CALETHOS, INC. The following discussion should be read in conjunction with our audited financial statements and the related notes that appear elsewhere in this Annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include those discussed below and elsewhere in this Annual Report.
Our audited financial statements are stated in
5 Plan of Operations
It is the intention of our board of directors for our company to pursue the
development of the 80 acres of land in
To implement our plan, we have optioned the land and hired an experienced data center builder and operator and we are now in the process of acquiring the other principal ingredients needed for our data center operation - clean energy and fiber connectivity. To this end, over the next couple of months, we plan to finish negotiations with local geothermal and solar power producers to deliver clean energy for our operation, and to complete agreements with multiple communication providers for access to their close-by long-haul and dark fiber communication networks for connectivity.
We are also in the process of developing partnerships with leading-edge containerized and modular immersion and liquid cooled data center system providers whose systems we will offer for rent to our customers. We believe that, when construction of our data center is complete, the principal differentiators of our data center operations in the marketplace are expected to be that we are powered by 100% certified clean energy and that we provide leading-edge immersion and liquid cooled energy-efficient data center systems that will support the ever-increasing power and cooling needs of high-performance enterprise IT computer systems.
It is anticipated that we will incur expenses in the implementation of the business plan described herein, and such expenses will require substantial financing to complete the development of the property for a data center operation and to achieve our goals. The failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our development plans, any commercialization efforts or other operations. We may not be able to secure financing on favorable terms, or at all, to meet our future capital needs. In addition, even if we are able to obtain sufficient funding to commence our business operations, we may need to pursue additional financing in the future to make expenditures and/or investments to support the growth of our business and may require additional capital to pursue our business objectives and respond to new competitive pressures, pay extraordinary expenses or fund our growth, including through acquisitions. Additional funds, however, may not be available when we need them on terms that are acceptable to us, or at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to commence our proposed business operations, to continue to grow and support our business and to respond to business challenges could be significantly limited.
We currently have only limited capital with which to pay these anticipated expenses. To fund our business plan going forward, we intend to raise funds from investors by issuing common stock, preferred stock and/or debt securities.
Results of Operations for the years ended
The following summary should be read in conjunction with our audited financial
statements for the years ended
For the years ended December 31,
2022 2021
Revenues $ - $ -
Operating Expenses
Professional fees 667,000 1,033,000
Restricted stock grants (4,791,000 ) 5,062,000
Impairment loss 154,000 -
General and administrative 52,000 57,000
Total operating (income) expenses (3,918,000 ) 6,152,000
Income (loss) from operations 3,918,000 (6,152,000 )
Financing costs (1,744,000 ) (597,000 )
Interest income 7,000 -
Net income (loss) $ (2,181,000 ) $ (6,749,000 )
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Revenue
For the years ended
Operating Expenses Professional fees
Our professional fees decreased from
Restricted stock grant expense (gain)
Our restricted stock grant expense (gain) decreased from an expense of
Impairment loss
Our impairment loss increased from nil in the year ended
General and administrative expenses
Our general and administrative expenses decreased from
Financing Costs
Our financing cost increased from
Liquidity and Capital Resources
Our financial position as ofDecember 31 in each of the years indicated was as follows: Working Capital As of December 31, 2022 2021 Current assets$ 2,071,000 $ 3,054,000 Current liabilities (5,214,000 ) (3,632,000 ) Working deficit$ (3,143,000 ) $ (578,000 )
Our working capital decreased from a
Cash Flows
For the years ended December 31,
2022 2021
Net cash used in operating activities
(105,000 ) (38,000 )
Net cash provided by financing activities (50,000 ) 3,652,000
Effect of exchange rate changes (5,000 ) (2,000 )
Change in cash during the period (980,000 ) 3,047,000
Cash, beginning of period 3,047,000 -
Cash, end of period $ 2,067,000 $ 3,047,000
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Cash flows from operations
Cash used in operating activities decreased to approximately
Cash flow from investing
We made payments of
Cash flows from financing
We made payments of
Going Concern
The audited financial statements included in this Report have been prepared on a going concern basis, which implies that our company will continue to realize its assets and discharge its liabilities and commitments in the normal course of business. We are presently in the development stage and, apart from our cash balances, have only limited assets. Our company has not generated revenues in the last two fiscal years, has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of our company as a going concern is dependent upon: (i) continued financial support from our shareholders; (ii) the ability of our company to continue raising necessary debt or equity financing to achieve its operating objectives; and (iii) our ability to acquire assets and establish a business or merge or otherwise acquire business opportunities.
Our independent auditors included an explanatory paragraph in their report on
our financial statements for the year ended
Application of Critical Accounting Policies
The preparation of financial statements in conformity with
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.
8 Foreign Currency Translation
The financial statements of our foreign subsidiary, for which the functional
currency is the local currency, are translated into
Debt and Debt Discounts
In accordance with ASC 470-20, Debt with Conversion and Other Options, we first allocate the cash proceeds of the notes between the notes and any warrants on a relative fair value basis. Proceeds are then allocated to the conversion feature.
We account for debt discounts originating in connection with conversion features that remain embedded in the related notes in accordance with ASC 470-20. These costs are classified on the balance sheet as a direct deduction from the debt liability. We amortize these costs over the term of our debt agreements as financing cost in the consolidated statement of operations and comprehensive loss.
Stock-Based Compensation
We account for our stock-based compensation under ASC 718, "Compensation - Stock Compensation" using the fair value based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments.
We use the fair value method for equity instruments granted to non-employees and use the BSM model for measuring the fair value of options. The stock based fair value compensation is determined as of the date of the grant (measurement date) and is recognized over the vesting periods.
Recent Accounting Pronouncements
Our management reviewed all recently-issued accounting standard updates ("ASU's") not yet adopted by our company and does not believe the future adoptions of any such ASU's may be expected to cause a material impact on the Company's consolidated financial condition or the results of -our operations.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial position, revenues and expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
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