Cover
Cover - $ / shares | 6 Months Ended | |
Jun. 30, 2024 | Aug. 14, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2024 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2024 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 000-50331 | |
Entity Registrant Name | CalEthos, Inc. | |
Entity Central Index Key | 0001174891 | |
Entity Tax Identification Number | 98-0371433 | |
Entity Incorporation, State or Country Code | NV | |
Entity Address, Address Line One | 11753 Willard Avenue | |
Entity Address, City or Town | Tustin | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92782 | |
City Area Code | (714) | |
Local Phone Number | 352-5315 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 25,230,540 | |
Entity Listing, Par Value Per Share | $ 0.001 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2024 | Dec. 31, 2023 |
Current assets | ||
Cash and cash equivalents | $ 298,000 | $ 308,000 |
Prepaid and other current expenses | 10,000 | 10,000 |
Total current assets | 308,000 | 318,000 |
Data center costs | 4,158,000 | 2,262,000 |
Total assets | 4,466,000 | 2,580,000 |
Current liabilities | ||
Accounts payable and accrued expenses | 403,000 | 670,000 |
Convertible promissory notes, net | 341,000 | |
Notes payable, net of discount | 436,000 | 11,000 |
Total current liabilities | 839,000 | 1,022,000 |
Convertible debentures, net | 92,000 | |
Total liabilities | 931,000 | 1,022,000 |
Stockholders’ equity | ||
Preferred stock, value | ||
Common stock par value $0.001: 100,000,000 shares authorized; 25,230,540 and 24,345,598 shares issued and outstanding | 25,000 | 24,000 |
Additional paid-in capital | 30,734,000 | 20,807,000 |
Other comprehensive income | 9,000 | 9,000 |
Stock subscription receivable | (2,000) | (2,000) |
Accumulated deficit | (27,231,000) | (19,280,000) |
Total stockholders’ equity | 3,535,000 | 1,558,000 |
Total liabilities and stockholders’ equity | 4,466,000 | 2,580,000 |
Series A Convertible Preferred Stock [Member] | ||
Stockholders’ equity | ||
Preferred stock, value |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2024 | Dec. 31, 2023 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock shares, par value | $ 0.001 | $ 0.001 |
Common stock shares, authorized | 100,000,000 | 100,000,000 |
Common stock shares, issued | 25,230,540 | 24,345,598 |
Common stock shares, outstanding | 25,230,540 | 24,345,598 |
Series A Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 3,600,000 | 3,600,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Income Statement [Abstract] | ||||
Revenues | ||||
Operating Expenses | ||||
Professional fees | 113,000 | 97,000 | 256,000 | 186,000 |
Equity-based compensation | 109,000 | 24,000 | 230,000 | 24,000 |
General and administrative expenses | 29,000 | 33,000 | 38,000 | 41,000 |
Payroll and related expense | 74,000 | 93,000 | ||
Total operating expenses | 325,000 | 154,000 | 617,000 | 251,000 |
Loss from operations | (325,000) | (154,000) | (617,000) | (251,000) |
Other income (expenses) | ||||
Interest income | 4,000 | 17,000 | 9,000 | 31,000 |
Financing costs | (616,000) | (103,000) | (875,000) | (219,000) |
Gain on settlement of accounts payable | 23,000 | 23,000 | ||
Loss on extinguishment of debt | (6,468,000) | |||
Total other expenses | (612,000) | (63,000) | (7,334,000) | (165,000) |
Loss before provision for income taxes | (937,000) | (217,000) | (7,951,000) | (416,000) |
Provision for income taxes | ||||
Net loss | $ (937,000) | $ (217,000) | $ (7,951,000) | $ (416,000) |
Net loss per share - Basic | $ (0.04) | $ (0.01) | $ (0.32) | $ (0.02) |
Net loss per share - Diluted | $ (0.04) | $ (0.01) | $ (0.32) | $ (0.02) |
Weighted Average common shares outstanding - Basic | 25,230,540 | 14,495,621 | 25,028,916 | 14,495,621 |
Weighted Average common shares outstanding - Diluted | 25,230,540 | 14,495,621 | 25,028,916 | 14,495,621 |
Comprehensive (loss) income | ||||
Net loss | $ (937,000) | $ (217,000) | $ (7,951,000) | $ (416,000) |
Foreign currency translation gain | 3,000 | 1,000 | 3,000 | |
Comprehensive loss | $ (934,000) | $ (216,000) | $ (7,951,000) | $ (413,000) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) | Preferred Stock [Member] Series A Convertible Preferred Stock [Member] | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Stock Subscription Receivable [Member] | AOCI Attributable to Parent [Member] | Retained Earnings [Member] | Total |
Balance at Dec. 31, 2022 | $ 24,000 | $ 11,480,000 | $ (2,000) | $ 5,000 | $ (14,650,000) | $ (3,143,000) | ||
Balance, shares at Dec. 31, 2022 | 24,495,621 | |||||||
Foreign currency translation income (loss) | 2,000 | 2,000 | ||||||
Net Income (loss) | (199,000) | (199,000) | ||||||
Balance at Mar. 31, 2023 | $ 24,000 | 11,480,000 | (2,000) | 7,000 | (14,849,000) | (3,340,000) | ||
Balance, shares at Mar. 31, 2023 | 24,495,621 | |||||||
Balance at Dec. 31, 2022 | $ 24,000 | 11,480,000 | (2,000) | 5,000 | (14,650,000) | (3,143,000) | ||
Balance, shares at Dec. 31, 2022 | 24,495,621 | |||||||
Foreign currency translation income (loss) | 3,000 | |||||||
Net Income (loss) | (416,000) | |||||||
Balance at Jun. 30, 2023 | $ 14,000 | 11,514,000 | (2,000) | 8,000 | (15,066,000) | (3,532,000) | ||
Balance, shares at Jun. 30, 2023 | 14,495,621 | |||||||
Balance at Mar. 31, 2023 | $ 24,000 | 11,480,000 | (2,000) | 7,000 | (14,849,000) | (3,340,000) | ||
Balance, shares at Mar. 31, 2023 | 24,495,621 | |||||||
Equity-based compensation | 24,000 | 24,000 | ||||||
Foreign currency translation income (loss) | 1,000 | 1,000 | ||||||
Net Income (loss) | (217,000) | (217,000) | ||||||
Cancellation of shares | $ (10,000) | 10,000 | ||||||
Cancellation of shares, shares | (10,000,000) | |||||||
Balance at Jun. 30, 2023 | $ 14,000 | 11,514,000 | (2,000) | 8,000 | (15,066,000) | (3,532,000) | ||
Balance, shares at Jun. 30, 2023 | 14,495,621 | |||||||
Balance at Dec. 31, 2023 | $ 24,000 | 20,807,000 | (2,000) | 9,000 | (19,280,000) | 1,558,000 | ||
Balance, shares at Dec. 31, 2023 | 24,345,598 | |||||||
Equity-based compensation | 445,000 | 445,000 | ||||||
Shares issued for extinguishment of debt | $ 1,000 | 6,927,000 | 6,928,000 | |||||
Shares issued for extinquishment of debt, shares | 884,942 | |||||||
Warrants issued for note payable extension | 581,000 | 581,000 | ||||||
Foreign currency translation income (loss) | (3,000) | (3,000) | ||||||
Net Income (loss) | (7,014,000) | (7,014,000) | ||||||
Balance at Mar. 31, 2024 | $ 25,000 | 28,760,000 | (2,000) | 6,000 | (26,294,000) | 2,495,000 | ||
Balance, shares at Mar. 31, 2024 | 25,230,540 | |||||||
Balance at Dec. 31, 2023 | $ 24,000 | 20,807,000 | (2,000) | 9,000 | (19,280,000) | 1,558,000 | ||
Balance, shares at Dec. 31, 2023 | 24,345,598 | |||||||
Foreign currency translation income (loss) | ||||||||
Net Income (loss) | (7,951,000) | |||||||
Balance at Jun. 30, 2024 | $ 25,000 | 30,734,000 | (2,000) | 9,000 | (27,231,000) | 3,535,000 | ||
Balance, shares at Jun. 30, 2024 | 25,230,540 | |||||||
Balance at Mar. 31, 2024 | $ 25,000 | 28,760,000 | (2,000) | 6,000 | (26,294,000) | 2,495,000 | ||
Balance, shares at Mar. 31, 2024 | 25,230,540 | |||||||
Equity-based compensation | 1,121,000 | 1,121,000 | ||||||
Warrants issued for note payable extension | 853,000 | 853,000 | ||||||
Foreign currency translation income (loss) | 3,000 | 3,000 | ||||||
Net Income (loss) | (937,000) | (937,000) | ||||||
Balance at Jun. 30, 2024 | $ 25,000 | $ 30,734,000 | $ (2,000) | $ 9,000 | $ (27,231,000) | $ 3,535,000 | ||
