for the three months ended March 31, 2021, from $715,005 for the same period ended 2020 mainly due to the depreciation expense related to the equipment used in the data center and digital currency ~~miners.~~

~~We expect that our professional fees, payroll expenses,~~of $2,733,882 and ~~general and administrative fees will increase in future quarters as we further implement our business plan. As we execute~~an unrealized loss on ~~customer contracts we may be required to hire and compensate additional personnel and support increased operational costs.~~

~~Other income (expenses)~~

~~Other income/(expenses) increased to $9,897,012 for the three months ended March 31, 2021, from ($3,543,046) for the same period ended March 31, 2020.~~derivative security of $1,410,146. Our other income for the three months ended March 31, 2021 consisted ~~mainly~~primarily of ~~income related to the forgiveness of debt of $541,576,~~a realized gain on sales of digital currency of $585,709 and an unrealized gain on ~~equity securities~~derivative security of ~~$343,000, derivative gain~~$8,400,629.

Net Income

We recorded a net loss of ~~$8,400,629, and net interest income of $26,098. Our other (expenses)~~$170,735 for the three months ended March 31, ~~2020 consisted mainly of an unrealized loss on equity securities of ($210,000), derivative loss of ($1,441,763)and interest expense of ($1,891,283).~~

~~Net Income/(Loss)~~

~~We recorded~~2022, as compared with a net income of $7,400,040 for the three months ended March 31, ~~2021, as compared with a net loss~~2021. The decrease was due primarily to the increased losses from sale of ~~($5,815,098) for the same period ended March 31, 2020 mainly due to an increase in revenues~~digital currency and unrealized ~~gains~~losses on ~~equity and~~ derivative ~~securities.~~asset compared to a significant gain on the derivative asset in the prior period.

Results of operations for the six months ended March 31, ~~2021~~2022 and ~~2020~~2021

Revenues

Revenues increased to ~~$10,377,258~~$82,879,961 during the six months ended March 31, ~~2020,~~2022, as compared with ~~$4,635,107~~$10,377,258 in revenues for the same period ended ~~2020~~2021 primarily due to ~~revenue~~increase in revenues from our ~~Cryptocurrency mining.~~digital currency mining segment.

For the six months ended March 31, 2022, our revenue was derived from digital currency mining, the sale of equipment, solar panels, batteries, design, engineering, and services, and data center services. Income from our mining segment of $73,940,317 is a result of bitcoin mining activities in the United States. Income from our Energy segment of $8,556,181 is the result of contracts to sell switchgear equipment, perform engineering design, provide software for distributed energy and microgrid systems, and provide solar and battery installation.

Costs and Expenses

~~Loss from Operation~~

~~Our cost~~We had costs and expenses ~~were~~of $75,390,160 for the six months ended March 31, 2022, as compared with $19,044,328 for the six months ended March 31, ~~2021, resulting in loss from operations~~2021.

Our cost of ~~($8,667,070), as compared with cost and expenses of $9,898,620~~revenues was $20,925,046 for the six months ended March 31, ~~2020, resulting in loss from operations of ($5,263,513).~~

~~The decrease in our~~2022, as compared with cost of revenues of $2,879,197 for the six months ended March 31, 2021. Our cost of revenues during the six months ended March 31, 2022 was primarily the result of mining energy costs at owned facilities of $3,912,857, mining hosting and associated energy fees of $9,377,031, and energy hardware related cost of inventory of $5,587,847. Our cost of revenues during the six months ended March 31, 2021 was primarily the result of mining energy costs at owned facilities of $890,520, and energy hardware related cost of inventory of $1,556,295. The increase in cost of revenues between the comparative periods was mainly the result of ~~a decrease in manufacturing and hardware expenses.~~

revenue growth over the same period.

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Professional fees increased to $4,218,795 for the six months ended March 31, 2022 from $4,169,277 for the six months ended March 31, ~~2021, from $2,522,578 for the same period ended March 31, 2020.~~2021. Our professional fees expenses for the six months ended March 31, ~~2021~~2022 consisted ~~mainly~~primarily of accounting and tax expenses of $1,560,228, legal ~~fees~~expenses of ~~$2,856,077, consulting fees~~$868,318, and subcontractor expenses of ~~$620,063, external marketing fees of $327,761, accounting, audit and review fees of $303,882.~~ $733,053.

Our professional fees for the six months ended March 31, 2021 consisted primarily of legal expenses of $2,840,232 and consulting expenses of $253,395.

Payroll expenses increased to $19,425,072 for the six months ended March 31, 2022 from $6,576,298 for the six months ended March 31, 2021. Our payroll expenses for the six months ended March 31, ~~2020~~2022 consisted ~~mainly~~primarily of ~~officers~~salary and ~~directors’ consulting fees~~wages expenses of ~~$466,154, consulting fees of $755,858,~~$5,092,739, and ~~accounting, audit~~employee and ~~review fees of $94,160 and~~officer stock-based compensation of ~~$831,412. Professional fees increased in 2021 mainly as a result of increased legal fees.~~

~~Payroll expenses increased to $6,576,298 for the six months ended March 31, 2021, from $1,695,919 for the same period ended 2020.~~$12,303,091. Our payroll expenses for the six months ended March 31, 2021 consisted ~~mainly~~primarily of salary and wages ~~expense~~expenses of ~~$4,810,244~~$3,118,279 and employee and officer stock-based compensation of $1,766,054.

General and administrative expenses increased to $5,071,046 for the six months ended March 31, 2022 from $2,193,293 for the six months ended March 31, 2021. Our ~~payroll~~general and administrative expenses for the six months ended March 31, ~~2020~~2022 consisted ~~mainly~~primarily of ~~salary~~insurance expenses of $1,458,645, marketing expenses of $1,041,640, dues and ~~wages expense~~subscriptions expenses of ~~$1,636,231~~$534,330, utilities expenses of $361,242, and ~~employee stock-based compensation~~travel expenses of ~~$59,688.~~

~~General and administrative fees increased to $2,193,293 for the six months ended March 31, 2021, from $541,792 for the same period ended 2020. The increase in our~~$348,465. Our general and administrative expenses for the six months ended March 31, 2021 consisted ~~mainly as a result~~primarily of ~~an increase in our~~ marketing expenses of ~~$688,662,~~$1,016,294, dues and ~~subscriptions~~subscription expenses of $405,600, rent expenses of $257,236, and insurance expenses of $244,641, ~~rent expenses of $317,297,~~ and bad debt expenses of $231,932.

Our ~~general and administrative expenses~~gain on disposal of assets increased to $642,691 for the six months ended March 31, ~~2020 consisted mainly~~2022 from $0 for the six months ended March 31, 2021. The gain on disposal is from the sale of ~~travel expenses~~miners, offset by loss on disposal of ~~$79,963, rent expenses of $48,459, insurance expenses of $93,686, dues~~miners, and ~~subscriptions of $169,038 and office expense of $21,200.~~there were no such disposals for the six months ended March 31, 2021.

