Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 ~~days~~days.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ [X] No ☐[ ]

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

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

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. ~~17,354,277~~34,017,796 shares as of ~~July 30, 2020.~~May 6, 2021.

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

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

The accompanying consolidated financial statements and footnotes have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended ~~June 30, 2020~~March 31, 2021 are not necessarily indicative of the results that can be expected for the full year.

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

CleanSpark, Inc. (“CleanSpark”, “we”, “our”, the "Company") was incorporated in the ~~State~~state of Nevada on October 15, 1987 asunder the name, SmartData Corporation (“SmartData”). SmartData conducted a 504-public offering in the State of Nevada in December 1987 and began trading publicly in January 1988. Due to a series of unfortunate events, including the untimely death of the founding CEO, SmartData discontinued active business operations in 1992.

Corporation. In ~~December 2014,~~October 2016, the Company changed its name to ~~Stratean~~CleanSpark, Inc. ~~through a short-form merger~~ in order to better reflect the Company’s brand identity.

The Company, through itself and its ~~new business plan.~~wholly owned subsidiaries, has operated in the alternative energy sector since March 2014, and in the digital currency mining sector since December 2020.

On July 1, 2016, the Company entered into an Asset Purchase Agreement, as amended (the “Purchase Agreement”), with CleanSpark Holdings LLC, CleanSpark LLC, CleanSpark Technologies LLC, and Specialized Energy Solutions, Inc. (together, the “Seller”). Pursuant to the Purchase Agreement, the Company acquired CleanSpark, LLC and all the assets related to the Seller and its line of ~~business and assumed~~ ~~$200,000~~ ~~in liabilities.~~business.

~~In October 2016, the Company changed its name to~~ CleanSpark Critical Power Systems, Inc. ~~through a short-form merger in order to better reflect the brand identity.~~

On January 22, 2019, CleanSpark entered into an ~~Agreement and Plan of Merger~~agreement with Pioneer Critical Power, Inc. ~~(“Pioneer”)~~, whereby ~~the Company~~it acquired certain intellectual property assets and ~~a customer list. As consideration, the Company issued to Pioneer’s sole shareholder (i)~~ ~~175,000~~ ~~shares of common stock of CleanSpark, (ii) a~~ ~~five-year~~ ~~warrant to purchase~~ ~~50,000~~ ~~shares of common stock of CleanSpark at an exercise price of~~ ~~$16.00~~ ~~per share, and (iii) a~~ ~~five-year~~ ~~warrant to purchase~~ ~~50,000~~ ~~shares of common stock of CleanSpark at an exercise price of~~ ~~$20.00~~ ~~per share.~~client lists. As a result of the transaction, Pioneer Critical Power Inc. became a wholly owned subsidiary of ~~CleanSpark.~~the Company. On February 1, 2019, Pioneer Critical Power, Inc. was renamed to CleanSpark Critical Power Systems, Inc.

~~On December 10, 2019, the Financial Industry Regulatory Authority (“FINRA”) approved a~~ ~~1:10~~p2klabs, Inc. reverse stock split of the Company’s common stock. The reverse stock split took effect on December 11, 2019. Unless otherwise noted, impacted amounts and share information in this report and included in the financial statements and notes thereto as of and for the period ended June 30, 2020 and September 30, 2019, have been adjusted for the stock split as if such stock split occurred on the first day of the first period presented.

On January 31, 2020, the Company entered into a Stock Purchase Agreement ~~(the “Agreement”)~~ with p2klabs, ~~Inc., a Nevada corporation~~Inc (“p2k”), and its sole stockholder, ~~Amer Tadayon (“Seller”),~~ whereby the Company purchased all of the issued and outstanding shares of p2k from ~~the Seller (the “Transaction”) in exchange for an aggregate purchase price of cash and equity of $1,688,935. The Transaction closed simultaneously upon the execution of the Agreement by the parties on January 31, 2020.~~its sole stockholder. As a result of the ~~Transaction,~~transaction, p2k isbecame a ~~wholly-owned~~wholly owned subsidiary of the Company.

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

On December 9, 2020, the Company entered into an Agreement and Plan of Merger (the “Merger”) with ATL Data Centers LLC (“ATL”), and its members whereby the Company purchased all of the issued and outstanding membership units of ATL from its members. As a result of the transaction, ATL became a wholly owned subsidiary of the Company. (See ~~note~~Note 3 for details.)

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

Through CleanSpark, LLC, ~~the Company provides~~we provide microgrid engineering, design and software solutions to military, commercial and residential ~~properties.~~

~~The~~customers. Our services ~~offered~~ consist of distributed energy microgrid system engineering and design, and ~~engineering, and~~ project ~~development~~ consulting services. The work is generally performed under fixed price bid contracts and negotiated price contracts.

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

Through GridFabric, LLC, we provide Open Automated Demand Response (“OpenADR”) and other middleware communication protocol software solutions to commercial and utility customers.

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

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

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

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

The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent ~~Annual Financial Statements~~annual report on Form 10-K for the year ended September 30, 2020, filed with the SEC on December 17, 2020 (“Form ~~10-K.~~10-K”). In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented in this quarterly report on Form 10-Q have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted.

The Company has incurred losses ~~for~~in the past ~~several years~~ while ~~developing~~it developed its infrastructure and ~~its~~ software platforms. As shown in the accompanying unaudited consolidated financial statements, the Company incurred ~~net~~operating losses of $~~16,282,653~~8.7 millionand produced net income of $232,510during the ~~nine~~six months ended ~~June 30, 2020. In response to these conditions and to ensure the~~March 31, 2021. The Company has sufficient capital for ongoing operations ~~for a~~ ~~minimum~~ ~~of 12 months,~~ we ~~have raised~~from raising additional capital through the registered sale of ~~debt and~~ equity securities pursuant to a registration statement on Form S-3. (See Note ~~10 and Note 18~~11 for additional details.) As of ~~June 30, 2020,~~March 31, 2021, the Company had working capital of $171,118,618~~5,631,164~~.

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

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include estimates used to review the Company’s goodwill impairment, intangible assets acquired, impairments and estimations of long-lived assets, revenue recognition on percentage of completion type contracts, allowances for uncollectible accounts, and the valuations of non-cash capital stock issuances. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions including, but not limited to, the ultimate impact that COVID-19 may have on the Company’s operations and financial results during 2020 as such impact will depend on the ultimate severity and scope of the COVID-19 pandemic. We are not able to fully quantify the impact that the COVID-19 pandemic will have on our financial results during 2020 and beyond, but developments related to COVID-19 could affect the Company’s financial performance in 2020.

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

Our accounting policy on revenue recognition ~~from the policy provided in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended September 30, 2019. The revised accounting policy on~~by type of revenue ~~recognition~~ is provided below. ~~The Company accounts for revenue contracts with customers through the following steps:~~

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

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

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

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

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

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

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

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

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

Contract assets represent revenue recognized in excess of amounts billed and include unbilled receivables (typically for cost reimbursable contracts) of $0 and contract work in progress (typically for fixed-price contracts) of $0 and $~~57,077~~4,103 as of ~~June 30, 2020~~March 31, 2021 and September 30, ~~2019,~~2020, respectively. Unbilled receivables, which represent an unconditional right to payment subject only to the passage of time, are reclassified to accounts receivable when they are billed under the terms of the contract. Advances that are payments on account of contract assets of $~~321,000~~0 and $~~360,000~~0 as of ~~June 30, 2020~~March 31, 2021 and September 30, ~~2019,~~2020, respectively, have been deducted from contract assets. Contract liabilities represent amounts billed to clients in excess of revenue recognized to date. The Company recorded $~~149,493~~551,977 and $~~499,401~~64,198 in contract liabilities as of ~~June 30, 2020~~March 31, 2021 and September 30, ~~2019,~~2020, respectively.

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

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

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

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

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

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

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

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

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

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

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

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

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

For the ~~nine~~six months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019,~~ the Company reported revenues of $~~8,073,781~~10,377,258 and $~~2,209,542~~4,635,107, respectively.

For purposes of the consolidated statements of cash flows, the Company considers all highly liquid investments and short-term debt instruments with original maturities of three months or less to be cash equivalents. There was $~~1,955,776~~157,274,542 and $~~7,838,857~~3,126,202 in cash and no cash equivalents as of ~~June 30, 2020~~March 31, 2021 and September 30, ~~2019,~~2020, respectively.

Digital currencies are included in current assets in the consolidated balance sheets. Digital currencies are recorded at cost less impairment. Digital currencies held are accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the digital currency at the time its fair value is being measured. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted.