Balance, shares at Jun. 30, 2024 | 25,230,540 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cashflow (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2024 | Jun. 30, 2023 | |
Cash Flows From Operating Activities | ||
Net loss | $ (7,951,000) | $ (416,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Amortization of note payable discounts | 859,000 | |
Fair value of equity-based compensation | 230,000 | 24,000 |
Gain on settlement of accounts payable | (23,000) | |
Loss on extinguishment of debt | 6,468,000 | |
Changes in operating assets and liabilities | ||
Prepaid expenses and other current assets | (6,000) | |
Accounts payable and accrued expenses | 20,000 | 243,000 |
Net Cash Used in Operating Activities | (374,000) | (178,000) |
Cash Flows From Investing Activities | ||
Project development cost | (728,000) | (184,000) |
Net Cash Used in Investing Activities | (728,000) | (184,000) |
Cash Flows From Financing Activities | ||
Cash proceeds from issuance of convertible debenture | 100,000 | |
Cost for issuance of convertible debenture | (8,000) | |
Cash proceeds for issuances of notes payable | 1,000,000 | |
Net Cash Provided by Financing Activities | 1,092,000 | |
Effect of exchange rate changes on cash and cash equivalents | 2,000 | |
Net decrease in cash and cash equivalents | (10,000) | (360,000) |
Cash and cash equivalents, beginning of period | 308,000 | 2,067,000 |
Cash and cash equivalents, end of period | 298,000 | 1,707,000 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | ||
Cash paid for income taxes | ||
Non-cash investing and financing activities | ||
Relative fair value of warrants issued with note payable | 1,434,000 | |
Capitalized interest – project development cost | 23,000 | 14,000 |
Accrued Expense – project development cost | 3,000 | |
Equity-based compensation capitalized | 1,339,000 | |
Common stock issued for forgiveness of principal and interest | $ 6,928,000 |
ORGANIZATION AND ACCOUNTING POL
ORGANIZATION AND ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2024 | |
Accounting Policies [Abstract] | |
ORGANIZATION AND ACCOUNTING POLICIES | ORGANIZATION AND ACCOUNTING POLICIES CalEthos, Inc. (the “Company” or “we”) was incorporated on March 20, 2002 under the laws of the State of Nevada. The Company is implementing its plan to build a clean-energy-powered data center operation using the latest energy-efficient building materials and cooling technologies and to provide wholesale colocation services to enterprise IT and hyperscale customers. In addition, the Company may acquire assets and all or part of other companies operating in the high-density computing industry or invest in or joint venture with other more-established companies already in the industry that would add value to the Company’s business strategy. As of July 2022, the Company’s board of directors resolved to focus exclusively on developing a clean-energy-powered data center. Korean entity On November 5, 2021, AIQ System Inc. (“AIQ”) was incorporated in Seoul, Republic of Korea. AIQ is authorized to issue 3 10,000 100,000,000 89,000 100 Basis of Presentation The accompanying Condensed Consolidated Financial Statements and notes thereto are unaudited. The unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and note disclosures normally included in the Company’s annual financial statements have been condensed or omitted. The December 31, 2023 condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. These interim unaudited condensed consolidated financial statements, in the opinion of management, reflect all normal recurring adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the interim six-month periods ended June 30, 2024 and 2023. The results for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the full year ending December 31, 2024 or for any future period. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2023, included in the Company’s annual report on Form 10-K filed with the SEC on April 9, 2024. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary from the formation date. All material intercompany transactions and balances have been eliminated in consolidation. Going Concern and Liquidity The Company incurred a net loss of approximately $ 7,951,000 27,231,000 no The Company’s consolidated financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is subject to a number of risks similar to those of other similar stage companies, including dependence on key individuals; successful development, marketing and branding of services; the uncertainty of product development and generation of revenues; dependence on outside sources of financing; risks associated with research and development; dependence on third-party suppliers and collaborators; protection of intellectual property; and competition with larger, better-capitalized companies. Ultimately, the attainment of profitable operations is dependent on future events, including obtaining adequate financing to fund the Company’s operations and generating a level of revenues adequate to support the Company’s cost structure. The Company will need to raise debt or equity financing in the future in order to continue its operations and achieve its growth targets. However, there can be no assurance that such financing will be available in sufficient amounts and on acceptable terms, when and if needed, or at all. The precise amount and timing of the funding needs cannot be determined accurately at this time, and will depend on a number of factors, including the development of the Company’s data center campus, approvals for construction permits, construction times, delivery of critical equipment, market demand for the Company’s wholesale colocation data center services, the timing of customer commitments for data center space, the management of working capital, and payment terms and conditions for purchase of the Company’s services. The Company believes its cash balances and cash flow from operations will not be sufficient to fund its operations and growth for the next twelve months from the issuance date of these financial statements. If the Company is unable to raise additional funding from investors or through other avenues, it may not be able to continue as a going concern. The accompanying unaudited consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Foreign Currency Translation The financial statements of foreign subsidiaries, for which the functional currency is the local currency, are translated into U.S. dollars using the exchange rate at the consolidated balance sheet date for assets and liabilities and a weighted-average exchange rate during the year for revenue, expenses, gains and losses. Translation adjustments are recorded as other comprehensive income (loss) within shareholders’ equity (deficit). Gains or losses from foreign currency transactions are recognized in the consolidated statements of operations. Fair Value Measurement Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that market participants would use in valuing the asset or liability. There are three levels of inputs that may be used to measure fair value: Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 - Other inputs that are directly or indirectly observable in the marketplace. Level 3 - Unobservable inputs which are supported by little or no market activity. