The following discussion and analysis of the results of operations and financial condition of the Company for the quarters ended February 28, 2022, and 2021, should be read in conjunction with the other sections of this Quarterly Report, including the Financial Statements and notes thereto of the Company included in this Quarterly Report. The various sections of this discussion contain forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this Quarterly Report as well as other matters over which we have no control. See "Cautionary Note Regarding Forward-Looking Statements." Our actual results may differ materially. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report.





Overview

By a written consent dated July 16, 2021, holders of a majority of the Company's issued and outstanding common stock approved a resolution to appoint Jonathan Bates, Raymond Mow, Michael Maloney, and Seth Bayles to the board of directors of the Company, and to appoint Jonathan Bates as Chairman, Seth Bayles as Corporate Secretary, Raymond Mow as Chief Financial Officer, and Ryan Ramnath as Chief Operating Officer (collectively, the "New O&Ds"). Prior to July 16, 2021, Erik S. Nelson was the sole director and officer. As part of the transaction, Mr. Nelson agreed to remain on the board as a director and to serve as chief executive officer. At the same time, the board and shareholders approved the issuance of 32,994,999 shares of common stock in the Company's offering of common stock at $0.015 per share, and the grant of 4,750,000 shares for services, which were valued at $0.015 per share. As a result of the foregoing stock issuances, the New O&Ds (or entities controlled by them) collectively acquired 24,893,877 shares of common stock, which represents 57.5% of the issued and outstanding shares as of February 28, 2022.

The appointment of certain of the New O&Ds to the Company's board, and issuance to the New O&Ds of a controlling interest in the Company, were made in order to enable the Company to enter the business of creating a hosting center for Bitcoin mining computers primarily utilizing immersion cooling technology, as well mining the Bitcoin digital currency for its own account. Prior to the change of control to the New O&Ds, the Company was a shell company.

During the six months ended February 28, 2022 the Company began implementing its business plan by generating revenue from the mining of Bitcoin digital currency and from sale of mining equipment.





Results of Operations

Comparison of Results of Operations for the Three Months Ended February 28, 2022, and 2021.





Revenues and Cost of Sales

During the three months ended February 28, 2022 the Company generated $4,574 in Bitcoin revenue from mining. Prior to the end of the quarter, the Company sold the mining equipment that generated the Bitcoin revenue and recorded revenue on the sale of the mining equipment of $344,700. This compares to no revenue during the three months ended February 28, 2021. The Company intends to continue selling Bitmine equipment to third parties and to generate increasing levels of Bitcoin digital revenue once it receives additional equipment that is currently in transit. There can be no assurances as to this timing or the level of additional sales and revenue.

Cost of sales related to the sale of mining equipment was $186,657 and cost of sales on Bitcoin revenue was $45,468, respectively, for the three months ended February 28, 2022, compared to zero in the prior period when there was no revenue. For the sale on mining equipment we recorded a net profit of $158,043.

Since we are in the early stages of setting up our infrastructure to generate higher levels of revenues, we expect that our cost of sales to generate Bitmine digital revenue will exceed the revenue we generate, for the immediate future. These costs include electricity, utilities, facilities costs, depreciation and supplies.





Operating Expenses

During the three months ended February 28, 2022, the Company incurred $156,114 in operating expenses compared to $5,940 in operating expenses during the three months ended February 28, 2021. Operating expenses for the 2022 period were primarily comprised of $20,134 in general and administrative expenses, approximately $44,000 in legal and accounting fees, and $92,460 in related party compensation expense to two of our officers. The higher level of operating expenses in the 2022 period as compared to the 2021 period is attributable to expenses incurred to as part of the Company's entry into the bitmine hosting business. The Company expects that operating expenses will trend materially higher in future periods as the Company begins paying regular compensation to existing officers and directors, hires additional employees, and incurs other costs associated with the commencement of operations.









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Other Income (Expense)

During the three months ended February 28, 2022, the Company incurred $73,162 in other expenses, which was comprised solely of interest expense, compared to $4,519 of interest expenses during the same three months ended February 28. 2021. The increase in interest expense is due to increased levels of borrowings by the Company under its Line of Credit in 2022 compared to the 2021 period when no Line of Credit was available.





Net Income (Loss)

As a result of the foregoing, during the three months ended February 28, 2022, the Company incurred a net loss of ($112,127), or ($0.00) per share, as compared to a net loss of ($10,368) during the three months ended February 28, 2021. The increase in the Company's net loss in three months ended February 28, 2022, compared to the three months ended February 28, 2021 is attributable to the factors discussed above.

Comparison of Results of Operations for the Six Months Ended February 28, 2022, and 2021.





Revenues and Cost of Sales

During the six months ended February 28, 2022 the Company generated $4,574 in Bitcoin revenue from mining. Prior to the end of the quarter, the Company sold the mining equipment that generated the Bitcoin revenue and recorded revenue on the sale of the mining equipment of $344,700. This compares to no revenue during the three months ended February 28, 2021. The Company intends to continue selling Bitmine equipment to third parties and to generate increasing levels of Bitcoin digital revenue once it receives additional equipment that is currently in transit. There can be no assurances as to this timing or the level of additional sales and revenue.

Cost of sales related to the sale of mining equipment was $186,657 and cost of sales on Bitcoin revenue was $45,468, respectively, for the six months ended February 28th, compared to zero in the prior period when there was no revenue. For the sale on mining equipment we recorded a net profit of $158,043.