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

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

IsAccounts receivable is comprised of uncollateralized customer obligations due under normal trade terms. The Company performs ongoing credit evaluation of its customers and management closely monitors outstanding receivables based on factors surrounding the credit risk of specific customers, historical trends, and other information. The carrying amount of accounts receivable is reviewed periodically for collectability. If management determines that collection is unlikely, an allowance that reflects management’s best estimate of the amounts that will not be collected is recorded. Accounts receivable are presented net of an allowance for doubtful accounts of $~~400,741~~693,508 and $~~254,570~~42,970 at ~~June 30, 2020,~~March 31, 2021, and September 30, ~~2019,~~2020, respectively.

Retention receivable is the amount withheld by a customer until a contract is completed. Retention receivables of $~~171,513~~0 and $~~159,989~~615 were included in the balance of trade accounts receivable as of ~~June 30, 2020~~March 31, 2021 and September 30, ~~2019,~~2020, respectively.

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

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

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

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

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

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

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

At times throughout the year, the Company may maintain cash balances in certain bank accounts in excess of FDIC limits. As of ~~June 30, 2020,~~March 31, 2021, the cash balance in excess of the FDIC limits was $~~1,705,776~~157,024,542. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk in these accounts. The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue. (See Note 1715 for details.)

The Company establishes warranty liability reserves to provide for estimated future expenses as a result of installation and product defects, product recalls, and litigation incidental to the Company’s business. Liability estimates are determined based on management’s judgment, considering such factors as historical experience, the likely current cost of corrective action, manufacturers’ and subcontractors’ participation in sharing the cost of corrective action, consultations with third party experts such as engineers, and discussions with the Company’s general counsel and outside counsel retained to handle specific product liability cases. The Company’s manufacturers and service providers currently provide substantial warranties between ten to twenty-five years with full reimbursement to replace and install replacement parts. Warranty costs and associated liabilities were $0 and $0 at ~~June 30, 2020~~March 31, 2021 and September 30, ~~2019,~~2020, respectively.

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

The Company reports earnings (loss) per share in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 260-10 “~~Earnings~~“Earnings Per Share,” which provides for calculation of “basic” and “diluted” earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income or loss available to common stockholders by the weighted average common shares outstanding the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity. The calculation of diluted net loss per share gives effect to common stock equivalents; however, potential common shares are excluded if their effect is anti-dilutive. As of ~~June 30, 2020,~~March 31, 2021, there are ~~1,503,639~~1,522,604shares issuable upon exercise of outstanding options and warrants, the dilutive effect of which ~~have been excluded as anti-dilutive.~~is computed using the treasury stock method.

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

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

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

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

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

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

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

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

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

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

The carrying value of cash, accounts payable and accrued expenses, and debt (See ~~Notes 9 & 10)~~Note 8) approximate their fair values because of the short-term nature of these instruments. Management believes the Company is not exposed to significant interest or credit risks arising from these financial instruments. ~~The carrying amount of the Company’s long-term debt is also stated at fair value of $681,169~~ ~~since the stated rate of interest approximates market rates.~~

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company utilizes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable.

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

The below table presents the change in the fair value of the derivative asset and investment in debt security during the ~~nine~~three months ended ~~June 30, 2020:~~March 31, 2021:

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

Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding the method to allocate resources and assess performance. The Company currently has three reportable segments for financial reporting purposes.

In June 2018, the FASB issued ASU 2018-07, "Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting," which modifies the accounting for share-based payment awards issued to nonemployees to largely align it with the accounting for share-based payment awards issued to employees. ASU 2018-07 is effective for us for annual periods beginning October 1, 2019. The new standard did not have a material impact on the Company’s results of operations or cash flows.

In August 2018, the FASB issued ASU 2018-15, "Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract," which allows for the capitalization of certain implementation costs incurred in a hosting arrangement that is a service contract. ASU 2018-15 allows for either retrospective adoption or prospective adoption to all implementation costs incurred after the date of adoption. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019. ~~We are currently evaluating the impact the adoption of this new standard will have on our financial position and results of operations.~~

~~In February 2016, the FASB issued guidance within ASU 2016-02,~~ ~~Leases~~~~. The amendments in ASU 2016-02 to Topic 842,~~ ~~Leases~~, require lessees to recognize the lease assets and lease liabilities arising from operating leases in the statement of financial position. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. The Company adopted the amendments to Topic 842 on October 1, 2019 using the modified retrospective approach. The Company elected the transition option issued under ASU 2018-11, ~~Leases (Topic 842) Targeted Improvements~~~~, which allows entities to continue to apply the legacy guidance in ASC 840,~~ ~~Leases~~, to prior periods, including disclosure requirements. Accordingly, prior period financial results and disclosures have not been adjusted. The Company also elected to apply the package of practical expedients permitting entities to forgo reassessment of: 1) expired or existing contracts that may contain leases; 2) lease classification of expired or existing leases; and 3) initial direct costs for any existing leases. The Company has also elected to apply the short term lease measurement and recognition exemption to leases with an initial term of 12 months or less. The most significant impact of the new standard on the Company’s Consolidated Financial Statements was the recognition of a right of use asset and lease liability for operating leases for which the Company is the lessee. Upon adoption of this guidance, on October 1, 2019, the Company recorded a Right of use asset and corresponding lease liability of $85,280 and $85,280, respectively, on the Consolidated Balance Sheet. No cumulative effect adjustment to retained earnings resulted from adoption of this guidance. The new standard did not have a material impact on the Company’s results of operations or cash flows.

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

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

In June 2016, the FASB issued guidance within ASU 2016-13, Financial Instruments – Credit Losses. The amendments in ASU 2016-13 require assets measured at amortized cost and establishes an allowance of credit losses for available for sale debt securities. ASU 2016-13 is effective for fiscal years beginning after December 15, ~~2020.~~2022. We are currently evaluating the impact the adoption of this new standard will have on our financial position and results of operations.

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

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

At the closing on February 24, 2021, SWS became a wholly owned subsidiary of the Company. In exchange, the Company issued (i) 477,703 shares of restricted common stock based on the average closing price of the Company’s common stock (as reflected on Nasdaq.com) for the five trading days including and immediately preceding the closing date of $32.74 per share to the sellers, of which (a) 167,685 shares would be fully earned on closing, and (b) an additional 310,018 shares were issued and held in escrow, subject to holdback pending Sellers’ satisfaction of certain future milestones with all such shares subject to a lock up of no less than 180 days and a leak out of no more than 10% of average daily trading value of the prior 30 days for a period of 36 months following the closing, and (ii) up to $3,850,000 in cash was remitted to the Sellers, of which: (c) $1,350,000 was remitted to Sellers on a pro rata basis at closing, less payment of $500,000 in Sellers’ debt at closing, (d) $200,000 in cash was held back by the Company for a period of nine months to satisfy potential damages from indemnification claims and any amounts owed pursuant to post-closing adjustments, (e) an additional $100,000 in cash was held back by the Company for a period of 90 days to satisfy any amounts owed pursuant to post-closing adjustments, and (f) up to $2,500,000 in cash was held back by the Company pending the Sellers’ satisfaction of certain future milestones.

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

The total purchase price was allocated to identifiable assets deemed acquired, and liabilities assumed, based on their estimated fair values as indicated below. The business combination accounting is not yet final and the amounts assigned to the assets acquired and the liabilities assumed are provisional. Therefore, this may result in future adjustments to the provisional amounts as new information is obtained about the facts and circumstances that existed at the acquisition date.

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

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

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

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

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

The strategic contract relates to supply of a critical input to our digital currency mining business. The other assets and liabilities assumed includes $5.475 million in digital currency mining equipment and notes payable related to this equipment, which was settled by the Company during the six months ended March 31, 2021.

On January 31, 2020, the Company, entered into an Agreement with p2k, and its sole stockholder, Amer Tadayon (the “Seller”), whereby the Company purchased all of the issued and outstanding shares of p2k in exchange for an aggregate adjusted purchase price of cash and equity of $1,688,935. The ~~Transaction~~transaction closed simultaneously upon the execution of the Agreement by the parties on January 31, 2020.

As a result of the ~~Transaction,~~transaction, p2k isbecame a ~~wholly-owned~~wholly owned subsidiary of the Company.

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

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

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

On August 31, 2020, the Company entered into a Membership Interest Purchase Agreement (the “Agreement”) with GridFabric, and its sole member, Dupont Hale Holdings, LLC (the “Seller”), whereby the Company purchased all of the issued and outstanding membership units of GridFabric from the Seller (the “Transaction”) in exchange for an aggregate purchase price of cash and stock of up to $1,400,000 (the “Purchase Price”). The ~~business combination accounting is not yet complete,~~Transaction closed simultaneously with execution on August 31, 2020. As a result of the Transaction, GridFabric, became a wholly owned subsidiary of the Company.