Impairment expenses recorded for the six months ended March 31, 2022 were $7,033,691 and $0 impairment expenses were recorded for the six months ended March 31, 2021. Impairment expense for the six months ended March 31, 2022 consisted of bitcoin impairment of $811,345.

Depreciation and amortization expense increased to $19,359,201 for the six months ended March 31, 2022, from $3,226,263 for the six months ended March 31, ~~2021, from $1,381,069 for the same period ended 2020.~~2021.

We expect that our operating expenses will increase in future quarters as we further implement our business plan. As we execute on customer contracts we may be required to hire and compensate additional personnel and support increased operational costs.

~~Other income (Expenses)~~

Other ~~income/~~income (expenses) ~~increased~~

Other income decreased to ~~$8,899,580~~$6,825,219 for the six months ended March 31, ~~2021, from ($2,467,839)~~2022 compared to other income of $8,899,580 for the ~~same period~~six months ended March 31, ~~2020.~~2021. Our other income for the six months ended March 31, 2022 consisted primarily of a realized gain on sales of digital currency of $7,260,909 and an unrealized loss on derivative security of $1,111,297. Our other income for the six months ended March 31, 2021 consisted ~~mainly~~primarily of ~~income related to the forgiveness of debt of $541,576,~~a realized gain on sales of digital currency of $635,627 and an unrealized gain on ~~equity securities~~derivative security of ~~$269,500, derivative gain of $7,380,135, and~~$7,380,135.

Net Income

We recorded a net ~~interest~~ income of ~~$72,742.~~ ~~Our other (expenses)~~$14,315,020 for the six months ended March 31, ~~2020 consisted mainly of an unrealized gain on equity securities of $158,868, derivative gain of $824,891and interest expense of ($3,451,598).~~

~~Net Income/(Loss)~~

~~We recorded~~2022, as compared with a net income of $232,510 for the six months ended March 31, ~~2021, as compared with a net loss~~2021. The increase was due primarily to the increased gains for sale of ~~($7,731,352) for the same period ended March 31, 2020.~~digital currency and unrealized gains on derivative securities.

~~Table of Contents~~

Liquidity and Capital Resources

Our primary requirements for liquidity and capital are working capital, inventory management, capital expenditures, public company costs and general corporate needs. We expect these needs to continue as we further develop and grow our business. Our principal sources of liquidity have been and are expected to be our cash and cash equivalents and digital currency inventory.

As of March 31, ~~2021,~~2022, we had total current assets of ~~$178,459,063,~~$41,956,064, consisting of cash ~~digital currency,~~and cash equivalents, accounts receivable, ~~and~~inventory, prepaid expenses and other current assets, digital currency, investment in equity security, investment in debt security and related derivative asset, and total assets in the amount of ~~$292,612,596.~~$424,797,304. Our total current liabilities and total liabilities as of March 31, ~~2021~~2022 were ~~$7,340,445~~$22,577,517 and ~~$8,892,137~~$23,849,400 respectively. We had

working capital of ~~$171,296,123~~$19,378,547 as of March 31, ~~2021.~~2022. In addition, we have access to equity financing through our At-the-Market offering facility and debt financing through the lending arrangement we entered into in April 2022 (see Note 15 - Subsequent Events to our consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

We believe our cash and cash equivalents on hand, together with cash we expect to generate from future operations, will be sufficient to meet our working capital and capital expenditure requirements for a period of at least twelve months from the date of this Quarterly Report on Form 10-Q. We are likely to require additional capital to respond to technological advancements, competitive dynamics or technologies, customer demands, business opportunities, challenges, acquisitions or unforeseen circumstances and in either the short-term or long-term may determine to engage in equity or debt financings or enter into credit facilities for other reasons. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited. In particular, the widespread COVID-19 pandemic, including variants, has resulted in, and may continue to result in, significant disruption of global financial markets, reducing our ability to access capital. If we are unable to raise additional funds when or on the terms desired, our business, financial condition and results of operations could be adversely affected.

Material Cash Requirements

We are a party to many contractual obligations involving commitments to make payments to third parties. These obligations impact our short-term and long-term liquidity and capital resource needs. Certain contractual obligations are reflected on the consolidated balance sheet as of March 31, 2022, while others are considered future commitments. Our contractual obligations primarily consist of cancelable purchase commitments with various parties to purchase goods or services, primarily miners and equipment, entered into in the normal course of business and operating leases. For information regarding our other contractual obligations, refer to Note 12, Commitments and Contingencies on the Form 10-Q for the quarterly period ended March 31, 2022, and Note 15, Commitments and Contingencies included in our Annual Report on Form 10-K as filed with the SEC on December 14, 2021.

Operating Activities

Operating activities used $33,548,507 in cash for the six months ended March 31, 2022, as compared with using $11,686,460 in cash for the six months ended March 31, ~~2021, as compared with $1,263,055~~2021. Our net income of $14,315,020 was the main component of our operating cash flow for the ~~same period~~six months ended March 31, ~~2020. Our use~~2022, offset primarily by realized gain on digital currency of ~~net cash in operating activities were primarily driven~~$7,260,909, increased by ~~gain~~impairment of digital currency of $7,033,691, stock based compensation of $12,303,091, and unrealized loss on derivative asset of $7,380,135, realized gain on sale of digital currency of $635,627, and PPA loan forgiveness of $531,169, offset mainly by stock based compensation of $5,199,658, depreciation and amortization of $3,226,263, and bad debt provision of $231,932.$1,111,297. Other components of our ~~negative~~ operating cash flow are the changes in operating assets and liabilities including increase in mining of digital currency of $73,940,317, increase in prepaid expenses and other current assets of ~~$(1,130,741), decrease~~$12,985,662, increase in accounts payable and accrued liabilities of ~~($2,890,270),~~$10,083,770, increase in ~~digital currency~~accounts receivables of ~~($7,449,202), increase in contract liabilities of $487,779,~~$3,963,323, and decrease ~~in accounts receivable of $114,285, and increase~~ in inventory of ~~($793,945).~~$1,495,321. Our net ~~loss~~income of ~~$7,731,352~~$232,510 was the main component of our negative operating cash flow for the six months ended March 31, ~~2020, offset mainly~~2021, increased primarily by ~~unrealized gain on equity security~~stock based compensation of ~~($158,868),~~$5,199,658, and depreciation and amortization of $3,226,263, and decreased primarily by unrealized gain on derivative asset of ~~($824,891), depreciation and amortization~~$7,380,135. Other components of ~~$1,381,069, amortization of debt discounts of $3,000,959, stock-based compensation of $910,200, and change~~our operating cash flow are the changes in operating ~~and~~ assets and liabilities including increase in production of ~~$2,138,102.~~digital currency of $7,449,202, increase in accounts payable and accrued liabilities of $2,890,270, and increase in prepaid expenses and other current assets of $1,130,741.