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. As of and for the six months ended June 30, 2024, the Company had no assets or liabilities that require fair value measurement. Cash and Cash Equivalents The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. Cash and cash equivalents are recorded at cost, which approximates their fair value. The Company maintains its cash and cash equivalents in banks insured by the Federal Deposit Insurance Corporation (“FDIC”) in accounts that at times may be in excess of the federally insured limit of $ 250,000 45,000 22,000 Prepaid Expenses Prepaid expenses are assets held by the Company that are expected to be realized and consumed within twelve months after the reporting period. Data Center Cost Data center cost is stated at cost, which includes the cost incurred to complete phase I of the Company’s data center development plan. Phase I costs include the option payment for the land and the cost of consulting firms to provide power and connectivity assessments, feasibility studies, engineering plans, and project benchmarking. Data center cost also includes internal cost such as payroll-related cost and debt interest cost. In accordance with ASC 360-10-35, the Company reviews the carrying amounts of data center cost when events or changes in circumstances indicate the assets may not be recoverable. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. The recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows to be derived from continuing use of the asset or cash-generating unit are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Fair value less costs of disposal is the amount obtainable from the sale of an asset or cash-generating unit in an arm’s length transaction between knowledgeable, willing parties, less the cost of disposal. When a binding sale agreement is not available, fair value less costs of disposal is estimated using a discounted cash flow approach with inputs and assumptions consistent with those of a market participant. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the cash-generating unit is reduced to its recoverable amount. An impairment loss is recognized immediately in net income. As of June 30, 2024, there have been no circumstances to indicate the asset may not be recoverable. See Footnote 7 – Subsequent Events. Related Parties The Company follows Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) section 850-10 for the identification of related parties and disclosure of related-party transactions. Pursuant to ASC section 850-10-20, the related parties include (a.) affiliates of the Company (“Affiliate” means, with respect to any specified Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Person, as such terms are used in and construed under Rule 405 under the Securities Act); (b.) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option of ASC section 825–10–15, to be accounted for by the equity method by the investing entity; (c.) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; (d.) principal owners of the Company; (e.) management of the Company; (f.) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (g.) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. The consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: (a.) the nature of the relationship(s) involved; (b.) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; (c.) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and (d.) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. Commitments and Contingencies The Company follows ASC section 450-20 to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Stock-Based Compensation The Company accounts for its stock-based compensation under ASC 718, “ Compensation – Stock Compensation The Company uses the fair value method for equity instruments granted to non-employees and use the BSM model for measuring the fair value of options. The stock based fair value compensation is determined as of the date of the grant (measurement date) and is recognized over the vesting periods. Earnings Per Share The Company uses ASC 260, “ Earnings Per Share Securities that could potentially dilute loss per share in the future were not included in the computation of diluted loss per share for the six months ended June 30, 2024 and 2023 because their inclusion would be anti-dilutive. Common stock equivalents amounted to 6,145,801 7,510,448 Recent Accounting Pronouncements The Company’s management reviewed all recently-issued accounting standard updates (“ASU’s”) not yet adopted by the Company and does not believe the future adoptions of any such ASU’s may be expected to cause a material impact on the Company’s consolidated financial condition or the results of its operations. |
DATA CENTER COSTS
DATA CENTER COSTS | 6 Months Ended |
Jun. 30, 2024 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
DATA CENTER COSTS | Note 2 – Data Center Costs DATA CENTER COSTS On March 30, 2023, the Company signed an option agreement to acquire 80 3,360,000 84,000 84,000 84,000 The Purchase Price is payable with a cash payment of $ 1,680,000 840,000 1.00 840,000 2.0 If the Purchase Shares are issued at the Closing Date, the Company has agreed to repurchase the Purchase Shares (the “Put Option”) under specific circumstances. However, the Put Option expires if the Company’s common stock trades above $2.00 per share for 120 consecutive days. If the Company’s common stock trades below $2.00 per share for 10 consecutive days, the Holder has the option for the Company to repurchase the Purchase Shares for $2.00 per share As of June 30, 2024, the Company has incurred costs of approximately $ 4,158,000 219,000 |
NOTES PAYABLE
NOTES PAYABLE | 6 Months Ended |
Jun. 30, 2024 | |
Notes Payable | |
NOTES PAYABLE | Note 3 – Notes Payable NOTES PAYABLE Notes payable transactions for the six months ended June 30, 2024 are summarized as follows: SCHEDULE OF NOTES PAYABLE Balance, beginning of the period $ 11,000 Additions 1,000,000 Balance, end of the period $ 1,011,000 Discount Balance, beginning of the period - Additions $ 1,434,000 Amortization 859,000 Balance, end of the period 575,000 Net carrying amount $ 436,000 In February 2024, the Company issued a promissory note (“Promissory Note”) in the principal amount of $ 1,000,000 10 five 200,000 0.50 In accordance with ASC 470 - Debt 1,000,000 of cash proceeds on a relative fair value to the Promissory Note and the Finance Warrant. The Finance Warrant was valued using the Black Scholes option pricing model for a total fair value of approximately $ 1,389,000 based on a 2.5 -year term, volatility of 159 % , a risk-free equivalent yield of 4.1 %, and a stock price of $ 7.21 . The Finance Warrant was ascribed a relative fair value of approximately $ 581,000 . As of June 30, 2024, the Company had amortized approximately $ 581,000 On the Maturity Date, the holder of the Promissory Note agreed to extend the Maturity Date to August 31, 2024 (“Extension”). As consideration for the Extension, the Company issued to the holder a warrant to purchase 300,000 3.50 The Extension Warrant was valued using the Black Scholes option pricing model for a total fair value of approximately $ 853,000 2.5 163 4.3 3.5 853,000 278,000 Interest expense on the Promissory Note amounted to $ 35,000 6,000 21,000 nil |
CONVERTIBLE DEBENTURES
CONVERTIBLE DEBENTURES | 6 Months Ended |