The Shares were issued at a fair market value of $9.46 per share. The Earn-Out Shares are accounted for as contingent consideration and the ~~amounts assigned~~number of shares to be issued will be determined based on the closing price of the Company’s common stock on the date such milestone event occurs.

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

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

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

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

The total purchase price of the Company’s acquisition of GridFabric was allocated to identifiable assets deemed acquired, and ~~the~~ liabilities assumed, ~~are provisional. Therefore, this may result in future adjustments to the provisional amounts~~based on their estimated fair values as ~~new information is obtained about the facts and circumstances that existed at the acquisition date.~~indicated below.

The following is the unaudited pro forma information assuming the acquisition of GridFabric, p2k Labs, ATL, and SWS occurred on October 1, ~~2018:~~ 2019:

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

On November 5, 2019, ~~CleanSpark~~the Company entered into a binding Memorandum of Understanding (the “MOU”) with International Land Alliance, Inc., a Wyoming corporation (“ILAL”), in order to lay a foundational framework where the Company will deploy its energy solutions products and services to ILAL, its energy projects, and its customers.

~~Pursuant to the terms of the MOU, the parties will work in good faith and pursue the following priorities over the next twelve (12) months:~~

In connection with the MOU, and in order to support the power and energy needs of ILAL’s development and construction of certain projects, the Company entered into a Securities Purchase Agreement, dated as of November 6, 2019, with ILAL (the “ILAL SPA”).

Pursuant to the terms of the ILAL SPA, ILAL sold, and the Company purchased 1,000shares of Series B Preferred Stock (the “Preferred Stock”) of ILAL for an aggregate purchase price of US $500,000~~(the~~ (the “Stock Transaction”), less certain expenses and fees. The Company also received 350,000 shares (“commitment shares”) of ILAL’s common stock. The ~~Series B~~ Preferred Stock willaccrue cumulative ~~in kind~~in-kind accruals at a rate of 12% per annum and ~~shall~~may increase ~~by 10% per annum~~ upon the occurrence of ~~any trigger event. ILAL may redeem by paying in cash within 9 months from the issuance date.~~certain events. The Preferred ~~Stock becomes~~is now convertible into common stock ~~after 9 months or when certain triggering events occur. In~~at a variable rate as calculated under the ~~event~~agreement terms.

The commitment shares are recorded at fair value as of ~~a conversion~~March 31, 2021 of any shares of the Preferred Stock, the number of conversion shares is equal to the face value of the Preferred Stock divided by the applicable Conversion Price (defined at 65% of the 5 lowest individual daily volume weighted average prices of the Common Stock from issuance to conversion less $0.05 per share, but no less than the Floor Price ($0.01)$729,500. ~~While the Preferred Stock is outstanding if triggering events occur, the Conversion Rate may be decreased by 10% and the accrual rate increased by 10% for each triggering event.~~

The Company believes that, pursuant to the terms and conditions of the ILAL SPA, at least two triggering events have occurred. Under this good faith belief, the Company believes that as a result of the occurrence of these triggering events, the Series B Preferred stock should be convertible at the Company’s option, and the interest and conversion rate should be adjusted by 10% for each such occurrence.

The Preferred Stock is recorded as an AFS debt security and is reported at its estimated fair value as of ~~June 30, 2020. As of June 30, 2020, the~~March 31, 2021. The Company ~~has~~ identified a derivative instrument in accordance with ASC Topic No. 815 due to the variable conversion ~~feature upon certain triggering events that occurred during the period.~~feature. Topic No. 815 requires the Company to account for the conversion feature on its balance sheet at fair value and account for changes in fair value as a derivative gain or loss.

The Black-Scholes model utilized the following inputs to value the derivative asset at the date in which the derivative asset was determined through ~~June 30, 2020.~~March 31, 2021.

~~In connection with the Stock Transaction, ILAL issued~~ ~~350,000~~ ~~shares of its common stock to the Company as commitment shares. The commitment shares are recorded at~~ ~~$171,500, or~~ ~~$0.49~~ ~~per share, which was the quoted price of the shares on June 30, 2020.~~

On April 6, 2020, the Company entered into a joint venture agreement with third party partners to procure, distribute, and supply Personal Protective Equipment (PPE) for hospitals and frontline medical personnel. The agreement is effective until December 31, 2020, unless otherwise extended by mutual consent.

~~The Company contributed capital in the amount of~~ ~~$660,000~~ on April 6, 2020 to assist with the procurement of these products, with the potential for additional monies to be lent by the Company to the contractual joint venture, upon mutual consent if necessary.

~~The resulting income is reported net of all other costs, and CleanSpark recognized~~ ~~$20,000~~ ~~in other income from the agreement for the period ended June 30, 2020. As of June 30, 2020, the balance of CleanSpark funds held in the joint venture(“JV”) account for future orders was~~ ~~$660,000~~and is accounted for as a receivable from the third party partner since the Company considers itself as a passive investor in the JV. The receivable is reported in prepaid expenses and other current assets in the consolidated balance sheet.

~~On July 7, 2020, the Company received its~~ ~~$660,000~~ in initial capital from the JV. The Company plans to continue to evaluate opportunities under the JV and will continue to provide capital for the procurement of PPE under this agreement as future opportunities continue to arise.

Capitalized software consists of the following as of ~~June 30, 2020~~March 31, 2021 and September 30, ~~2019:~~2020:

Capitalized software amortization recorded as cost of revenues and product development expense for the ~~nine~~six months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ was $~~121,582~~83,983 and $~~1,034,612~~79,705, respectively.

~~Intangible assets consist of the following as of June 30, 2020 and September 30, 2019:~~

~~Amortization expense for the nine months ended June 30, 2020 and 2019 was~~ ~~$1,952,779~~ ~~and~~ ~~$1,243,610, respectively.~~

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

Intangible assets consist of the following as of ~~June 30, 2020~~March 31, 2021 and September 30, ~~2019:~~2020:

~~Depreciation~~Amortization expense for the ~~nine~~six months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ was $~~51,952~~2,225,991 and $~~31,639~~1,269,293, respectively.

~~On September 5, 2017, the~~The Company ~~executed a~~ 9% ~~secured promissory note with a face value of~~ ~~$150,000~~ ~~with an investor. Under the terms of the promissory note, the Company received~~ ~~$150,000~~ ~~and agreed~~expects to ~~make monthly interest payments and repay the note principal~~ 24 ~~months from the date of issuance. On September 5, 2019, the investor extended the maturity date to~~ ~~September 5, 2021~~ ~~and the modification was not deemed substantial. The note is secured by~~ ~~15,000~~ ~~shares which are held in escrow and would be issued to the note holder only in the case of an uncured default. As of June 30, 2020, the Company owed~~ ~~$150,000~~ ~~in principal and $~~0 ~~in accrued interest under the terms of the agreement and recorded interest~~record amortization expense of ~~$10,133~~intangible assets over the next 5 years and ~~$10,096~~ ~~during the nine months ended June 30, 2020 and 2019, respectively.~~ thereafter as follows:

~~On November 11, 2017, the Company executed a~~ ~~10%~~ ~~secured promissory note with a face value of~~ ~~$100,000~~ ~~with an investor. Under the terms of the promissory note the Company received~~ ~~$100,000~~ ~~and agreed to make monthly interest payments and repay the note principal~~ 24 ~~months from the date of issuance. The note was secured by~~ ~~10,000~~ ~~shares which would be issued to the note holder only in the case of an uncured default. The Company repaid all principal and outstanding interest on August 13, 2019 and the~~ ~~10,000~~ ~~shares of common stock held as collateral were returned to treasury and cancelled on August 26, 2019. The Company recorded interest expense of~~ $0 ~~and~~ ~~$7,478~~ ~~for the nine months ended June 30, 2020 and 2019, respectively.~~

~~On December 5, 2017, the Company executed a~~ 9~~% secured promissory note with a face value of~~ ~~$50,000~~ ~~with an investor. Under the terms~~

Property and equipment, net consist of the ~~promissory note~~following as of March 31, 2021 and September 30, 2020:

Depreciation expense for the ~~Company received~~six months ended March 31, 2021 and 2020 was $~~50,000~~ ~~and agreed to make monthly interest payments and repay the note principal~~ 24 ~~months from the date of issuance. The note was secured by~~ ~~5,000~~ ~~shares which would be issued to the note holder only in the case of an uncured default. The Company repaid all principal and outstanding interest on December 5, 2019 and the~~ ~~5,000~~930,324 ~~shares of common stock held as collateral were returned to treasury and cancelled on January 13, 2020. The Company recorded interest expense of~~ ~~$802~~ and $~~3,367~~ 32,071~~for the nine months ended June 30, 2020 and 2019,~~, respectively.