Investing Activities

Investing activities used ~~($55,909,101)~~$50,679,613 during the six months ended March 31, ~~2021,~~2022, as compared with ~~($2,001,825) for the same period ended March 31, 2020. Our increase in deposits on mining equipment of 45,488,258 was the main component of our negative investing cash flow~~$55,909,101 for the six ~~months~~month period ended March 31, 2021. Our sale of digital currencies of ~~$2,422,282, acquisition~~$80,430,113, sale of ~~ATL Data Centers, LLC~~miners of ~~$45,783, acquisition~~$3,497,654, payments on miner deposits of ~~Solar Watt Solutions, Inc. of ($1,000,337), investment in infrastructure development of ($2,830,860),~~$105,077,053 and purchase of ~~property and equipment~~fixed assets of ~~($9,058,011)~~$28,914,917 were the main components of our investing cash flow for the six months ended March 31, ~~2021.~~2022. Our sale of digital currencies of

$2,422,282, payments on miner deposits of $45,488,258, purchase of fixed assets of $9,058,011, investment in infrastructure development of $2,830,560, and acquisition of ~~p2K~~Solar Watt Solutions of ~~($1,141,990) and investment in debt and equity securities of $(750,000)~~$1,000,337 were the main components of our ~~negative~~ investing cash flow for the six months ended March 31, ~~2020.~~2021.

Financing Activities

Cash flows ~~received~~generated from financing activities during the six months ended March 31, ~~2021~~2022 amounted to ~~$221,743,901, as~~$68,100,740, when compared ~~with ($67,467)~~to $221,743,901 for the six months ended March 31, ~~2020.~~2021. Our cash flows from financing activities for the six months ended March 31, 2022 consisted primarily of proceeds from underwritten offering of $67,988,993. Our cash flows from financing activities for the six months ended March 31, 2021 consisted primarily of ~~repayments of ($5,865,476) on promissory notes,~~ proceeds from underwritten offering of $224,262,818, exercise of options and warrants of $3,346,559, and ~~proceeds from underwritten offerings of $224,262,818. Our negative cash flows from financing activities for the six months ended March 31, 2020 consisted of repayments of ($67,467)~~offset by payments on promissory ~~notes.~~notes of $5,865,476.

Critical Accounting Estimates

Our ~~future capital requirements will depend on many factors including our growth rate, the timing~~discussion and ~~extent of spending to support development efforts, the expansion~~analysis of our ~~sales and marketing, the timing of new product introductions and the continuing market acceptance of our products and services.~~

Management believes that the Company has sufficient liquidity to satisfy its anticipated cash requirements for the next twelve months and beyond. The Company’s management prepares budgets and monitors the financial results of the Company as a tool to align liquidity needs to the recurring business requirements.

~~Off Balance Sheet Arrangements~~

~~As of March 31, 2021, there were no off-balance sheet arrangements.~~

~~Recently Issued Accounting Pronouncements~~

~~The Company has evaluated all recent accounting pronouncements and believes that none of them will have a material effect on the Company's financial position, results of operations or cash flows.~~

~~Table of Contents~~

~~Critical Accounting Policies~~

In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results ~~and~~of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these consolidated financial statements requires ~~management’s most difficult, subjective or complex judgments, often as a result of the need~~us to make estimates and assumptions that affect the reported amounts of assets, liabilities, net sales and expenses. We evaluate our estimates and assumptions on an ongoing basis, and base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for the judgments we make about the ~~effect~~carrying value of ~~matters~~assets and liabilities that are not readily apparent from other sources. Because these estimates can vary depending on the situation, actual results may differ from these estimates. Making estimates and judgments about future events is inherently ~~uncertain.~~unpredictable and is subject to significant uncertainties, some of which are beyond our control. Should any of these estimates and assumptions change or prove to have been incorrect, it could have a material impact on our results of operations, financial position and statement of cash flows.

~~Our accounting policies are discussed in detail in the footnotes~~There have been no material changes to ~~our financial statements included in our Annual Report on Form 10-K for the year ended September 30, 2020. However, we consider~~ our critical accounting policies and estimates as compared to be those ~~related~~disclosed in our Form 10-K. For a description of our critical accounting policies and estimates, see Part I, Item 1, Note 2, "Summary of Significant Accounting Policies" in our notes to ~~revenue recognition, long-lived assets, accounts receivable, fair value~~the consolidated financial statements in this Quarterly Report.

Recent Accounting Pronouncements

Please refer to Note 2 in our unaudited condensed consolidated financial statements contained elsewhere in this Quarterly Report on Form 10-Q for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of ~~financial instruments, cash and cash equivalents, accounts receivable, warranty liability and stock-based compensation.~~the date of this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to several market risks in its normal business activities. The types of market risks the Company is exposed to are the market price of bitcoin, banking, costs of mining, and liquidity risk. We do not believe that inflation has had a material effect on our business, financial condition or results of operations. Because our assets are primarily short-term and liquid in nature, they are generally not significantly impacted by inflation. The rate of inflation does, however, affect our expenses, including employee compensation, communications and information processing and office leasing costs, which may not be readily recoverable from our customers. To the extent inflation results in rising interest rates and has adverse impacts upon securities markets, it may adversely affect our results of operations and financial condition.

~~Not applicable~~

We continue to monitor rising inflationary pressures, including rising freight and import costs, in an attempt to minimize its effect through pricing strategies and cost reductions. If our costs become subject to significant inflationary

pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition, and operating results.

Market Price Risk of Bitcoin. We acquire bitcoin from our daily operations of mining and, as of March 31, 2022, we held approximately 431.67 bitcoins. The carrying value of our bitcoins as of March 31, 2022 was $17,045,640 on our Consolidated Balance Sheet. We account for our bitcoin as indefinite-lived intangible assets, which are subject to impairment losses if the fair value of our bitcoin decreases below their carrying value at any time since their acquisition. Impairment losses cannot be recovered for any subsequent increase in fair value. For example, the market price of one bitcoin in our principal market ranged from $35,079 - $68,205 during the six months ended March 31, 2022, but the carrying value of each bitcoin we held at the end of the reporting period reflects the lowest price of one bitcoin quoted on the active exchange at any time since its acquisition. Therefore, negative swings in the market price of bitcoin could have a ~~“smaller reporting company”~~material impact on our earnings and on the carrying value of our digital assets.

Banking Risk. A number of companies that engage in bitcoin and/or other cryptocurrency-related activities have been unable to find banks or financial institutions that are willing to provide them with bank accounts and other services. Similarly, a number of companies and individuals or businesses associated with cryptocurrencies may have had and may continue to have their existing bank accounts closed or services discontinued with financial institutions. To the extent that such events may happen to us, they could have a material adverse effect on our business, prospects or operations and potentially the value of any bitcoin or other cryptocurrencies we mine or otherwise acquire or hold for our own account.

Costs of Mining Risk. Mining operations are costly and our expenses may increase in the future. Increases in mining expenses may not be offset by corresponding increases in revenue. Our expenses may become greater than we anticipate, and our investments to make our business more cost-efficient may not succeed. Bitcoin mining operations are also subject to increased costs as ~~defined~~a result of the periodically increasing mining difficulty rates. Increases in ~~Item 10(f)(1)~~our costs without corresponding increases in our revenue would adversely affect our profitability and could seriously harm our business and an investment in us.