Jun. 30, 2024 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE DEBENTURES | Note 4 – Convertible Debentures CONVERTIBLE DEBENTURES Convertible debentures transactions for the six months ended June 30, 2024 are summarized as follows: SCHEDULE OF CONVERTIBLE DEBENTURES Principal Balance, beginning of period $ 341,000 Additions 100,000 Conversions (341,000 ) Balance, end of period $ 100,000 Debt issuance cost Balance, beginning of period $ - Additions 8,000 Amortization - Balance, end of period $ 8,000 Net book value $ 92,000 In June 2024, the Company issued a convertible debenture in the amount of $ 100,000 92,000 8,000 10.0 15.0 2.00 In accordance with the Debenture, the Company has the right to prepay the Debenture upon providing 45 days of its intention to prepay. The outstanding principal amount of the Debenture and all accrued interest thereon shall automatically be converted into shares of common stock at the then effective conversion price upon (i) the close of business on the sixtieth (60th) consecutive day on which the VWAP of the Company’s common stock is at least $ 4.00 In December 2023, the Company offered the holders of the Company’s outstanding convertible promissory notes in the aggregate principal amount of $ 341,000 0.51 to $ 0.54 per share. During the three months ended March 31, 2024, the Company converted principal and interest of approximately $ 341,000 and $ 119,000 , respectively (a total of $ 460,000 ), for 884,942 shares of the Company’s common stock with a fair market value of approximately $ 6,928,000 as of the dates of conversion. As the terms of the conversion were not in accordance with the original conversion feature, the holders of such notes did not provide any concession to the Company, and there was not an inducement to the holders to convert. As the offer did not have a time limit, the Company has accounted for the conversion in accordance with ASC 470-50-40-4. The difference between the fair value of the consideration paid of approximately $ 6,928,000 and the liability of $ 460,000 was approximately $ 6,468,000 , which was accounted for as a loss on liability settlement. The loss on the settlement was recorded as a loss on extinguishment of debt on the statement of operations for the three months ended March 31, 2024. Interest expense on these notes payable amounted to $ 4,000 229,000 2,000 nil, respectively, |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Note 5 – Commitments and Contingencies COMMITMENTS AND CONTINGENCIES Litigation From time to time, the Company may become subject to legal proceedings, claims and litigation arising in the ordinary course of business. The Company is not currently a party to any material legal proceedings, nor is the Company aware of any pending or threatened litigation that would have a material adverse effect on the Company’s business, operating results, cash flows or financial condition should such litigation be resolved unfavorably. Employment Agreement Chief Operating Officer In June 2023, the Company executed an employment agreement (“Employment Agreement”) to employ an individual to be the Company’s President and Chief Operating Officer (“Executive”). As compensation for services rendered, the Executive will be paid a base salary of $ 250,000 1) when the necessary governmental permits are granted to start construction of the Company’s initial data center, 2) once the initial data center is operational and at least 25% of the planned megawatts of collation capacity is leased. Also, at the discretion of the Company, following each calendar year of continued employment, the Executive shall be eligible to receive a discretionary bonus of up to fifty percent (50%) of Executive’s base salary during the first year of employment, up to seventy-five percent (75%) of Executive’s then-current base salary during the second year of employment, and up to one-hundred percent (100%) of Executive’s then-current base salary during Executive’s third year of employment. Payment of any bonus will be based on achieving certain goals and performance criteria established by the Company 600,000 1,900,000 The Employment Agreement also provides for certain severance benefits upon termination of the Executive by the Company without “cause” or by the Executive for good reason. In the event of a termination by the Company without cause or by the Executive for good reason after the first full year of employment, the Executive would be entitled to (i) continued payment of the base salary for the lesser of six months or the remaining term of the Employment Agreement, subject to the Executive signing a timely and effective separation agreement containing a release of all claims against the Company and other customary terms. Vice President of Data Center Development On March 1, 2024, the Company hired an individual as vice president of data center development with an annual salary of $ 225,000 . The salary increases to $ 240,000 and $ 250,000 on the first and second anniversary dates, respectively. Also, the individual is eligible for an annual bonus of up to 25%, 35% and 40% of the annual salary for the first, second and third calendar years, respectively. Chief Strategy and Development Officer On April 1, 2024, the Company hired an individual as chief strategy and development officer vice president with an annual salary of $ 250,000 . The salary increases to $ 275,000 and $ 300,000 on the first and second anniversary dates, respectively. Also, the individual is eligible for an annual bonus of up to 25%, 35% and 40% of the annual salary for the first, second and third calendar years, respectively . |
STOCKHOLDERS EQUITY
STOCKHOLDERS EQUITY | 6 Months Ended |
Jun. 30, 2024 | |
Equity [Abstract] | |
STOCKHOLDERS EQUITY | Note 6 – Stockholders Equity STOCKHOLDERS EQUITY Stock Options As part of the offer letter executed on April 1, 2024 for the Chief Strategy and Development officer, the Company award a non-qualified stock option to purchase 1,000,000 2.62 The 1,000,000 ● 168,750 ● 168,750 st nd rd ● Phase (a) 32,500 ● Phase (b) 65,000 ● Phase (c) 32,500 ● Phase (d) 65,000 ● Phase (e) 130,000 The Company’s management has accounted for the options in accordance with ASC 718 – Stock Compensation (“ASC 718”). ASC 718 requires the Company to estimate the service period over which the compensation cost will be recognized. Management has estimated that the first development phase (a) will be completed by December 31, 2024, the second development phase (b) by March 31, 2025, the third development phase (c) by July 1, 2025, and the fourth and fifth development phases (d) and (e) by December 31, 2026. The estimated service period will be adjusted for actual and expected completion date changes. Any such change will be recognized prospectively, and the remaining deferred compensation will be recognized over the remaining service period. The option grant date fair value of $ 2,437,000 was calculated using the Black Scholes fair value option-pricing model with key input variables provided by management, as of the date of issuance: volatility range 166.28 % to 243.04 %, the fair value of common stock $ 2.62 , estimated life range 2.38 to 5.0 years, risk-free rate of range 4.34 % to 4.72 % and dividend rate of nil . For the six months ended June 30, 2024, the Company recorded compensation expenses of approximately $ 1,339,000 , which was capitalized as data center cost. Stock option grant activity for the six months ended June 30, 2024, was as follows: SCHEDULE OF STOCK OPTION ACTIVITIES Number of Weighted