The Company has purchase commitments for approximately $146.5 million related to purchase of miners as of March 31, 2021, and the Company has paid $42.8 million towards these commitments as of the end of this period.

On May 7, 2020, the Company applied for a loan from Celtic Bank Corporation, as lender, pursuant to the Paycheck Protection Program of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) as administered by the U.S. Small Business Administration (the "SBA"). On May 15, 2020, the loan was approved and the Company received the proceeds from the loan in the amount of $531,169 (the “PPP Loan”). The PPP Loan, which took the form of a promissory note issued by the Company ~~that~~(the “PPP Note”) matures on May 7, 2022 and ~~bears~~bear interest at a rate of ~~1.0~~1.0%% per annum. Monthly principal and interest payments, less the amount of any potential forgiveness (discussed below), will commence on December 7, 2020. The PPP Loan provides for customary events of default, including, among others, those relating to failure to make payments thereunder. Borrower may prepay the principal of the PPP Loan at any time without incurring any prepayment penalties. The PPP Loan is non-recourse against any individual shareholder, except to the extent that such party uses the loan proceeds for an unauthorized purpose.

~~All or a portion of the PPP Loanmay be forgiven by~~The Company applied for and received loan forgiveness from the SBA ~~and lender upon application by the Company and upon documentation of expenditures in accordance with the SBA requirements.~~ ~~Under the CARES Act, loan forgiveness is available for the sum of documented payroll costs, covered rent payments, and covered utilities during the applicable period beginning~~ on the date of loan approval. For purposes of the CARES Act, payroll costs exclude compensation of an individual employee in excess of $100,000, prorated annually. Not more than 25% of the forgiven amount may be for non-payroll costs. Forgiveness is reduced if full-time headcount declines, or if salaries and wages for employees with salaries of $100,000 or less annually are reduced by more than 25%. In the event the PPP Loan, or any portion thereof, is forgiven pursuant to the PPP, the amount forgiven is applied to outstanding principal.March 23, 2021. The ~~Company recorded interest expense of~~ ~~$3,987~~ ~~and $~~0 ~~for the nine months ended June 30, 2020 and 2019, respectively.~~

~~On February 11, 2019, the Company executed an unsecured 5.6% installment loan with a total face value of~~ ~~$78,603~~ ~~with a financial institutional to finance its insurance policies. Under the terms of the installment notes the Company received~~ ~~$76,800~~ ~~and agreed to make equal payments and repay the note~~ ~~10 months~~ ~~from the date of issuance. As of September 30, 2019,~~ ~~$17,467~~ ~~in principal remained outstanding. The Company repaid all principal and outstanding interest on November 4th, 2019.~~

On December 31, 2018, the Company entered into a Securities Purchase Agreement (the “SPA”) with an otherwise unaffiliated third-party institutional investor (the “Investor”), pursuant to which the Company issued to the Investor a Senior Secured Redeemable Convertible Debenture (the “Debenture”) in the aggregate face value of ~~$5,250,000. The note was secured by all assets of the Company. The Debenture has a maturity date of~~ ~~two years~~ ~~from the issuance date and the Company agreed to pay compounded interest on the unpaid~~entire principal balance ~~of the Debenture at the rate equal~~ ~~7.5%per annum. Interest is payable on the date the applicable principal is converted or on maturity. The~~and interest ~~must be paid in cash and, in certain circumstances, may be paid in shares of common stock.~~charges were forgiven.

~~The transactions described above closed on December 31, 2018. In connection with the issuance of the Debenture and pursuant to the terms of the SPA, the Company issued to the Investor~~ ~~10,000~~ ~~shares of common stock and a Common Stock Purchase Warrant to acquire up to~~ ~~308,333~~ ~~shares of common stock for a term of~~ ~~three years~~ ~~(the “Warrant”) on a cash-only basis at an exercise price of~~ ~~$20.00~~ ~~per share with respect to~~ ~~125,000~~ ~~Warrant Shares,~~ ~~$25.00~~ ~~with respect to~~ ~~100,000~~ ~~Warrant Shares,~~ ~~$50.00~~ ~~with respect to~~ ~~50,000~~ ~~Warrant Shares and~~ ~~$75.00~~ ~~with respect to~~ ~~33,333~~ ~~Warrant Shares. The warrants and shares issued were fair valued and a debt discount of~~ ~~$4,995,000~~ ~~was recorded as a result of the issuance of the warrants and shares and the recognition of a beneficial conversion feature on the Debenture. The Company also paid a~~ ~~$5,000~~ ~~due diligence fee prior to receiving the funding which was also recorded as a debt discount.~~

~~Pursuant to the terms of the SPA, the Investor agreed to tender to the Company the sum of~~ ~~$5,000,000, of which the Company received the full amount as of the closing.~~

Prior to the maturity date, provided that no trigger event has occurred, the Company will have the right at any time upon 30 trading days’ prior written notice, in its sole and absolute discretion, to redeem all or any portion of the Debenture then outstanding by paying to the Investor an amount equal to 140% of the of the portion of the Debenture being redeemed.

The Investor may convert the Debenture into shares of the Company’s common stock at a conversion price equal to 95% of the mathematical average of the 5 lowest individual daily volume weighted average prices of the common stock, less $0.50 per share, during the period beginning on the issuance date and ending on the maturity date subject to certain floor price restrictions. In the event certain equity conditions exist, the Company may require that the Investor convert the Debenture. In no event shall the Debenture be allowed to affect a conversion if such conversion, along with all other shares of Company common stock beneficially owned by the Investor and its affiliates would exceed 4.99% of the outstanding shares of the common stock of the Company.

While the note is outstanding if Triggering Events occur the conversion rate may be decreased by 10% and the interest rate increased by 10% for each Triggering Event which may result in the issuance of additional shares.

~~On March 4, March 13, and May 1, 2020 the Company entered into amendments (the “Amendments”) with the Investor.~~

~~On January 7, 2019, the Investor converted~~ ~~$2,500,000~~ ~~in principal and~~ ~~$875,000~~ ~~in interest as a conversion premium, for~~ ~~178,473~~ ~~shares of the Company common stock at an effective conversion price of~~ ~~$18.90, due to a trigger event for the Company not filing its annual report on Form 10-K for the fiscal year ended September 30, 2018 on or before December 31, 2018.~~9. LEASES

~~On March 6, 2019, the Investor converted~~ ~~$1,000,000~~ ~~in principal and~~ ~~$350,000~~ ~~in interest as a conversion premium, for~~ ~~71,389~~ ~~shares of the Company common stock at an effective conversion price of~~ ~~$18.90, due to a trigger event for the Company not filing its annual report on Form 10-K for the fiscal year ended September 30, 2018 on or before December 31, 2018.~~

~~On July 9, 2019, in accordance with the terms of the agreement the Investor was issued an additional~~ ~~45,614~~ ~~shares of common stock due to the decrease in stock price resulting in an effective conversion price of~~ ~~$15.06~~.

~~On July 16, 2019, in accordance with the terms of the agreement the Investor was issued an additional~~ ~~18,246~~ ~~shares of common stock due to the decrease in stock price resulting in an effective conversion price of~~ ~~$15.06~~.

~~On July 19, 2019, the Investor converted~~ ~~$500,000~~ ~~in principal and~~ ~~$175,000~~ ~~in interest as a conversion premium, for~~ ~~45,109~~ ~~shares of the Company common stock at an effective conversion price of~~ ~~$15.00~~ ~~due to a trigger event for the Company not filing its annual report on Form 10-K for the fiscal year ended September 30, 2018 on or before December 31, 2018.~~

~~On August 23, 2019, in accordance with the terms of the agreement the Investor was issued an additional~~ ~~43,721~~ ~~shares of common stock due to the decrease in stock price resulting in an effective conversion price of~~ ~~$7.60~~.

~~On September 16, 2019, in accordance with the terms of the agreement the Investor was issued an additional~~ ~~61,500~~ ~~shares of common stock due to the decrease in stock price resulting in an effective conversion price of~~ ~~$7.30~~.

~~On October 17, 2019, in accordance with the terms of the agreement the Investor was issued an additional~~ ~~90,000~~ ~~shares of common stock due to the decrease in stock price resulting in an effective conversion price of~~ ~~$3.74~~.

~~On December 5, 2019, in accordance with the terms of the agreement the Investor was issued an additional~~ ~~97,100~~ ~~shares of common stock due to the decrease in stock price resulting in an effective conversion price of~~ ~~$3.15~~.