We do not believe that inflation has had a material effect on our business, financial condition or results of ~~Regulation S-K.~~operations. Nonetheless, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition, and results of operations.

Liquidity Risk. Liquidity risk arises from the general funding needs of the Company's activities and in the management of the Company's assets and liabilities.

Item 4. Controls and Procedures

Limitation on Effectiveness of Controls and Procedures

We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our periodic and current reports that we file with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

~~Limitation on Effectiveness~~ In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of ~~Controls~~

~~The~~achieving the desired control objectives. In addition, the design of ~~any control system is based in part upon certain assumptions about~~disclosure controls and procedures must reflect the ~~likelihood of future events, and~~fact that there can be no assurance that any design will succeed in achieving its stated goals. The inherent limitations in any control system include the realities that judgments related to decision-making can be faulty,are resource constraints and that ~~reduced effectiveness~~management is required to apply judgment in evaluating the benefits of possible controls ~~can occur because~~and procedures relative to their costs.

Evaluation of ~~simple errors or mistakes. Due to the inherent limitations in a cost-effective control system, misstatements due to error may occur and may not be detected.~~

Disclosure Controls and Procedures

~~We carried out an evaluation~~Our management, with the participation of our principal executive officer and principal financial officer, evaluated, as of the ~~effectiveness~~end of the ~~design and operation~~period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as that term is defined in ~~Exchange Act~~ Rules 13a-15(e) and 15d-15(e)~~) as of March 31, 2021. This evaluation was carried out~~ under the ~~supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer.~~Exchange Act). Based upon that evaluation, our ~~Chief Executive Officer~~principal executive officer and ~~Chief Financial Officer~~principal financial officer concluded that, as of March 31, ~~2021,~~2022, our disclosure controls and procedures were not effective due to ~~our recently acquired entity (i.e., ATL Data Centers LLC~~)the material weaknesses in ~~the process of adopting~~ our internal control over financial reporting described below.

Material Weaknesses and Remediation Plan

We identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The following material weaknesses have been identified and included in management assessment: (1) The Company did not adequately implement or properly maintain controls over its financial close and reporting process and its process over the recording of energy and other services revenue and (2) the Company did not adequately design and maintain effective general information technology controls over third-party information systems and applications that are relevant to the preparation of the Company’s financial statements. Specifically:

•

Financial Close and Reporting: Controls over financial statement reviews, specific to the appropriate reconciliation of certain balance sheet accounts, were not operating effectively.

▪

Recording of Revenues for certain non-principal revenue generating subsidiaries: Controls over the recording and processing of revenue for certain non-principal revenue generating entities, specifically, p2kLabs, Inc, GridFabric, LLC and CleanSpark, LLC, lack the level of precision necessary to ensure the completeness and accuracy of revenue recorded.

•

Information and Technology Controls: Certain individual control deficiencies related to information technology (“IT”) general controls and ~~procedures.~~report reviews aggregate into a material weakness, as follows:

▪

Certain process-level and IT-dependent controls over user access to IT programs and applications, specifically utilized for hosting services and file storage, were not effective.

▪

Controls relating to the evaluation of service organization controls reports were not performed over certain third-party service providers to cover the entire fiscal year.

Management has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weakness are remediated, such that these controls are designed, implemented, and operating effectively. To date, the remediation actions include the following:

•

appointment of additional qualified staff;

•

implementation of additional monitoring of controls to improve documentation of internal control procedures;

•

expanding the management and governance over IT system controls; and

•

implementation of enhanced process controls around internal user access management including provisioning, removal, and periodic review.

While these actions and planned actions are subject to ongoing management evaluation and will require validation and testing of the design and operating effectiveness of internal controls over a sustained period, we are committed to continuous improvement and will continue to diligently review our internal control over financial reporting.

Changes in Internal Control over Financial Reporting

Other than remediation actions related to ~~a previous~~the material ~~weakness~~weaknesses in our internal controls described above, there has been no change in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, ~~2021~~2022 that ~~have~~has materially affected, or ~~are~~is reasonably likely to materially affect, our internal control over financial reporting.

~~Table of Contents~~

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are ~~subject to litigation, claims, investigations and audits arising~~ from time to time subject to various claims, lawsuits, and other legal and administrative proceedings arising in the ordinary course of business. See Note 12 - Commitments and Contingencies to our ~~business.~~

~~CleanSpark, Inc. v. Discover Growth Fund, LLC~~

~~On August 5, 2020, the Company filed a verified complaint (the “Complaint”)~~consolidated financial statements in the Supreme Court of the State of New York against an investor (“Investor”). Among other things, the Complaint seeks: declaratory relief against Investor in response to Investor’s claim that a Form 8-K filed by the Company in relation to a July 20, 2020 securities purchase agreement (the “July 2020 SPA”) needed pre-approval by Investor prior to filing, and injunctive relief in response to conversion notices sent by Investor claiming trigger events and defaults arising out of the failure to obtain the Form 8-K pre-approval. The case was subsequently removed to the United States District Court for the Southern District of New York, which then determined that the parties’ agreements required a JAMS arbitrator sitting in the U.S. Virgin Islands to resolve the parties’ dispute over which of their agreements’ competing forum selection clauses was controlling, and that therefore the Court’s personal jurisdiction over Investor had not been established. While the New York action was pending, Investor filed a demand for arbitration with JAMS in the U.S. Virgin Islands, alleging breach of the Securities Purchase Agreement dated December 31, 2018, and the Purchase Agreement dated April 17, 2019 (the “Prior SPAs”) between Investor and the Company (the “Arbitration”) and seeking issuance of additional shares of the Company. The Company then filed a response to Investor’s claims, denying Investor’s claims and asserting counterclaims against Investor, and also filed for emergency injunctive relief in the Arbitration seeking, among other things, an order enjoining Investor from continuing to pursue certain remedies based on the allegations in the Arbitration between Investor and the Company. On September 21, 2020, the arbitrator granted the Company’s motion for emergency interim relief in the Arbitration.

~~On April 30, 2021, the Arbitrator granted in part the Company’s motion for partial summary judgment and denied the Investor’s motion for partial summary judgment, and ordered the following:~~

(i) the July 2020 SPA is a fully merged and integrated agreement and its publicity clause supersedes the publicity clauses of the Prior SPAs between Company and Investor with respect to securities filings relating to the July 2020 SPA transaction;

(ii) the Company had no obligation to allow the Investor to review and approve certain 8-K’s and 10-Q’s concerning the July 2020 SPA transaction and the purported failure to allow the Investor to review and approve such filings was not a breach of the Prior SPAs between the Company and Investor;

(iii) the Company’s obligations under the parties’ prior debenture and note (the “Debenture” and “Note”) were discharged when the Investor fully converted those instruments on or before June 30, 2020;

~~(iv) the subsequent delivery notices sent by the Investor were void ab initio and the Company no longer has any obligations under the Debenture and Note; and~~

(v) the Investor’s claim for liquidated damages arising from the Company’s alleged failure to deliver conversion shares under the Debenture and Note was denied on the grounds that (1) the Investor’s right to issue delivery notices had expired, and the Company’s obligations under the Debenture and Note had been discharged prior to June 30, 2020, and (2) all the Investor’s delivery notices rely at least in part on the Company’s alleged breach of the Prior SPAs’ publicity clause with respect to securities filings relating to the July 2020 SPA transaction, a claim to which the Arbitrator ruled in the Company’s favor.