Weighted Weighted Aggregate Balance, December 31, 2023 6,854,000 $ 0.53 7.00 $ 0.51 $ 0.44 Granted 1,000,000 2.62 7.00 2.44 1.29 Forfeited - - - - - Exercised - - - - - Expired - - - - - Balance, June 30, 2024 7,854,000 0.79 7.00 0.75 2.71 Vested and exercisable, June 30, 2024 2,406,083 0.68 7.00 0.66 2.82 Unvested, June 30, 2024 5,447,917 $ 0.84 7.00 $ 0.79 $ 2.66 Warrant grant activity for the six months ended June 30, 2024, was as follows: SCHEDULE OF WARRANTS ACTIVITY Number of Weighted Weighted Weighted Aggregate Balance, December 31, 2023 5,645,801 $ 1.84 3.00 $ 1.49 $ - Granted 500,000 2.30 4.8 2.9 1.20 Forfeited - - - - - Exercised - - - - - Expired - - - - - Balance, June 30, 2024 6,145,801 0.54 4.2 0.59 2.8 Vested and exercisable, June 30, 2024 6,145,801 0.54 4.2 0.59 2.8 Unvested, June 30, 2024 - $ - - $ - $ - |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2024 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | Note 7 – Subsequent Events SUBSEQUENT EVENTS The Company evaluated all events that occurred after the balance sheet date through the date the financial statements were issued to determine if they must be reported. The management determined there are no reportable events except for the following: On July 22, 2024, the Company entered into an option agreement (“Option 315”) to acquire for a purchase price of $ 5,000,000 315 50,000 75,000 On July 24, 2024, the Company terminated the Option to acquire a 80 |
ORGANIZATION AND ACCOUNTING P_2
ORGANIZATION AND ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2024 | |
Accounting Policies [Abstract] | |
Korean entity | Korean entity On November 5, 2021, AIQ System Inc. (“AIQ”) was incorporated in Seoul, Republic of Korea. AIQ is authorized to issue 3 10,000 100,000,000 89,000 100 |
Basis of Presentation | Basis of Presentation The accompanying Condensed Consolidated Financial Statements and notes thereto are unaudited. The unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and note disclosures normally included in the Company’s annual financial statements have been condensed or omitted. The December 31, 2023 condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. These interim unaudited condensed consolidated financial statements, in the opinion of management, reflect all normal recurring adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the interim six-month periods ended June 30, 2024 and 2023. The results for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the full year ending December 31, 2024 or for any future period. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2023, included in the Company’s annual report on Form 10-K filed with the SEC on April 9, 2024. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary from the formation date. All material intercompany transactions and balances have been eliminated in consolidation. |
Going Concern and Liquidity | Going Concern and Liquidity The Company incurred a net loss of approximately $ 7,951,000 27,231,000 no The Company’s consolidated financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is subject to a number of risks similar to those of other similar stage companies, including dependence on key individuals; successful development, marketing and branding of services; the uncertainty of product development and generation of revenues; dependence on outside sources of financing; risks associated with research and development; dependence on third-party suppliers and collaborators; protection of intellectual property; and competition with larger, better-capitalized companies. Ultimately, the attainment of profitable operations is dependent on future events, including obtaining adequate financing to fund the Company’s operations and generating a level of revenues adequate to support the Company’s cost structure. The Company will need to raise debt or equity financing in the future in order to continue its operations and achieve its growth targets. However, there can be no assurance that such financing will be available in sufficient amounts and on acceptable terms, when and if needed, or at all. The precise amount and timing of the funding needs cannot be determined accurately at this time, and will depend on a number of factors, including the development of the Company’s data center campus, approvals for construction permits, construction times, delivery of critical equipment, market demand for the Company’s wholesale colocation data center services, the timing of customer commitments for data center space, the management of working capital, and payment terms and conditions for purchase of the Company’s services. The Company believes its cash balances and cash flow from operations will not be sufficient to fund its operations and growth for the next twelve months from the issuance date of these financial statements. If the Company is unable to raise additional funding from investors or through other avenues, it may not be able to continue as a going concern. The accompanying unaudited consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. |
Foreign Currency Translation | Foreign Currency Translation The financial statements of foreign subsidiaries, for which the functional currency is the local currency, are translated into U.S. dollars using the exchange rate at the consolidated balance sheet date for assets and liabilities and a weighted-average exchange rate during the year for revenue, expenses, gains and losses. Translation adjustments are recorded as other comprehensive income (loss) within shareholders’ equity (deficit). Gains or losses from foreign currency transactions are recognized in the consolidated statements of operations. |
Fair Value Measurement | Fair Value Measurement Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that market participants would use in valuing the asset or liability. There are three levels of inputs that may be used to measure fair value: Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 - Other inputs that are directly or indirectly observable in the marketplace. Level 3 - Unobservable inputs which are supported by little or no market activity. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. As of and for the six months ended June 30, 2024, the Company had no assets or liabilities that require fair value measurement. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. Cash and cash equivalents are recorded at cost, which approximates their fair value. The Company maintains its cash and cash equivalents in banks insured by the Federal Deposit Insurance Corporation (“FDIC”) in accounts that at times may be in excess of the federally insured limit of $ 250,000 45,000 22,000 |
Prepaid Expenses | Prepaid Expenses Prepaid expenses are assets held by the Company that are expected to be realized and consumed within twelve months after the reporting period. |