~~On February 10, 2020, in accordance with the terms of the agreement the Investor was issued an additional~~ ~~100,000~~ ~~shares of common stock due to the decrease in stock price resulting in an effective conversion price of~~ ~~$3.15~~.

~~On February 21, 2020, in accordance with the terms of the agreement the Investor was issued an additional~~ ~~108,770~~ ~~shares of common stock due to the decrease in stock price resulting in an effective conversion price of~~ ~~2.69~~.

~~On March 2, 2020, in accordance with the terms of the agreement the Investor was issued an additional~~ ~~167,100~~ ~~shares of common stock due to the decrease in stock price resulting in an effective conversion price of~~ ~~$1.87~~.

~~On March 5, 2020, in accordance with the terms of the agreement the Investor was issued an additional~~ ~~154,835~~ ~~shares of common stock due to the decrease in stock price resulting in an effective conversion price of~~ ~~$1.83~~.

~~On March 13, 2020, in accordance with the terms of the agreement the Investor was issued an additional~~ ~~116,000~~ ~~shares of common stock due to the decrease in stock price resulting in an effective conversion price of~~ ~~$1.50~~.

~~On March 20, 2020, in accordance with the terms of the agreement the Investor was issued an additional~~ ~~163,800~~ ~~shares of common stock due to the decrease in stock price resulting in an effective conversion price of~~ ~~$1.50~~.

~~On April 15, 2020, the Investor converted~~ ~~$1,250,000~~ ~~in principal and~~ ~~$437,500~~ ~~in interest, for~~ ~~1,125,000~~ ~~shares of the Company common stock at an effective conversion price of~~ ~~$1.50~~ due to a trigger event for the Company not filing its annual report on Form 10-K for the fiscal year ended September 30, 2018 on or before December 31, 2018. As of June 30, 2020, the Debenture was fully converted into shares of the Company’s common stock.

~~The aggregate debt discount has been accreted and charged to interest expenses as a financing expense in the amount of~~ ~~$783,474~~ ~~during the nine months ended June 30, 2020.~~

On April 17, 2019, the Company entered into a Securities Purchase Agreement (the “Agreement”) with an otherwise unaffiliated third-party institutional investor (the “Investor”), pursuant to which the Company agreed to issue to the Investor a ~~$10,750,000~~ ~~face value Senior Secured Redeemable Convertible Promissory Note (the “Debenture”) with a~~ ~~7.5%~~ ~~original issue discount,~~ ~~215~~ ~~shares of our Series B Preferred Stock with a~~ ~~7.5%~~ ~~original issue discount, a Common Stock Purchase Warrant (the “Warrant”) on a cash-only basis to acquire up to~~ ~~230,000~~ ~~shares (the “Warrant Shares”) of our common stock and~~ ~~125,000~~ ~~shares of our Common Stock. The aggregate purchase price for the Debenture, the Series B Preferred Stock the Warrant and the Common Stock is~~ ~~$20,000,000. (See Notes 13 and 14 for additional details.)The Debenture was secured by all assets of the Company.~~

~~Pursuant to the first closing of the Agreement, which occurred on April 18, 2019, the Investor agreed to tender to the Company the sum of~~ ~~$10,000,000~~, for the Debenture, the Common Stock and the Warrant. No additional closings to sell the preferred stock have occurred and the Series B preferred stock was removed under the amendments to the Agreement discussed below.

~~The Debenture has a maturity date of~~ ~~two years~~ ~~from the issuance date and the Company has agreed to pay compounded interest on the unpaid principal balance of the Debenture at the rate equal~~ ~~7.5%~~ ~~per annum. Interest is payable on the date the applicable principal is converted or on maturity. The interest must be paid in cash and, in certain circumstances, may be paid in shares of common stock.~~

Prior to the maturity date, provided that no trigger event has occurred, the Company will have the right at any time upon 30 trading days’ prior written notice, in its sole and absolute discretion, to redeem all or any portion of the Debenture then outstanding by paying to the Investor an amount equal to 145% of the of the portion of the Debenture being redeemed.

The Investor may convert the Debenture into shares of the Company’s common stock at a conversion price equal to 90% of the mathematical average of the 5 lowest individual daily volume weighted average prices of the common stock, less $0.75 per share, during the period beginning on the issuance date and ending on the maturity date subject to certain floor price restrictions. In the event certain equity conditions exist, the Company may require that the Investor convert the Debenture. In no event shall the Debenture be allowed to effect a conversion if such conversion, along with all other shares of Company common stock beneficially owned by the Investor and its affiliates would exceed 4.99% of the outstanding shares of the common stock of the Company.

~~On March 4, March 13, and May 1, 2020 the Company entered into amendments (the “Amendments”) with the Investor.~~

~~On May 5, 2020, the Investor converted~~ ~~$750,000~~ ~~in principal and~~ ~~$112,500~~ ~~in interest, for~~ ~~575,000shares of the Company common stock at an effective conversion price of~~ ~~$1.50~~.

~~On May 6, 2020, the Investor converted~~ ~~$600,000~~ ~~in principal and~~ ~~$90,000~~ ~~in interest, for~~ ~~460,000~~ ~~shares of the Company common stock at an effective conversion price of~~ ~~$1.50~~.

~~On May 7, 2020, the Investor converted~~ ~~$595,000~~ ~~in principal and~~ ~~$89,250~~ ~~in interest, for~~ ~~456,167~~ ~~shares of the Company common stock at an effective conversion price of~~ ~~$1.50~~.

~~On May 8, 2020, the Investor converted~~ ~~$350,000~~ ~~in principal and~~ ~~$52,500~~ ~~in interest, for~~ ~~268,333~~ ~~shares of the Company common stock at an effective conversion price of~~ ~~$1.50~~.

~~On May 11, 2020, the Investor converted~~ ~~$350,000~~ ~~in principal and~~ ~~$52,500~~ ~~in interest, for~~ ~~268,333~~ ~~shares of the Company common stock at an effective conversion price of~~ ~~$1.50~~.

~~On May 12, 2020, the Investor converted~~ ~~$730,000~~ ~~in principal and~~ ~~$109,500~~ ~~in interest, for~~ ~~559,667~~ ~~shares of the Company common stock at an effective conversion price of~~ ~~$1.50~~.

~~On May 13, 2020, the Investor converted~~ ~~$375,000~~ ~~in principal and~~ ~~$56,250~~ ~~in interest, for~~ ~~287,500~~ ~~shares of the Company common stock at an effective conversion price of~~ ~~$1.50~~.

~~On May 18, 2020, the Investor converted~~ ~~$360,000~~ ~~in principal and~~ ~~$54,000~~ ~~in interest, for~~ ~~276,000~~ ~~shares of the Company common stock at an effective conversion price of~~ ~~$1.50~~.

~~On May 19, 2020, the Investor converted~~ ~~$1,020,000~~ ~~in principal and~~ ~~$153,000~~ ~~in interest, for~~ ~~782,000~~ ~~shares of the Company common stock at an effective conversion price of~~ ~~$1.50~~.

~~On May 20, 2020, the Investor converted~~ ~~$380,000~~ ~~in principal and~~ ~~$57,000~~ ~~in interest, for~~ ~~291,333~~ ~~shares of the Company common stock at an effective conversion price of~~ ~~$1.50~~.

~~On May 21, 2020, the Investor converted~~ ~~$2,140,000~~ ~~in principal and~~ ~~$321,000~~ ~~in interest, for~~ ~~1,640,667~~ ~~shares of the Company common stock at an effective conversion price of~~ ~~$1.50~~.

~~On May 22, 2020, the Investor converted~~ ~~$3,100,000~~ ~~in principal and~~ ~~$465,000~~ ~~in interest, for~~ ~~2,376,667~~ ~~shares of the Company common stock at an effective conversion price of~~ ~~$1.50~~.

~~As of June 30, 2020, the Debenture was fully converted into shares of the Company’s common stock.~~

~~The aggregate debt discount has been accreted and charged to interest expenses as a financing expense in the amount of~~ ~~$8,320,205~~ ~~during the nine months ended June 30, 2020.~~

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

The Company has operating leases under which it leases its branch offices, ~~and~~ corporate headquarters, and data center, one of which is with a related party. ~~Upon adoption of the new lease guidance, on October 1, 2019, the Company recorded a right of use asset and corresponding lease liability of~~ ~~$85,280~~ ~~and~~ ~~$85,280, respectively, on the consolidated balance sheet.~~ As of ~~June 30, 2020,~~March 31, 2021, the Company's operating lease right of use asset and operating lease liability totaled $~~52,280~~713,158 and $~~52,999~~713,023, respectively. A weighted average discount rate of 10% was used in the measurement of the right of use asset and lease ~~liability as of October 1, 2019.~~liability. As the rate implicit in the lease is not readily determinable, the Company's incremental collateralized borrowing rate is used to determine the present value of lease payments. This rate gives consideration to the applicable Company collateralized borrowing rates and is based on the information available at the commencement date. The Company has elected to apply the short-term lease measurement and recognition exemption to leases with an initial term of 12 months or less; therefore, these leases are not recorded on the Company’s Consolidated Balance Sheet, but rather, lease expense is recognized over the lease term on a straight-line basis.