~~In so holding, the Arbitrator also denied, as a matter of law, the Investor’s claims for breach of contract (Counts~~Part I, Item 1 ~~and 2) and its claim seeking specific performance of delivering additional shares (Count 4).~~

~~Certain claims remain for trial in the Arbitration and the ultimate outcome~~ of this matter cannot be determined with certainty. As it has stated previously, the Company believes that claims raised by the Investor in and related to the Arbitration are without merit, and the Company intends to continue to both defend itself vigorously and to vigorously prosecute its counterclaims.

~~It is possible that actions related to this dispute with the Investor may yet be filed in the same or other forums. The Company does not intend to file further Current Reports~~Quarterly Report on Form ~~8-K describing the additional lawsuits, or provide updates, except as required by law.~~

~~Table of Contents~~

10-Q.

~~Bishins v. CleanSpark, Inc. et al.~~

On January 20, 2021, Scott Bishins (“Bishins”), individually, and on behalf of all others similarly situated (together, the “Class”), filed a class action complaint (the “Class Complaint”) in the United States District Court for the Southern District of New York against the Company, its Chief Executive Officer, Zachary Bradford (“Bradford”), and its Chief Financial Officer, Lori Love (“Love”) (the “Class Action”). The Class Complaint alleges that, between December 31, 2020 and January 14, 2021, the Company, Bradford, and Love “failed to disclose to investors: (1) that the Company had overstated its customer and contract figures; (2) that several of the Company’s recent acquisitions involved undisclosed related party transactions; and (3) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.” (the “Class Allegations”). The Class Complaint seeks: (a) certification of the Class, (b) an award of compensatory damages to the Class, and (c) an award of reasonable costs and expenses incurred by the Class in the litigation. To date, no class has been certified in the Class Action.

Although the ultimate outcome of the Class Action cannot be determined with certainty, the Company stands behind all of its prior statements and disclosures and believes that the claims raised in the Class Complaint are entirely without merit. The Company intends to both defend itself vigorously against these claims and to vigorously prosecute any counterclaims.

Notwithstanding the Class Allegations’ lack of merit, however, the Class Action may distract the Company and cost the Company’s management time, effort and expense to defend against the claims made in the Class Complaint. Notwithstanding the Company’s belief that the Company and its management have complied with all of their obligations under applicable securities regulations, no assurance can be given as to the outcome of the Class Action, and in the event the Company does not prevail in such action, the Company, its business, financial condition and results of operations would be materially and adversely affected.

Item 1A. Risk Factors

Please carefully consider the information set forth in this Quarterly Report on Form 10-Q and the risk factors discussed in Part I, Item 1I A. of our Annual Report on Form 10-K for the year ended September 30, ~~2020, Part II, Item 1. A of our~~ ~~Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2020, and the risk factors starting on page S-11 of our recent~~ ~~Prospectus Supplement filed on March 18,~~ 2021, ~~(the “Prospectus Supplement”), each of which is incorporated by reference in this Quarterly Report on Form 10-Q,~~ which could materially affect our business, financial condition or future results. In evaluating our business, you should carefully consider the risk factors discussed in our Annual Report on Form 10-K, as updated by our subsequent filings under the Exchange ~~Act and the Prospectus Supplement.~~Act. The occurrence of any of the risks discussed in such filings, or other events that we do not currently anticipate or that we currently deem immaterial, could harm our business, prospects, financial condition and results of operations. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The information set forth below relates to our issuances of securities without registration under the Securities Act of 1933 during the reporting period which were not previously included in an Annual Report on Form 10-K, Quarterly Report on Form 10-Q, or Current Report on Form 8-K.

~~During the period commencing January 1, 2021 through March 31, 2021, the Company issued 19,429 shares of common stock as in relation to compensation for services.~~ None.

These securities were issued pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506 promulgated thereunder. The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock.

~~Table of Contents~~

Item 3. Defaults upon Senior Securities

None.

~~None.~~

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

~~None.~~15

Item 6. Exhibits


		Incorporated by Reference				Filed/
Exhibit Number	Exhibit Description	Form	File No.	Exhibit	Filing Date	Furnished Herewith

3.1	First Amended and Restated Articles of Incorporation of CleanSpark, Inc., dated September 17, 2021	8-K	001-39187	3.1	9/17/2021
3.2	First Amended and Restated Bylaws of CleanSpark, Inc., dated September 17, 2021	8-K	001-39187	3.2	9/17/2021
4.1	Form of Senior Secured Redeemable Convertible Debenture, dated December 31, 2018 issued to the Investor	8-K	000-53498	4.1	12/31/2018
4.2	Form of Common Stock Purchase Warrant, dated December 31, 2018, issued to the Investor	8-K	000-53498	4.2	12/31/2018
4.3	Form of Senior Secured Redeemable Convertible Promissory Note, dated April 17, 2019, issued to the Investor	8-K	000-53498	4.1	4/18/2019
4.4	Form of Common Stock Purchase Warrant, dated December 31, 2018, issued to the Investor	8-K	000-53498	4,2	4/18/2019
10.1	Master Equipment Financing Agreement by and between CleanSpark, Inc. and Trinity Capital Inc. dated as of April 22, 2022	8-K	001-39187	10.1	4/26/2022
10.2	Form of Equipment Financing Schedule by and between CleanSpark, Inc. and Trinity Capital Inc.	8-K	001-39187	10.2	4/26/2022
10.3	Hosting Agreement by and between CleanSpark, Inc. and Lancium LLC, dated as of March 29, 2022					*, +
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a)					*
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)					*
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350					**
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350					**

~~Exhibit Number~~	~~Description of Exhibit~~
10.1*	~~Non-Fixed Price Sales and Purchase Agreement between CleanSpark, Inc. and Bitmain Technologies Limited, executed April 15, 2021~~.
10.2*	~~Form of Hardware Purchase & Sales Agreement~~
10.3*	~~Form of Future Sales and Purchase Agreement~~
10.4*	~~Form of Agreement for Sale of Equipment~~
~~10.5*+~~	~~Amendment to Employment Agreement by and between CleanSpark, Inc. and Zachary K. Bradford, dated April 16, 2021.~~
~~10.6*+~~	~~Amendment to Employment Agreement by and between CleanSpark, Inc. and Lori Love, dated April 16, 2021~~.
~~10.7*+~~	~~Amendment to Employment Agreement by and between CleanSpark, Inc. and S. Matthew Schultz, dated April 16, 2021.~~
31.1*	~~Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~
31.2*	~~Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~
32.1*	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
101 INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101 SCH	Inline XBRL Taxonomy Extension Schema Document
101 CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101 DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101 LAB	Inline XBRL ~~Labels~~Taxonomy Extension Label Linkbase Document
101 PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
~~101 DEF~~104	Cover Page Interactive Data File (formatted as Inline XBRL ~~Definition Linkbase Document~~and contained in Exhibit 101)
*	Filed herewith.
**	Furnished herewith.
+	Certain portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K. The Company will provide an unredacted copy of this agreement, on a supplemental basis, to the SEC upon request.