Data Center Cost | Data Center Cost Data center cost is stated at cost, which includes the cost incurred to complete phase I of the Company’s data center development plan. Phase I costs include the option payment for the land and the cost of consulting firms to provide power and connectivity assessments, feasibility studies, engineering plans, and project benchmarking. Data center cost also includes internal cost such as payroll-related cost and debt interest cost. In accordance with ASC 360-10-35, the Company reviews the carrying amounts of data center cost when events or changes in circumstances indicate the assets may not be recoverable. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. The recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows to be derived from continuing use of the asset or cash-generating unit are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Fair value less costs of disposal is the amount obtainable from the sale of an asset or cash-generating unit in an arm’s length transaction between knowledgeable, willing parties, less the cost of disposal. When a binding sale agreement is not available, fair value less costs of disposal is estimated using a discounted cash flow approach with inputs and assumptions consistent with those of a market participant. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the cash-generating unit is reduced to its recoverable amount. An impairment loss is recognized immediately in net income. As of June 30, 2024, there have been no circumstances to indicate the asset may not be recoverable. See Footnote 7 – Subsequent Events. |
Related Parties | Related Parties The Company follows Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) section 850-10 for the identification of related parties and disclosure of related-party transactions. Pursuant to ASC section 850-10-20, the related parties include (a.) affiliates of the Company (“Affiliate” means, with respect to any specified Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Person, as such terms are used in and construed under Rule 405 under the Securities Act); (b.) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option of ASC section 825–10–15, to be accounted for by the equity method by the investing entity; (c.) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; (d.) principal owners of the Company; (e.) management of the Company; (f.) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (g.) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. The consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: (a.) the nature of the relationship(s) involved; (b.) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; (c.) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and (d.) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. |
Commitments and Contingencies | Commitments and Contingencies The Company follows ASC section 450-20 to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for its stock-based compensation under ASC 718, “ Compensation – Stock Compensation The Company uses the fair value method for equity instruments granted to non-employees and use the BSM model for measuring the fair value of options. The stock based fair value compensation is determined as of the date of the grant (measurement date) and is recognized over the vesting periods. |
Earnings Per Share | Earnings Per Share The Company uses ASC 260, “ Earnings Per Share Securities that could potentially dilute loss per share in the future were not included in the computation of diluted loss per share for the six months ended June 30, 2024 and 2023 because their inclusion would be anti-dilutive. Common stock equivalents amounted to 6,145,801 7,510,448 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company’s management reviewed all recently-issued accounting standard updates (“ASU’s”) not yet adopted by the Company and does not believe the future adoptions of any such ASU’s may be expected to cause a material impact on the Company’s consolidated financial condition or the results of its operations. |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Notes Payable | |
SCHEDULE OF NOTES PAYABLE | Notes payable transactions for the six months ended June 30, 2024 are summarized as follows: SCHEDULE OF NOTES PAYABLE Balance, beginning of the period $ 11,000 Additions 1,000,000 Balance, end of the period $ 1,011,000 Discount Balance, beginning of the period - Additions $ 1,434,000 Amortization 859,000 Balance, end of the period 575,000 Net carrying amount $ 436,000 |
CONVERTIBLE DEBENTURES (Tables)
CONVERTIBLE DEBENTURES (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Debt Disclosure [Abstract] | |
SCHEDULE OF CONVERTIBLE DEBENTURES | Convertible debentures transactions for the six months ended June 30, 2024 are summarized as follows: SCHEDULE OF CONVERTIBLE DEBENTURES Principal Balance, beginning of period $ 341,000 Additions 100,000 Conversions (341,000 ) Balance, end of period $ 100,000 Debt issuance cost Balance, beginning of period $ - Additions 8,000 Amortization - Balance, end of period $ 8,000 Net book value $ 92,000 |
STOCKHOLDERS EQUITY (Tables)
STOCKHOLDERS EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Equity [Abstract] | |
SCHEDULE OF STOCK OPTION ACTIVITIES | Stock option grant activity for the six months ended June 30, 2024, was as follows: SCHEDULE OF STOCK OPTION ACTIVITIES Number of Weighted Weighted Weighted Aggregate Balance, December 31, 2023 6,854,000 $ 0.53 7.00 $ 0.51 $ 0.44 Granted 1,000,000 2.62 7.00 2.44 1.29 Forfeited - - - - - Exercised - - - - - Expired - - - - - Balance, June 30, 2024 7,854,000 0.79 7.00 0.75 2.71 Vested and exercisable, June 30, 2024 2,406,083 0.68 7.00 0.66 2.82 Unvested, June 30, 2024 5,447,917 $ 0.84 7.00 $ 0.79 $ 2.66 |
SCHEDULE OF WARRANTS ACTIVITY | Warrant grant activity for the six months ended June 30, 2024, was as follows: SCHEDULE OF WARRANTS ACTIVITY Number of Weighted Weighted Weighted Aggregate Balance, December 31, 2023 5,645,801 $ 1.84 3.00 $ 1.49 $ - Granted 500,000 2.30 4.8 2.9 1.20 Forfeited - - - - - Exercised - - - - - Expired - - - - - Balance, June 30, 2024 6,145,801 0.54 4.2 0.59 2.8 Vested and exercisable, June 30, 2024 6,145,801 0.54 4.2 0.59 2.8 Unvested, June 30, 2024 - $ - - $ - $ - |
ORGANIZATION AND ACCOUNTING P_3
ORGANIZATION AND ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||||||
Nov. 05, 2021 | Jun. 30, 2024 | Mar. 31, 2024 | Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | |
Number of common shares authorized to issued | 100,000,000 | 100,000,000 | 100,000,000 | |||||
Number of shares issued, value | $ 6,928,000 | |||||||
Net loss | $ 937,000 | $ 7,014,000 | $ 217,000 | $ 199,000 | $ 7,951,000 | $ 416,000 | ||
Accumulated deficit | 27,231,000 | 27,231,000 | $ 19,280,000 | |||||
Recurring revenue from operation | 0 | |||||||
Cash, FDIC insured amount | 250,000 | 250,000 | ||||||
Prepaid insurance | $ 45,000 | $ 45,000 | $ 22,000 | |||||
Potentially dilute loss per share | 6,145,801 | 7,510,448 | ||||||
KOREA, REPUBLIC OF | ||||||||
Number of shares issued | 10,000 | |||||||
AIQ System Inc. [Member] | ||||||||
Number of common shares authorized to issued | 3,000,000 | |||||||
AIQ System Inc. [Member] | KOREA, REPUBLIC OF | ||||||||
Number of shares issued | 100,000,000 | |||||||
Number of shares issued, value | $ 89,000 | |||||||
Ownership percentage | 100% |
DATA CENTER COSTS (Details Narr
DATA CENTER COSTS (Details Narrative) | 6 Months Ended | ||
Mar. 30, 2023 USD ($) a $ / shares shares | Jun. 30, 2024 USD ($) | Dec. 31, 2023 USD ($) | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Purchase price payable with issuance of share | $ 436,000 | $ 11,000 | |
Development costs | 4,158,000 | ||
Interest expense | $ 219,000 | ||
Option Agreement [Member] | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Number of acres of commercially zoned land | a | 80 | ||
Purchase price | $ 3,360,000 | ||
Non-refundable deposit | 84,000 | ||
Escrow funds | 84,000 | ||