The Company's operating leases have remaining lease terms between one year to two years, with a weighted average lease term of ~~0.7~~1.15 years at ~~June 30, 2020.~~March 31, 2021. Some leases include multiple year renewal options.The Company’s decision to exercise these renewal options is based on an assessment of its current business needs and market factors at the time of the renewal. Currently, the Company has no leases for which the option to renew is reasonably certain and therefore, options to renew were not factored into the calculation of its right of use asset and lease liability as of ~~October 1, 2019.~~March 31, 2021. These operating leases also have a weighted average discount rate of 10% at March 31, 2021.

The following is a schedule of the Company's operating lease liabilities by contractual maturity as of ~~June 30, 2020:~~March 31, 2021:

Total operating lease costs of $~~38,328~~ 208,536 and ~~$38,523~~$48,459 for the ~~nine~~six months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively, were included as part of administrative expense.

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

These financing leases have a weighted average lease term of ~~12.~~3.13 years and a weighted average discount rate of 10.0% at March 31, 2021.

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

During the ~~nine~~six months ended June 30, 2019, the Company had a consulting agreement with ZRB Holdings, Inc., an entity wholly owned by Zachary Bradford, our Chief Executive Officer and director, for management services. In accordance with this agreement, as amended, Mr. Bradford earned ~~$353,140~~ during the nine months ended June 30, 2019. The agreement was terminated in October 2019 when Mr. Bradford stepped down as the CFO and took the position of CEO and accepted the associated employment agreement.

~~During the nine months ended June 30, 2020,~~March 31, 2021, the Company paid Blue Chip Accounting, LLC (“Blue Chip”) $~~86,658~~ 90,365for accounting, tax, administrative services and reimbursement for office supplies. Blue Chip is 50%beneficially owned by Mr. Bradford. ~~Blue Chip performed all services at discounted rates and none~~None of the ~~charges~~services were associated with work performed by Mr. Bradford. The services consisted of ~~preparing and filing tax returns,~~ bookkeeping, accounting, and administrative support assistance. The Company also sub-leases office space from Blue Chip (see ~~note 11~~Note 15 for additional details). During the ~~nine~~six months ended ~~June 30, 2020,~~March 31, 2021, $~~10,150~~ 9,150was paid to Blue Chip for rent.

~~On August 28, 2018, the Company executed an agreement with Zero Positive, LLC an entity controlled by Mr. Huber. In accordance with the agreement with Zero Positive, LLC, Mr. Huber earned~~ ~~$125,154~~ ~~and~~ ~~$127,772, during the nine months ended June 30, 2020 and 2019.~~

~~On March 12, 2019, the Agreement was terminated upon the execution of a separation agreement. All amounts owed from all agreements totaling~~ ~~$90,000~~ ~~were paid in full.~~

~~On September 28, 2018, in connection with the consulting agreement executed with Zero Positive, LLC, the Company issued warrants to purchase~~ ~~90,000~~ ~~shares of common stock at an exercise price of~~ ~~$8.00~~ ~~per share to Zero Positive. The warrants were valued at~~ ~~$2,607,096~~ ~~using the Black Scholes option pricing model based upon the following assumptions: term of~~ ~~10 years, risk free interest rate of~~ ~~3.05%, a dividend yield of~~ 0% ~~and volatility rate of~~ ~~191%~~. ~~The warrants vest as follows: 30,000 vested immediately, the balance vest evenly on the last day of each month over forty-two months beginning August 31, 2018. As of June 30, 2020,~~ ~~62,857~~ ~~warrants had vested, and the Company recorded an expense of~~ ~~$372,442~~ ~~and~~ ~~372,442~~ ~~during the nine months ended June 30, 2020 and 2019.~~

Matthew ~~Schultz-~~Schultz - Chairman of the Board ~~and Former Chief Executive Officer~~

The Company ~~has a consulting agreement with Matthew Schultz, our former Chief Executive Officer, for management services. In accordance with this agreement, as amended, Mr. Schultz earned~~ $0 ~~and~~ ~~$353,140~~, respectively during the nine months ended June 30, 2020 and 2019. The agreement was terminated on October 7, 2019 when Mr. Schultz stepped down as the CEO and took the position of Chairman of the Board. Mr. Schultz received ~~$189,000~~ ~~as compensation for his services as chairman of the board during the nine months ended June 30, 2020.~~

~~The Company additionally~~ entered into an agreement on November 15, 2019 with an organization to provide general investor relations and consulting services that Mr. Schultz is affiliated with. The Company paid the organization $49,500 in fees plus $176,000 in expense reimbursements for the ~~nine~~six months ended ~~June 30,~~March 31, 2020. The agreement was terminated in March 2020.

~~Effective January 1, 2019, the Company agreed to pay non-executive independent board members~~ ~~$2,500~~ ~~per month. Mr. McNeill earned~~ ~~$22,500~~ ~~and~~ ~~$15,000~~ ~~in Board compensation during the nine months ended June 30, 2020 and 2019. Mr. Beynon and Dr. Wood each earned~~ ~~$22,500~~ ~~and~~ $0 ~~in Board compensation during the nine months ended June 30, 2020 and 2019.~~

The Company’s authorized capital stock consists of ~~20,000,000~~50,000,000 shares of common stock and 10,000,000 shares of preferred stock, par value $0.001 per share. As of ~~June 30, 2020,~~March 31, 2021, there were ~~16,123,507~~33,874,152 shares of common stock issued and outstanding, and 1,750,000 shares of preferred stock issued and outstanding.

On December 10, 2019, the Financial Industry Regulatory Authority (“FINRA”) approved the Company’s 1:10 reverse stock split of the Company’s common stock. The reverse stock split took effect on December 11, 2019. Unless otherwise noted, impacted amounts and share information in the consolidated financial statements and notes thereto as of and for the periods ended June 30, 2020 and September 30, 2019, have been adjusted for the stock split as if such stock split occurred on the first day of the first period presented.

~~On August 9, 2019, the Company filed a Certificate of Amendment to its Articles of Incorporation to increase its authorized shares of common stock from~~ ~~100,000,000~~ to ~~200,000,000~~. The amendment was previously approved by written consent of the Company’s Board and more than a majority of the voting power of its stockholders and delivered to stockholders of record as of the close of business July 2, 2019 pursuant to a Definitive Information Statement on Schedule 14C. As a result of the reverse split mentioned above, the effect of the filed amendment reduced the authorized shares to ~~20,000,000~~.

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

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

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

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

On March 16, 2021, the Company filed a Certificate of ~~Preferred Stock Designation~~

~~On April 16, 2019, pursuant~~Amendment to ~~Article IV of our~~its Articles of Incorporation with the ~~Company’s Board~~Nevada Secretary of ~~Directors voted~~State to ~~designate a class~~increase its authorized shares of ~~preferred~~common stock ~~entitled Series B Preferred Stock, consisting of up~~ to ~~one hundred thousand (100,000) shares, par value~~ ~~$0.001~~50,000,000. Under the Certificate of Designation, the holders of Series B Preferred Stock are entitled to the following powers, designations, preferences and relative participating, optional and other special rights, and the following qualifications, limitations and restrictions, among others as set forth in the Certificate of Designation:

~~On March 6, 2020, the Company withdrew the Certificate of Designation for the Series B Preferred Stock. At the time of withdrawal, no shares of Series B Preferred Stock were issued and outstanding.~~

Common Stock issuances during the ~~nine~~six months ended ~~June 30, 2020~~March 31, 2021

The Company issued ~~1,964,313~~4,444,445 shares of the Company’s common stock in connection with its underwritten equity offering at a price of $9.00 per share for net proceeds of $37.05 million.

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

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

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

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

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

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

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

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

The Company issued 997,605 shares of common stock in accordance with the terms of the convertible debt agreement due to the decrease in stock price. ~~(See Note 10 for additional details.)~~

The Company issued ~~22,000~~2,000 shares of common stock for services rendered to an independent ~~consultants at a fair value of~~ ~~$54,000~~.consultant.