Since we are in the early stages of setting up our infrastructure to generate higher levels of revenues, we expect that our cost of sales to generate Bitmine digital revenue will exceed the revenue we generate, for the immediate future. These costs include electricity, utilities, facilities costs, depreciation and supp





Operating Expenses

During the six months ended February 28, 2022, the Company incurred $820,157 in operating expenses compared to $23,059 in operating expenses during the six months ended February 28, 2021. Operating expenses for the 2022 period were primarily comprised of $48,672 in general and administrative expenses, approximately $667,000 in legal, accounting, investment banking and professional fees, which includes $550,000 in non-cash stock based compensation, and $104,460 in related party compensation expense to two of our officers. The higher level of operating expenses in the 2022 period as compared to the 2021 period is attributable to expenses incurred to as part of the Company's entry into the bitmine hosting business. The Company expects that operating expenses will trend materially higher in future periods as the Company begins paying regular compensation to existing officers and directors, hires additional employees, and incurs other costs associated with the commencement of operations.





Other Income (Expense)

During the six months ended February 28, 2022, the Company incurred $117,874 in other expenses, which was comprised solely of interest expense, compared to $8,286 of interest expenses during the six month period ended February 28. 2021. The increase in interest expense is due to increased levels of borrowings by the Company on its Line of Credit in 2022 compared to the 2021 period when no Line of Credit was available.





Net Income (Loss)

As a result of the foregoing, during the six months ended February 28, 2022, the Company incurred a net loss of ($820,883), or ($0.00) per share, as compared to a net loss of ($31,345) during the six months ended February 28, 2021. The increase in the Company's net loss in six months ended February 28, 2022, compared to the six months ended February 28, 2021 is attributable to the factors discussed above.









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Liquidity and Capital Resources

As of February 28, 2022, the Company had $901,216 in cash on hand.

During the six months ended February 28, 2022, the Company had a net loss of ($820,883).

Cash flows used in operating activities were ($56,788) for the six months ended February 28, 2022, compared to cash flows used of ($23,059) for the six months ended February 28, 2021. The increase in cash flows used in operating activities for fiscal 2022 compared to fiscal 2021 is primarily attributable to our operating loss of ($820,883), which was offset by non-cash stock-based compensation of $565,460, an increase of $11,7,874 of accrued interest, and the accrual of $71,500 of compensation to related parties during the six months ended February 28, 2022, as well as minor changes in other balance sheet accounts.

Cash flows used in investing activities were ($1,602,546) for the six months ended February 28, 2022, compared to cash flows used in investing activities of $-0- for the six months ended February 28, 2021. The entire increase in cash flows used by investing activities during the 2022 period compared to the 2011 period is due to the purchase of $1,602,546 bitmining equipment.

Cash flows provided by financing activities were $2,341,813 for the six months ended February 28, 2022, compared to cash flows provided by financing activities of $24,000 for the six months ended February 28, 2021. The increase in cash flows provided by financing activities in the 2022 period compared to the 2021 period is attributable to $1,616,813 in borrowings on our Line of Credit and $725,000 in proceeds from the sale of common stock and warrants in 2022.

A significant component of the Company's current liquidity is derived from a Line of Credit Agreement with Innovative Digital Investors Emerging Technology, L.P., ("IDI") a limited partnership controlled by Jonathan Bates, our Chairman, and Raymond Mow, our chief financial officer and a director. The Line of Credit Agreement was initially entered into on July 22, 2021, and was amended and restated in its entirety on August 4, 2021, and on September 29, 2021 (as amended and restated, the "LOC Agreement"). The LOC Agreement, as most recently amended, provides for loans of up to $2,500,000 at the request of the Company to finance the purchase of equipment necessary for the operation of the Company's business. Loans under the LOC Agreement accrue interest at fifteen percent (15%) per annum, compounded on a 30/360 monthly basis until the loans have been repaid in full.

On March 30, 2022, IDI extended the maturity date on the LOC Agreement to May 31, 2022, increased the amount of borrowing available for $2,500,000 to $3,000,000, and agreed that borrowings may be used for general working capital purposes.

The Company believes that the accessibility to this Line of Credit will enable it to purchase equipment it can either resell at a profit or can be used to generate revenue through the mining of Bitcoin and other crypto-currencies. Additionally, the Company believes that this revenue combined with cash on hand will provide it sufficient liquidity to fund its operations for the next 12 months. Nevertheless, in order to expedite the Company's entry into the bitmine hosting business, and to ensure that the Company has adequate cash reserves, the Company has engaged an investment banker and is pursuing additional capital-raising alternatives, including the potential issuance of common stock in a private placement, or the issuance of convertible notes or preferred stock. There is no assurance that the Company will be able to raise additional capital or that the terms of any capital raise are not dilutive to current shareholders or carry other terms that are unfavorable to the Company and its shareholders.

Additionally, in January 2022 the Company began a $10 million Unit Offering of shares and warrants and raised $725,000 under the offering during the six months ended February 22, 2022. See Note 5. to the financial statements.

Critical Accounting Policies and Estimates

Our management's discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or "GAAP." The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reported period. In accordance with GAAP, we base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.









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Our significant accounting policies are fully described in Note 1 to our financial statements appearing elsewhere in this Quarterly Report, and we believe those accounting policies are critical to the process of making significant judgments and estimates in the preparation of our financial statements.

Off-Balance Sheet Arrangements

None.

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