Purchase price payable with cash payment | $ 1,680,000 | ||
Purchase price payable with issuance of share | shares | 840,000 | ||
Shares issued price per share | $ / shares | $ 1 | ||
Purchase price payable with issuance of share | $ 840,000 | ||
Repurchase description of shares | However, the Put Option expires if the Company’s common stock trades above $2.00 per share for 120 consecutive days. If the Company’s common stock trades below $2.00 per share for 10 consecutive days, the Holder has the option for the Company to repurchase the Purchase Shares for $2.00 per share | ||
Option Agreement [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Interest rate, stated percentage | 2% |
SCHEDULE OF NOTES PAYABLE (Deta
SCHEDULE OF NOTES PAYABLE (Details) - USD ($) | 1 Months Ended | 6 Months Ended |
Jun. 30, 2024 | Jun. 30, 2024 | |
Short-Term Debt [Line Items] | ||
Additions | $ 8,000 | |
Notes Payable [Member] | ||
Short-Term Debt [Line Items] | ||
Balance, beginning of the period | $ 11,000 | |
Additions | 1,000,000 | |
Balance, end of the period | 1,011,000 | 1,011,000 |
Balance, beginning of the period | ||
Additions | 1,434,000 | |
Amortization | 859,000 | |
Balance, end of the period | 575,000 | 575,000 |
Net carrying amount | $ 436,000 | $ 436,000 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | 6 Months Ended | |||
Aug. 31, 2024 | Feb. 29, 2024 | Jun. 30, 2024 | Jun. 30, 2023 | |
Short-Term Debt [Line Items] | ||||
Long-Term Debt, Fair Value | $ 1,000,000 | |||
Granted option fair value | $ 1,389,000 | |||
Estimated life | 2 years 6 months | |||
Volatality percentage | 159% | |||
Risk-free equivalent yield | 4.10% | |||
Share price | $ 7.21 | |||
Warrant was ascribed a relative fair value | $ 581,000 | $ 581,000 | ||
Warrant was ascribed a relative fair value | 278,000 | |||
Capitalized as data center development cost | 21,000 | |||
Forecast [Member] | ||||
Short-Term Debt [Line Items] | ||||
Granted option fair value | $ 853,000 | |||
Estimated life | 2 years 6 months | |||
Volatality percentage | 163% | |||
Risk-free equivalent yield | 4.30% | |||
Share price | $ 3.5 | |||
Warrant was ascribed a relative fair value | $ 853,000 | |||
Promissory Note [Member] | ||||
Short-Term Debt [Line Items] | ||||
Debt instrument face amount | $ 1,000,000 | |||
Debt instrument interest rate | 10% | |||
Warrant term | 5 years | |||
Number of purchase warrant | 200,000 | |||
Warrant exercise price | $ 0.50 | |||
Interest expense, debt | $ 35,000 | $ 6,000 | ||
Extension Warrant [Member] | Forecast [Member] | ||||
Short-Term Debt [Line Items] | ||||
Number of purchase warrant | 300,000 | |||
Warrant exercise price | $ 3.50 |
SCHEDULE OF CONVERTIBLE DEBENTU
SCHEDULE OF CONVERTIBLE DEBENTURES (Details) - USD ($) | 1 Months Ended | 6 Months Ended |
Jun. 30, 2024 | Jun. 30, 2024 | |
Short-Term Debt [Line Items] | ||
Additions | $ 8,000 | |
Convertible Notes Payable [Member] | ||
Short-Term Debt [Line Items] | ||
Balance, beginning of period | $ 341,000 | |
Additions | 100,000 | |
Conversions | (341,000) | |
Balance, end of period | 100,000 | 100,000 |
Balance, beginning of the period | ||
Additions | 8,000 | |
Amortization | ||
Balance, end of the period | 8,000 | 8,000 |
Net carrying amount | $ 92,000 | $ 92,000 |
CONVERTIBLE DEBENTURES (Details
CONVERTIBLE DEBENTURES (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2024 | Mar. 31, 2024 | Mar. 31, 2024 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | |
Short-Term Debt [Line Items] | ||||||
Convertible promissory notes aggregate principal amount | $ 100,000 | $ 100,000 | $ 341,000 | |||
Convertible debt noncurrent | 92,000 | $ 92,000 | ||||
Debt instrument unamortized discount additions | $ 8,000 | |||||
Common stock conversion per share | $ 2 | $ 2 | ||||
Payment for liability settlement | $ 6,928,000 | |||||
Data center cost | $ 4,158,000 | |||||
Convertible Notes Payable [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Default interest expense | 4,000 | $ 229,000 | ||||
Data center cost | $ 2,000 | |||||
Liability [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Payment for liability settlement | 460,000 | |||||
Loss on Liability Settlement [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Payment for liability settlement | 6,468,000 | |||||
Promissory Note [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Debt Instrument, Face Amount | $ 341,000 | $ 341,000 | ||||
Debt Instrument, Periodic Payment, Interest | 119,000 | |||||
Debt Instrument, Periodic Payment | $ 460,000 | |||||
Debt Conversion, Converted Instrument, Shares Issued | 884,942 | |||||
Debt Conversion, Original Debt, Amount | $ 6,928,000 | |||||
Minimum [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Debenture bears interest | 10% | 10% | ||||
Common stock conversion per share | $ 4 | $ 4 | ||||
Minimum [Member] | Promissory Note [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Debt Instrument, Convertible, Conversion Price | $ 0.51 | |||||
Maximum [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Debenture bears interest | 15% | 15% | ||||
Maximum [Member] | Promissory Note [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Debt Instrument, Convertible, Conversion Price | $ 0.54 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 1 Months Ended | 6 Months Ended | ||
Apr. 01, 2024 | Mar. 01, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | |
Loss Contingencies [Line Items] | ||||
Employee salary compensation | 1) when the necessary governmental permits are granted to start construction of the Company’s initial data center, 2) once the initial data center is operational and at least 25% of the planned megawatts of collation capacity is leased. Also, at the discretion of the Company, following each calendar year of continued employment, the Executive shall be eligible to receive a discretionary bonus of up to fifty percent (50%) of Executive’s base salary during the first year of employment, up to seventy-five percent (75%) of Executive’s then-current base salary during the second year of employment, and up to one-hundred percent (100%) of Executive’s then-current base salary during Executive’s third year of employment. Payment of any bonus will be based on achieving certain goals and performance criteria established by the Company | |||
Incentive Option [Member] | ||||
Loss Contingencies [Line Items] | ||||
Share option granted to purchase | 600,000 | |||
Non Qual Option [Member] | ||||
Loss Contingencies [Line Items] | ||||
Share option granted to purchase | 1,900,000 | |||
Chief Executive Officer [Member] | ||||
Loss Contingencies [Line Items] | ||||
Base salary | $ 250,000 | |||
Vice President [Member] | ||||
Loss Contingencies [Line Items] | ||||
Base salary | $ 225,000 | |||
Annual bonus description | Also, the individual is eligible for an annual bonus of up to 25%, 35% and 40% of the annual salary for the first, second and third calendar years, respectively. | |||
Vice President [Member] | Minimum [Member] | ||||
Loss Contingencies [Line Items] | ||||
Base salary | $ 240,000 | |||
Vice President [Member] | Maximum [Member] | ||||
Loss Contingencies [Line Items] | ||||
Base salary | $ 250,000 | |||
Chief Strategy and Development Officer [Member] | ||||
Loss Contingencies [Line Items] | ||||
Base salary | $ 250,000 | |||
Annual bonus description | Also, the individual is eligible for an annual bonus of up to 25%, 35% and 40% of the annual salary for the first, second and third calendar years, respectively | |||