The Company issued 793 shares of common stock as a result of rounding related to the reverse stock split.

The Company issued 95,699 shares of common stock in relation to the acquisition of p2k ~~(See note 3 for additional details.)~~

~~In relation to the Securities Purchase Agreement dated December 31, 2018, the Company issued~~ ~~1,125,000~~ ~~shares of common stock for the conversion of~~ ~~$1,250,000~~ ~~in principal and~~ ~~$437,500~~ ~~in interest at an effective conversion price of~~ ~~$1.50. (See Note 10 for additional details)~~

~~In relation to the Securities Purchase Agreement dated April 17, 2019, the Company issued~~ ~~8,241,665~~ ~~shares of common stock for the conversion of~~ ~~$10,750,000~~ ~~in principal and~~ ~~$1,612,500~~ ~~in interest as a conversion premium at an effective conversion price of~~ ~~$1.50. (See Note 10 for additional details)~~

~~The Company issued~~ ~~25,019~~ ~~shares of common stock as board and executive compensation at a fair value of~~ ~~$57,500~~.

Common stock returned during the ~~nine~~six months ended ~~June 30,~~March 31, 2020

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

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

Series A Preferred Stock issuances during the ~~nine~~six months ended ~~June 30,~~March 31, 2020

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

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

The following is a summary of stock warrant activity during the ~~nine~~six months ended ~~June 30, 2019~~March 31, 2021.

During the ~~period commencing October 1, 2018 through June 30, 2019, the Company received~~six months ended March 31, 2021, a total of ~~$361,800~~ ~~from 14 investors pursuant to private placement agreements with the investors to purchase~~ ~~45,225~~166,396 shares of the Company’s common stock ~~at a purchase price equal to~~were issued in connection with the exercise of ~~$8.00~~166,396 ~~for each share of common stock.~~

~~On September 11, 2018, the Company entered into an agreement with Regal Consulting, LLC for investor relations services. Under this agreement the Company agreed to issue~~ ~~3,000~~ ~~shares of the Company’s~~ common stock ~~per month as compensation~~warrants at exercise prices ranging from $3.36 and $20.00, for ~~services plus additional cash compensation. During the nine months ended June 30, 2019, the Company issued~~a total consideration of $2,774,812.

On March 31, 2021, a total of ~~18,000shares of its common stock in accordance with the agreement. Stock compensation of~~ ~~$531,600~~ ~~was recorded as a result of the stock issued under the agreement.~~

~~On October 15, 2018, the Company entered into an agreement with a consultant for services. Under this agreement the Company agreed to issue~~ ~~3,000~~ ~~shares of the Company’s common stock which vest evenly over a~~ ~~six month~~ ~~period from the agreement date. During the nine months ended June 30, 2019, the Company recorded stock compensation of~~ ~~$68,819~~ ~~was recorded as a result of the stock issued under the agreement.~~

~~On October 2, 2018, an investor exercised warrants to purchase~~ ~~300~~ ~~shares of the Company’s $0.001 par value common stock at a purchase price equal to~~ ~~$3.63~~ ~~for each share of Common stock. The Company receive~~ ~~$1,088~~ ~~as a result of this exercise.~~

~~The Company issued~~ ~~10,000~~ ~~shares in relation to a Securities purchase agreement executed on December 31, 2018. (See Note 10 for additional details.)~~

~~On December 31, 2018, the Company settled~~ ~~$25,000~~ ~~of a promissory note through the issuance of~~ ~~2,500~~ ~~shares of the Company’s common stock. The shares were valued at~~ ~~$51,225~~ ~~and a~~ ~~$26,225~~ ~~loss on settlement of debt was recorded as a result of the issuance.~~

~~On January 7, 2019, a total of~~ ~~144,417~~74,437 shares of the Company’s common stock were issued in connection with the cashless exercise of ~~150,000~~76,800 common stock warrants at an exercise ~~price of~~prices ranging from $0.83.

~~On January 7, 2019, an investor converted~~ ~~$2,500,000~~ ~~in principal and~~ ~~$875,000~~ ~~in interest,~~ ~~for~~ ~~178,472~~ ~~shares of the Company’s common stock at an effective conversion price of~~ ~~$18.90~~.

~~On January 22, 2019, in accordance with a merger agreement, the Company issued~~ ~~175,000~~ ~~shares of the Company’s common stock.~~

~~On February 26, 2019, a total of~~ ~~24,628~~ ~~shares of the Company’s common stock were issued in connection with the cashless exercise of~~ ~~25,000~~ ~~common stock warrants at an exercise price of~~ ~~$0.83~~.

~~On March 6, 2019, the investor converted~~ ~~$1,000,000~~ ~~in principal and~~ ~~$350,000~~ ~~in interest as a conversion premium, for~~ ~~71,389~~ ~~shares of the Company’s common stock at an effective conversion price of~~ ~~$18.90~~.

~~On March 26, 2019, a total of~~ ~~48,857~~ ~~shares of the Company’s common stock were issued in connection with the cashless exercise of~~ ~~50,000~~ ~~common stock warrants at an exercise price of~~ ~~$0.83~~.

~~On April 9, 2019, an investor exercised warrants to purchase~~ ~~900~~ ~~shares of the Company’s common stock at a purchase price equal~~ to $~~3.63~~3.67. ~~The Company received~~ ~~$3,267~~ ~~as a result of this exercise.~~

~~The Company issued~~ ~~125,000~~ ~~shares in relation to the Securities purchase agreement executed on April 17, 2019.~~

~~On June 12, 2019, the Company entered into an agreement with SylvaCap Media for investor relations services. Under this agreement, the Company agreed to issue~~ ~~25,000~~ ~~shares of the Company’s common stock as compensation for services for a six month period plus additional cash considerations.~~ The 25,000 shares vest upon issuance but if the agreement is terminated within 90 days of execution, the shares are to be returned and cancelled. The Company terminated the agreement and the shares were returned on February 10, 2020.

~~As a result of a conversion of a note on September 21, 2018,~~ ~~13,750~~ ~~shares common stock which were previously issued as a commitment fee were returned to treasury and cancelled on December 21, 2018.~~

~~As a result of a note payoff on January 3, 2019,~~ ~~13,750~~ ~~shares of common stock which were previously issued as a commitment fee returned to treasury and cancelled on January 8, 2019.~~

~~The following is a summary of stock warrant activity during the nine months ended June 30, 2020.~~

As of ~~June 30, 2020,~~March 31, 2021, the outstanding warrants have a weighted average remaining term of was ~~2.17~~0.77 years and an intrinsic value of $~~194,250~~6,073,392.

As of ~~June 30, 2020,~~March 31, 2021, there are warrants exercisable to purchase ~~1,286,922~~ 1,048,012shares of common stock in the Company and ~~27,143~~7,857 unvested warrants outstanding that cannot be exercised until vesting conditions are met. ~~996,198~~858,699 of the warrants require a cash investment to exercise as follows, ~~5,000~~ 2,500~~required~~ require a cash investment of $8.00 per share, ~~449,865~~ 439,865require a cash investment of $15.00 per share, ~~125,000~~ ~~require a cash investment of~~ ~~$20.00~~103,000 ~~per share,~~ ~~103,000~~ require a cash investment of $25.00 per share, 200,000require an investment of $35.00 per share, 10,000require an investment of $40.00 per share, 60,000require an investment of $50.00 per share, 38,333require a cash investment of $75.00 per share and 5,000require a cash investment of $100.00 per share. ~~317,867~~ 197,170of the outstanding warrants contain provisions allowing a cashless exercise at their respective exercise prices.