*	~~Filed herewith~~
**	These certifications are being furnished solely to accompany this quarterly report pursuant to 18 U.S.C. Section 1350, and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934 and are not to be incorporated by reference into any filing of the Registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

+	~~Indicates a management contract or compensatory plan or arrangement.~~

~~Table of Contents~~

SIGNATURES

~~SIGNATURES~~

Pursuant to the requirements 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.



Date: May ~~6, 2021~~10, 2022	By: /s/ Zachary K. Bradford Zachary K. Bradford Title: Chief Executive Officer (Principal Executive Officer)



Date: May ~~6, 2021~~10, 2022	By: /s/~~Lori L. Love~~Gary A. Vecchiarelli ~~Lori L. Love~~Gary A. Vecchiarelli Title: Chief Financial Officer (Principal Financial and Accounting Officer)


☒	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, ~~2021~~2022

☐	Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to __________

Commission File Number: 001-39187


Nevada	87-0449945
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)



Title of each class	~~Trading~~ ~~Symbol(s)~~	Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.001 per share	CLSK		The Nasdaq Stock Market LLC

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


~~TABLE OF CONTENTS~~		Page
PART I – FINANCIAL INFORMATION
Item 1:	Financial Statements	35
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	46
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	1312
Item 4:	Controls and Procedures	13
PART II – OTHER INFORMATION
Item 1:	Legal Proceedings	1415
Item 1A:	Risk Factors	15
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	15
Item 3:	Defaults Upon Senior Securities	1615
Item 4:	Mine Safety Disclosures	1615
Item 5:	Other Information	1615
Item 6:	Exhibits	16

	~~F-1~~
Consolidated Balance Sheets as of March 31, ~~2021~~2022 (unaudited) and September 30, ~~2020;~~2021;	F-1

	F-3
Consolidated Statements of Stockholders’ Equity for the three and six months ended March 31, ~~2021~~2022 and ~~2020~~2021 (unaudited);	F-5


	March 31, 2022 (Unaudited)			September 30, 2021

ASSETS
Current assets
Cash and cash equivalents, including restricted cash	$	1,912,947		$	18,040,327
Accounts receivable, net		6,836,253			2,619,957
Inventory		1,259,423			2,672,744
Prepaid expense and other current assets		10,316,242			5,129,047
Digital currency		17,045,640			23,603,210
Derivative investment asset		3,794,359			4,905,656
Investment in equity security		250,000			260,772
Investment in debt security, AFS, at fair value		541,200			494,608
Total current assets	$	41,956,064		$	57,726,321

Property and equipment, net	$	276,330,089		$	137,674,739
Operating lease right of use asset		1,353,557			1,488,240
Intangible assets, net		10,262,761			12,699,177
Deposits on mining equipment		69,902,321			87,959,910
Other long-term assets		5,943,314			875,536
Goodwill		19,049,198			19,049,198
Total assets	$	424,797,304		$	317,473,121

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	21,385,732		$	7,975,263
Contract liabilities		188,929			296,964
Operating lease liability		321,600			256,195
Finance lease liability		345,817			413,798
Acquisition liability		0			300,000
Contingent consideration		0			820,802
Dividends payable		335,439			-
Total current liabilities		22,577,517			10,063,022
Long-term liabilities
Operating lease liability, net of current portion		1,043,931			1,235,325
Finance lease liability, net of current portion		257,952			458,308
Total liabilities	$	23,879,400		$	11,756,655

Stockholders' equity
Common stock; $0.001 par value; 100,000,000 shares authorized; 41,290,587 and 37,395,945 shares issued and outstanding as of March 31, 2022 and September 30, 2021, respectively		41,291			37,394
Preferred stock; $0.001 par value; 10,000,000 shares authorized; Series A shares; 2,000,000 authorized; 1,750,000 and 1,750,000 issued and outstanding as of March 31, 2022 and September 30, 2021, respectively		1,750			1,750
Additional paid-in capital		525,246,200			444,074,832
Accumulated other comprehensive income (loss)		41,200			(5,392	)
Accumulated deficit		(124,412,537	)		(138,392,118	)
Total stockholders' equity		400,917,904			305,716,466

	March 31, 2021				September 30, 2020
ASSETS
Current assets
Cash and cash equivalents		$	157,274,542			$	3,126,202
Accounts receivable, net			1,756,112				1,047,353
Contract assets			—				4,103
Inventory			856,095				—
Prepaid expense and other current assets			2,184,863				998,931
Digital currency			5,662,547				—
Derivative investment asset			9,495,404				2,115,269
Investment equity security			729,500				460,000
Investment debt security, AFS, at fair value			500,000				500,000
Total current assets		$	178,459,063				8,251,858

Property and equipment, net			14,861,958				117,994
Operating lease right of use asset			713,158				40,711
Capitalized software, net			892,220				976,203
Intangible assets, net			17,332,820				7,049,656
Deposits on mining equipment and related assets			45,488,258				—
Other long-term asset			2,830,560				—
Goodwill			32,034,559				5,903,641
Total assets		$	292,612,596			$	22,340,063

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities		$	2,947,099			$	4,527,037
Contract liabilities			551,977				64,198
Operating lease liability, current portion			611,040				41,294
Finance lease liability, current portion			336,157				—
Acquisition liability			300,000				—
Contingent consideration, current portion			2,416,667				750,000
Dividends payable			177,505				—
Total current liabilities		$	7,340,445			$	5,382,529

Long-term liabilities
Loans payable			—				531,169
Operating lease liability, net of current portion			101,983				—
Finance lease liability, net of current portion			616,376				—
Contingent consideration, net of current portion			833,333				—
Total liabilities		$	8,892,137			$	5,913,698

Stockholders' equity
Common stock; $0.001 par value; 50,000,000 shares authorized; 33,874,152 and 17,390,979 shares issued and outstanding as of March 31, 2021 and September 30, 2020, respectively			33,874				17,391
Preferred stock; $0.001 par value; 10,000,000 shares authorized; Series A shares; 2,000,000 authorized; 1,750,000 and 1,750,000 issued and outstanding as of March 31, 2021 and September 30, 2020, respectively			1,750				1,750
Additional paid-in capital			400,032,436				132,809,830
Accumulated deficit			(116,347,601	)			(116,402,606)
Total stockholders' equity			283,720,459				16,426,365