Chief Strategy and Development Officer [Member] | Minimum [Member] | ||||
Loss Contingencies [Line Items] | ||||
Base salary | 275,000 | |||
Chief Strategy and Development Officer [Member] | Maximum [Member] | ||||
Loss Contingencies [Line Items] | ||||
Base salary | $ 300,000 |
SCHEDULE OF STOCK OPTION ACTIVI
SCHEDULE OF STOCK OPTION ACTIVITIES (Details) - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2024 | Dec. 31, 2023 | |
Equity [Abstract] | ||
Number of Number of Stock Option Shares, Outstanding, Beginning Balance | 6,854,000 | |
Exercise Price Range Per Share, Outstanding, Beginning | $ 0.53 | |
Weighted Average Remaining Contractual Term (Years) | 7 years | 7 years |
Relative Fair Value, Outstanding, Beginning | $ 0.51 | |
Aggregate Intrinsic Value, Beginning Balance | $ 0.44 | |
Number of Stock Option Shares, Granted | 1,000,000 | |
Exercise Price Range Per Share, Granted | $ 2.62 | |
Weighted Average Remaining Contractual Term (Years), Granted | 7 years | |
Relative Fair Value, Granted | $ 2.44 | |
Aggregate Intrinsic Value, Granted | $ 1.29 | |
Number of Stock Option Shares, Forfeited | ||
Exercise Price Range Per Share, Forfeited | ||
Weighted Average Grant Date Fair Value, Forfeited | ||
Aggregate Intrinsic Value per share, Forfeited | ||
Number of stock option shares, exercised | ||
Exercise Price Range Per Share, Exercised | ||
Weighted Average Grant Date Fair Value, Exercised | ||
Aggregate Intrinsic Value per share, Exercised | ||
Number of Stock Option Shares, Expired | ||
Exercise Price Range Per Share, Expired | ||
Weighted Average Grant Date Fair Value, Expired | ||
Aggregate Intrinsic Value per share, Expired | ||
Number of Stock Option Shares, Outstanding, Ending Balance | 7,854,000 | 6,854,000 |
Weighted Average Strike Price, Ending | $ 0.79 | $ 0.53 |
Weighted Average Grant Date Fair Value, Ending | 0.75 | 0.51 |
Aggregate Intrinsic Value per share, Ending Balance | $ 2.71 | $ 0.44 |
Number of Stock Option, Vested and Exercisable, Ending Balance | 2,406,083 | |
Exercise Price Range Per Share, Vested and Exercisable | $ 0.68 | |
Weighted Average Remaining Contractual Term (Years) Vested And Exercisable | 7 years | |
Weighted Average Grant Date Fair Value, Vested and Exercisable | $ 0.66 | |
Aggregate Intrinsic Value per share , Unvested and Exercisable | $ 2.82 | |
Number of Stock Option, Unvested, Ending Balance | 5,447,917 | |
Exercise Price Range Per Share, Unvested | $ 0.84 | |
Weighted Average Remaining Contractual Term (Years) Unvested | 7 years | |
Weighted Average Grant Date Fair Value, Unvested | $ 0.79 | |
Aggregate Intrinsic Value per share, Unvested | $ 2.66 |
SCHEDULE OF WARRANTS ACTIVITY (
SCHEDULE OF WARRANTS ACTIVITY (Details) - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2024 | Dec. 31, 2023 | |
Equity [Abstract] | ||
Number of warrants issued, Outstanding, Beginning of period | 5,645,801 | |
Weighted Average Strike Price/Share, Outstanding, Beginning of period | $ 1.84 | |
Weighted Average Remaining Contractual Term (Years) | 4 years 2 months 12 days | 3 years |
Weighted Average Grant Date Fair Value/Share, Ending of period | $ 1.49 | |
Aggregate intrinsic value, Beginning of period | ||
Number of warrants issued, Granted | 500,000 | |
Weighted Average Strike Price/Share, Granted | $ 2.30 | |
Weighted Average Remaining Contractual Term (Years), Granted | 4 years 9 months 18 days | |
Weighted Average Grant Date Fair Value/Share, Granted | $ 2.9 | |
Aggregate intrinsic value, Granted | $ 1.20 | |
Number of warrants issued, Forfeited | ||
Weighted Average Strike Price/Share, Forfeited | ||
Weighted Average Grant Date Fair Value/Share, forfeited | ||
Aggregate intrinsic value, forfeited | ||
Number of warrants issued, Exercised | ||
Weighted Average Strike Price/Share, Exercised | ||
Weighted Average Grant Date Fair Value/Share, Exercised | ||
Aggregate intrinsic value, Exercised | ||
Number of warrants issued, Expired | ||
Weighted Average Strike Price/Share, Expired | ||
Weighted Average Grant Date Fair Value/Share, Expired | ||
Aggregate intrinsic value, Expired | ||
Number of warrants issued, Outstanding, Ending of period | 6,145,801 | 5,645,801 |
Weighted Average Strike Price/Share, Outstanding, Beginning of period | $ 0.54 | $ 1.84 |
Weighted Average Grant Date Fair Value/Share, ending balance | 0.59 | $ 1.49 |
Aggregate intrinsic value, ending balance | $ 2.8 | |
Number of warrants issued, Vested and Exercisable, Ending of period | 6,145,801 | |
Weighted Average Strike Price/Share, Vested and Exercisable, Ending of period | 0.54 | |
Weighted Average Remaining Contractual Term (Years) Vested And Exercisable | 4 years 2 months 12 days | |
Weighted Average Grant Date Fair Value/Share, Vested and Exercisable, Ending of period | 0.59 | |
Aggregate intrinsic value, Vested and Exercisable, Ending of period | $ 2.8 | |
Number of warrants issued, Unvested, Ending of period | ||
Weighted Average Strike Price/Share, Unvested, Ending of period | ||
Weighted Average Grant Date Fair Value/Share, Unvested, Ending of period | ||
Aggregate intrinsic value, Unvested, Ending of period |
STOCKHOLDERS EQUITY (Details Na
STOCKHOLDERS EQUITY (Details Narrative) - USD ($) | 6 Months Ended | ||
Apr. 01, 2024 | Feb. 29, 2024 | Jun. 30, 2024 | |
Issuance of stock options | 1,000,000 | ||
Common stock per share | $ 2.62 | ||
Granted option fair value | $ 1,389,000 | ||
Volatility range, minimum | 159% | ||
Fair value of common stock | $ 7.21 | ||
Estimated life range | 2 years 6 months | ||
Equity Option [Member] | Initial Site Development Plan [Member] | |||
Options vest | 65,000 | ||
Equity Option [Member] | GMP Contract [Member] | |||
Options vest | 32,500 | ||
Equity Option [Member] | Data Center Site and Facilities [Member] | |||
Options vest | 32,500 | ||
Equity Option [Member] | First Data Center [Member] | |||
Options vest | 65,000 | ||
Equity Option [Member] | Customer Ready Data Center Facility [Member] | |||
Options vest | 130,000 | ||
Chief Strategy and Development Officer [Member] | |||
Issuance of stock options | 1,000,000 | ||
Common stock per share | $ 2.62 | ||
Options vest | 1,000,000 | ||
Granted option fair value | $ 2,437,000 | ||
Volatility range, minimum | 166.28% | ||
Volatility range, maximum | 243.04% | ||
Fair value of common stock | $ 2.62 | ||
Dividend rate | $ 0 | ||
Stock-based compensation | $ 1,339,000 | ||
Chief Strategy and Development Officer [Member] | Minimum [Member] | |||
Estimated life range | 2 years 4 months 17 days | ||
Risk-free rate of range, maximum | 4.34% | ||
Chief Strategy and Development Officer [Member] | Maximum [Member] | |||
Estimated life range | 5 years | ||
Risk-free rate of range, maximum | 4.72% | ||
Chief Strategy and Development Officer [Member] | Equity Option [Member] | |||
Options vest | 168,750 | ||
Chief Strategy and Development Officer [Member] | Equity Option [Member] | First Anniversary [Member] | |||
Options vest | 168,750 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - Option Agreement [Member] | Jul. 22, 2024 USD ($) a | Mar. 30, 2023 USD ($) | Jul. 24, 2024 a |
Subsequent Event [Line Items] | |||
Purchase price | $ 3,360,000 | ||
Non-refundable deposit | $ 84,000 | ||
Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Purchase price | $ 5,000,000 | ||
Number of acres land in imperial country | a | 315 | 80 | |
Non-refundable deposit | $ 50,000 | ||
Repayments of Debt | $ 75,000 |