Total liabilities and stockholders' equity		$	292,612,596			$	22,340,063


For the Six Months ended March 31, 2021
	Preferred Stock				Common Stock
	Shares		Amount		Shares			Amount			Additional Paid-in Capital		Accumulated Deficit			Total Stockholders' Equity
Balance, September 30, 2020		1,750,000	$	1,750		17,390,979		$	17,391		$	132,809,830	$	(116,402,606	)	$	16,426,365
Shares issued for services		—		—		501,437			501			3,011,133		—			3,011,634
Options and warrants issued for services		—		—		—			—			1,339,009		—			1,339,009
Shares issued for business acquisition		—		—		1,618,285			1,618			21,181,733		—			21,183,351
Exercise of options and warrants		—		—		115,385			116			192,540		—			192,656
Shares issued under underwritten offering, net of offering costs		—		—		4,444,445			4,445			37,045,160		—			37,049,605
Net loss		—		—		—			—			—		(7,167,530	)		(7,167,530)
Balance, December 31, 2020		1,750,000	$	1,750		24,070,531		$	24,071		$	195,579,405	$	(123,570,136	)	$	72,035,090
Shares issued for services		—		—		19,429			19			71,478		—			71,497
Options and warrants issued for services		—		—		—			—			777,517		—			777,517
Shares issued for business acquisition		—		—		477,703			478			13,246,226		—			13,246,704
Exercise of options and warrants		—		—		223,650			223			3,153,680		—			3,153,903
Shares issued under underwritten offering, net of offering costs		—		—		9,090,910			9,091			187,204,122		—			187,213,213
Shares returned in relation to business acquisition		—		—		(8,072	)		(8	)		8		—			(0)
Preferred stock dividends accrued		—		—		—			—			—		(177,505	)		(177,505)
Net income		—		—		—			—			—		7,400,040			7,400,040
Balance, March 31, 2021		1,750,000		1,750		33,874,151			33,874			400,032,436		(116,347,601	)		283,720,459

For the Six Months Ended March 31, 2020
	Preferred Stock				Common Stock
	Shares		Amount		Shares			Amount			Additional Paid-in Capital			Accumulated Deficit			Total Stockholders' Equity
Balance, September 30, 2019		1,000,000	$	1,000		4,679,018		$	4,679		$	111,936,125		$	(93,056,463	)	$	18,885,341
Shares issued for services		750,000		750		2,000			2			33,348			—			34,100
Options and warrants issued for services		—		—		—			—			602,169			—			602,169
Beneficial conversion feature and shares issued with convertible debt		—		—		187,100			187			(187	)		—			—
Rounding shares issued for stock split		—		—		793			1			(1	)		—			—
Net loss		—		—		—			—			—			(1,916,254	)		(1,916,254)
Balance, December 31, 2019		1,750,000		1,750		4,868,911			4,869			112,571,454			(94,972,717	)		17,605,356
Shares returned and cancelled		—		—		(30,000	)		(30	)		30			—			—
Options issued for business acquisition		—		—		—			—			88,935			—			88,935
Options and warrants issued for services		—		—		—			—			273,931			—			273,931
Shares issued for business acquisition		—		—		95,699			96			444,904			—			445,000
Beneficial conversion feature and shares issued with convertible debt		—		—		810,505			810			(810	)		—			—
Net loss		—		—		—			—			—			(5,815,098	)		(5,815,098)
Balance, March 31, 2020		1,750,000		1,750		5,745,115			5,745			113,378,444			(100,787,815	)		12,598,124


	For the Six Months Ended
	March 31, 2021			March 31, 2020
Cash Flows from Operating Activities
Net income (loss)	$	232,510		$	(7,731,352)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Stock based compensation		5,199,658			910,200
Unrealized gain on equity security		(269,500	)		(158,868)
Realized gain on sale of digital currency		(635,627	)		—
Amortization of operating lease right of use asset		166,460			21,726
Depreciation and amortization		3,226,263			1,381,069
Provision for bad debts		231,932			—
Gain on derivative asset		(7,380,135	)		(824,891)
PPP loan forgiveness		(531,169	)		—
Amortization of debt discount		—			3,000,959
Changes in operating assets and liabilities
(Increase) decrease in prepaid expenses and other current assets		(1,130,741	)		618,614
Decrease in contract assets		4,103			52,795
Increase in contract liabilities		487,779			90,840
Decrease (increase) in accounts receivable		114,285			(588,229)
(Decrease) increase in accounts payable		(2,890,270	)		2,052,295
Increase in digital currency from mining		(7,449,202	)		—
Decrease in lease liability		(268,861	)		(21,247)
Increase in inventory		(793,945	)		—
Increase (decrease) in due to related parties		—			(66,966)
Net cash used in operating activities		(11,686,460	)		(1,263,055)

Cash Flows from investing
Increase in deposits on mining equipment and related assets		(45,488,258	)		—
Sale of digital currencies		2,422,282			—
Investment in infrastructure development		(2,830,560	)		—
Purchase of property and equipment		(9,058,011	)		(24,910)
Acquisition of ATL Data Center, net of cash received		45,783			—
Acquisition of p2KLabs, net of cash received		—			(1,141,990)
Acquisition of Solar Watt Solutions, net of cash received		(1,000,337	)		—
Investment in capitalized software		—			(84,925)
Investment in debt and equity securities		—			(750,000)
Net cash used in investing activities		(55,909,101	)		(2,001,825)

Cash Flows from Financing Activities
Payments on promissory notes		(5,865,476	)		(67,467)
Proceeds from exercise of options and warrants		3,346,559			—
Proceeds from underwritten offerings		224,262,818			—
Net cash received/(provided) by financing activities		221,743,901			(67,467)

Net increase (decrease) in cash and cash equivalents		154,148,340			(3,332,347)

Cash and cash equivalents, beginning of period		3,126,202			7,838,857

Cash and cash equivalents, end of period	$	157,274,542		$	4,506,510

Supplemental disclosure of cash flow information
Cash paid for interest	$	31,846		$	7,606
Cash paid for tax	$	—		$	—

Non-cash investing and financing transactions
Day one recognition of right of use asset and liability	$	—		$	85,280
Shares issued for conversion of debt	$	—		$	998
Shares and options issued for business acquisition	$	34,430,055		$	533,935
Shares issued as collateral returned to treasury	$	—		$	30
Preferred stock dividends accrued	$	177,505		$	—
Cashless exercise of options/warrants	$	74		$	—



Cash and cash equivalents and restricted cash, end of period	$	1,912,947	$	157,274,542
Supplemental disclosure of cash flow information
Cash paid for interest	$	62,293	$	31,846
Non-cash investing and financing transactions
Shares and options issued for business acquisition	$	-	$	34,430,055
Cashless exercise of options and warrants	$	-	$	74
Receivables from exercise of options	$	252,973	$	-
Shares issued for settlement of seller agreements related to acquisition	$	150,011	$	-
Shares returned as part of settlement of seller agreements related to acquisition	$	233	$	-
Preferred shares dividends accrued	$	335,439	$	177,505
Unrealized gain on investment in available-for-sale debt security	$	46,592	$	-

	Amount
Balance at September 30, 2020	$	—
Additions of digital currencies		7,449,202
Realized gain on sale of digital currencies		635,627
Sale of digital currencies		(2,422,282)
Balance at March 31, 2021	$	5,662,547


	For three months ended					For six months ended
	March 31, 2021		March 31, 2020			March 31, 2021		March 31, 2020
Numerator:
Net Income (Loss) attributable to the Company	$	7,400,040	$	(5,815,098	)	$	232,510	$	(7,731,352)

Numerator for basic and diluted EPS - Income (loss) attributable to the Company's common shareholders	$	7,222,535	$	(5,815,098	)	$	55,005	$	(7,731,352)

Denominator:
Denominator for basic EPS - Weighted average shares		25,925,259		5,135,802			24,025,557		4,957,491
Dilutive effect of warrants and options		1,522,604		—			1,522,604		—
Dilutive effect of preferred stock conversions		5,250,000		—			5,250,000		—
Denominator for diluted EPS - Adjusted weighted average shares		32,697,863		5,135,802			30,798,161		4,957,491
Basic Income (Loss) per common share	$	0.28	$	(1.13	)	$	0.00	$	(1.56)
Diluted Income (Loss) per common share	$	0.22	$	(1.13	)	$	0.00	$	(1.56)

	Amount
Balance at September 30, 2020	$	2,615,269
Gain/(loss) on derivative asset		7,380,135
Balance at March 31, 2021	$	9,995,404

Purchase Price Allocation:
Customer List	$	5,122,733
Goodwill	$	12,051,206
Other assets and liabilities assumed, net	$	(77,235)
Total	$	17,096,704

Consideration:	Fair Value
1,618,285 shares of common stock	$	21,183,351
Total Consideration	$	21,183,351

Purchase Price Allocation:
Customer list	$	730,000
Design and other assets	$	123,000
Goodwill	$	957,388
Other assets and liabilities assumed, net	$	(121,453)
Total	$	1,688,935

Purchase Price Allocation:
Software	$	1,120,000
Customer list	$	60,000
Non-compete	$	190,000
Goodwill	$	26,395
Net Assets	$	3,605
Total	$	1,400,000

~~Fair value assumptions:~~	~~March 31, 2021~~
~~Risk free interest rate~~		~~0.09%~~
~~Expected term (months)~~		~~1.5~~
~~Expected volatility~~		~~141.83%~~
~~Expected dividends~~		0%

	March 31, 2021			September 30, 2020
mVSO software	$	437,135		$	437,135
mPulse software		741,846			741,846
Less: accumulated amortization		(286,761	)		(202,778)
Capitalized Software, net	$	892,220		$	976,203


	ILAL Debt Securities		ILAL Derivative Asset			ILAL Equity Securities			Law Clerk Equity Securities
Balance as of September 30, 2021	$	494,608	$	4,905,656		$	10,772		$	250,000
Shares sold during the year		0		0			(9,590	)		0
Realized gain on fair value recognized in other income/expense		0		0			665			0
Unrealized loss recognized in other income/expense		0		(1,111,297	)		(1,847	)		0
Unrealized gain on fair value recognized in other comprehensive income		46,592		0			0			0
Balance as of March 31, 2022	$	541,200	$	3,794,359		$	0		$	250,000


Long-term loans payable consists of the following:	March 31, 2021		September 30, 2020

Promissory notes	$	—	$	531,169

Total	$	—	$	531,169


Fiscal year ending September 30, 2021 (six months remaining)	$	335,094
Fiscal year ending September 30, 2022		420,931
Total Lease Payments		756,025
Less: imputed interest		(43,002)
Total present value of lease liabilities	$	713,023


Fiscal year ending September 30, 2021 (six months remaining)	$	208,818
Fiscal year ending September 30, 2022		417,636
Fiscal year ending September 30, 2023		325,100
Fiscal year ending September 30, 2024		128,089
Fiscal year ending September 30, 2025		12,320
Thereafter		1,854
Total Lease Payments		1,093,817
Less: imputed interest		(141,284)
Total present value of lease liabilities	$	952,533


	Three Months Ended March 31, 2021

		Energy			Digital Agency			Digital Currency Mining		Inter-segment			Consolidated

Revenues	$	1,103,368		$	425,881		$	6,715,792	$	(125,353	)	$	8,119,688

Total cost and expenses		10,327,198			(197,048	)		611,863		(125,353	)		10,616,660

Income/(loss) from operations		(9,223,830	)		622,929			6,103,929		—			(2,496,972)


Capital expenditures		12,565			972			9,025,392		—			9,038,929

Depreciation and amortization	$	844,018		$	285,718		$	987,436		—		$	2,117,172


	Three Months Ended March 31, 2020

		Energy			Digital Agency		Digital Currency Mining		Inter-segment			Consolidated

Revenues	$	3,426,424		$	296,530	$	—	$	(64,671	)	$	3,658,283

Total cost and expenses		5,750,335			244,671		—		(64,671	)		5,930,335

Income/(loss) from operations		(2,323,911	)		51,859		—		—			(2,272,052)


Capital expenditures		15,463			—		—		—			15,463

Depreciation and amortization	$	645,484		$	69,521	$	—		—		$	715,005


	Six Months Ended March 31, 2021

		Energy			Digital Agency		Digital Currency Mining		Inter-segment			Consolidated

Revenues	$	2,327,990		$	807,207	$	7,449,202	$	(207,141	)	$	10,377,258

Total cost and expenses		18,181,086			179,863		890,520		(207,141	)		19,044,328

Income/(loss) from operations		(15,853,096	)		627,334		6,558,682		—			(8,667,070)


Capital expenditures		27,740			4,879		9,025,392		—			9,058,011

Depreciation and amortization	$	1,592,357		$	362,126	$	1,271,780		—		$	3,226,263


	Six Months Ended March 31, 2020

	Energy			Digital Agency		Digital Currency Mining		Inter-segment			Consolidated

Revenues	$	4,403,247		$	296,530	$	—	$	(64,670	)	$	4,635,107

Total cost and expenses		9,718,619			244,671		—		(64,470	)		9,898,620

Income/(loss) from operations		(5,315,372	)		51,859		—		—			(5,263,513)


Capital expenditures		24,910			0		—		—			24,910

Depreciation and amortization	$	1,311,548		$	69,521	$	—		—		$	1,381,069


	March 31, 2021

	Energy		Digital Agency		Digital Currency Mining		Consolidated

Accounts Receivable	$	1,436,435	$	319,687	$	—	$	1,756,122

Goodwill	$	16,975,703	$	939,853	$	14,119,003	$	32,034,559

Total Assets	$	232,380,406	$	2,546,822	$	57,685,368	$	292,612,596