~~On October 15, 2018, the Company entered into an agreement with a consultant for services. Under this agreement the Company agreed to issue~~ ~~3,000~~ ~~warrants to purchase shares of the Company’s common stock at an exercise price of~~ ~~$25.00~~ ~~for a period of~~ ~~five years~~ ~~which vest evenly over a six-month period from the agreement date. During the nine months ended June 30, 2020 and 2019 the Company recorded stock compensation of~~ $0 ~~and~~ ~~$68,643as a result of the stock issued under the agreement. The warrants were valued using the black-Scholes valuation model.~~

~~On December 31, 2018, in connection with a Securities purchase agreement (see Note 10 for additional details) the Company issued Common Stock Purchase Warrants to acquire up to~~ ~~308,333~~ ~~shares of common stock for a term of three years on a cash-only basis at an exercise price of~~ ~~$20.00~~ ~~per share with respect to~~ ~~125,000~~ ~~Warrant Shares,~~ ~~$25.00~~ ~~with respect to~~ ~~100,000~~ ~~Warrant Shares,~~ ~~$50.00~~ ~~with respect to~~ ~~50,000~~ ~~Warrant Shares and~~ ~~$75.00~~ ~~with respect to~~ ~~33,333~~ ~~Warrant Shares.~~

~~On August 28, 2018, in connection with the Consulting agreement executed with Zero Positive, LLC the Company issued warrants to purchase~~ ~~90,000~~ ~~shares of common stock at an exercise price of~~ ~~$8.00~~ ~~per share to Zero Positive. The warrants were valued at~~ ~~$2,607,096~~ ~~using the Black Scholes option pricing model.~~ ~~The warrants vest as follows: 30,000 warrants vested immediately, the balance vest evenly on the last day of each month over the forty-two months beginning August 31, 2018. As of June 30, 2020,~~ ~~58,571~~ ~~warrants had vested, and the Company recorded an expense of~~ ~~$372,442~~ ~~and~~ ~~372,442~~ ~~during the nine months ended June 30, 2020 and 2019. (See Note 10 for additional details.)~~

~~On January 22, 2019, in accordance with a merger agreement, CleanSpark issued; a~~ ~~five year~~ ~~warrant to purchase~~ ~~50,000~~ ~~shares of CleanSpark common stock at an exercise price of~~ ~~$16.00~~ ~~per share, and a~~ ~~five year~~ ~~warrant to purchase~~ ~~50,000~~ ~~shares of CleanSpark common stock at an exercise price of~~ ~~$20.00~~ ~~per share.The warrants were valued at~~ ~~$1,102,417~~ ~~and~~ ~~$1,102,107, respectively.~~

~~On April 18, 2019, in connection with a Securities purchase agreement, the Company issued Common Stock Purchase Warrants to acquire up to~~ ~~230,000~~ ~~shares of common stock for a term of~~ ~~three years~~ ~~on a cash-only basis at an exercise price of~~ ~~$35.00~~ ~~per share with respect to~~ ~~200,000~~ ~~Warrant Shares,~~ ~~$40.00~~ ~~with respect to~~ ~~10,000~~ ~~Warrant Shares,~~ ~~$50.00~~ ~~with respect to~~ ~~10,000~~ ~~Warrant Shares,~~ ~~$75.00~~ ~~with respect to~~ ~~5,000~~ ~~Warrant Shares and~~ ~~$100.00~~ ~~with respect to~~ ~~5,000~~ ~~Warrant Shares.~~

~~The Black-Scholes model utilized the following inputs to value the warrants granted during the nine months ended June 30, 2019:~~

~~On January 7, 2019, a total of~~ ~~144,417~~ ~~shares of the Company’s common stock were issued in connection with the cashless exercise of~~ ~~150,000~~ ~~common stock warrants at an exercise price of~~ ~~$0.83~~.

~~As of June 30, 2020, the Company expects to recognize~~ ~~$786,415~~ ~~of stock-based compensation for the non-vested outstanding warrants over a weighted-average period of~~ ~~1.5 years~~.

The Company sponsors a stock-based incentive compensation plan known as the 2017 Incentive Plan (the “Plan”), which was established by the Board of Directors of the Company on June 19, 2017. ~~A total of~~On October 7, 2020, the Company executed a first amendment to the Plan to increase its share pool from 300,000 to 1,500,000shares ~~were initially reserved for issuance under the Plan.~~of common stock. As of ~~June 30, 2020,~~March 31, 2021, there were ~~21,360~~461,767 shares available for issuance under the ~~plan.~~Plan.

The Plan allows the Company to grant incentive stock options, non-qualified stock options, stock appreciation right, or restricted stock. The incentive stock options are exercisable for up to ten years, at an option price per share not less than the fair market value on the date the option is granted. The incentive stock options are limited to persons who are regular full-time employees of the Company at the date of the grant of the option. Non-qualified options may be granted to any person, including, but not limited to, employees, independent agents, consultants and attorneys, who the Company’s Board believes have contributed, or will contribute, to the success of the Company. Non-qualified options may be issued at option prices of less than fair market value on the date of grant and may be exercisable for up to ten years from date of grant. The option vesting schedule for options granted is determined by the Board of Directors at the time of the grant. The Plan provides for accelerated vesting of unvested options if there is a change in control, as defined in the Plan.

The following is a summary of stock option activity during the ~~nine~~six months ended ~~June 30, 2020.~~March 31, 2021.

As of ~~June 30, 2020,~~March 31, 2021, there are options exercisable to purchase ~~216,717~~338,191 shares of common stock in the Company. As of ~~June 30, 2020,~~March 31, 2021, the outstanding options have a weighted average remaining term of was ~~2.59~~2.43 years and an intrinsic value of $07,345,720.

Option activity for the ~~nine~~six months ended ~~June 30, 2020~~March 31, 2021

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

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

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

During the ~~nine~~six months ended ~~June 30,~~March 31, 2021 and 2020, the Company recognized of $1,163,401and $716,740 of stock compensation expense respectively. As of March 31, 2021, the Company expects to recognize $742,865of stock-based compensation for the non-vested outstanding options over a weighted-average period of 1.01 years.

During the six months ended March 31, 2020, the Company issued 233,233 options to purchase shares of common stock to ~~employees;~~employees, the shares were granted at quoted market prices ranging from $4.50 to $8.50. The options were valued at issuance using the Black Scholes model and stock compensation expense of $~~673,590~~716,740 was recorded as a result of the issuances.

The Black-Scholes model utilized the following inputs to value the options granted during the ~~nine~~six months ended ~~June 30,~~March 31, 2020:

~~As of June 30, 2020, the Company expects to recognize~~ ~~$245,300of stock-based compensation for the non-vested outstanding options over a weighted-average period of~~ ~~2.17 years~~.

~~During the nine months ended June 30, 2019, the Company issued~~ ~~12,788~~ ~~options to purchase shares of common stock to employees, the shares were granted at quoted market prices ranging from~~ ~~$15.10~~ to ~~$59.00. The options were valued at issuance using the Black Scholes model and stock compensation expense of~~ ~~$245,000~~ ~~was recorded as a result of the issuances.~~

~~On March 10, 2018 the Company issued a total of~~ ~~25,000~~ ~~options to four consultants for advisory services. The options vest evenly~~ ~~12 months~~ ~~from issuance. The options expire~~ ~~24 months~~ ~~after issuance and require a cash investment to exercise. The options were valued at issuance using the Black Scholes model at~~ ~~$342,500~~ ~~and amortized of the term of the agreement. During the nine months ended June 30, 2019,~~ ~~$191,425~~ ~~was expensed as stock-based compensation.~~

~~The Black-Scholes model utilized the following inputs to value the options granted during the nine months ended June 30, 2019:~~

~~Fair value assumptions – Options:~~	F-27	~~June 30, 2019~~
~~Risk free interest rate~~			~~2.21%~~-~~2.91%~~
~~Expected term (years)~~			3
~~Expected volatility~~			~~239%~~-~~271%~~
~~Expected dividends~~			0%

On November 22, 2019, the ~~company~~Company entered into a lease to relocate the corporate office to 1185 South 1800 West, Suite 3, Woods Cross, UT 84047. The agreement calls for the Company to make payments of $2,300in base rent per month through February 28, 2021. The lease ~~term~~renewed and is on an annual basis ~~beginning on March 1, 2020.~~through February 28, 2022.

On May 15, 2018, the Company executed a 37 month lease agreement, which commenced on July 1, 2018 at 4360 Viewridge Avenue, Suite C, San Diego, California. The agreement calls for the Company to make payments of $4,057 in base rent per month through July 31, 2021 subject to an annual 3% rent escalation. ~~Future~~ ~~minimum~~ ~~lease payments under the operating leases for the facilities as of June 30, 2020, are as follows:~~

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

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

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

On August 31, 2020, the Company acquired GridFabric. Pursuant to ~~renew.~~the terms of the purchase agreement, additional shares of the Company’s common stock valued at up to $750,000 will be issuable if GridFabric achieves certain revenue and product release milestones.

On February 24, 2021, the Company acquired SWS. Pursuant to the terms of the purchase agreement, additional cash consideration of $2,500,000 will be payable if Solar Watt Solutions achieves certain revenue milestones.

From time to time we may be subject to litigation. Risks associated with legal liability are difficult to assess and quantify, and their existence and magnitude can remain unknown for significant periods of time. We have acquired liability insurance to reduce such risk exposure to the Company. Despite the measures taken, such policies may not cover future litigation, or the damages claimed may exceed our coverage which could result in ~~continent~~contingent liabilities.

For a description of our material pending legal proceedings, please see Part II, Item I of this Quarterly Report on Form 10Q.

For the six months ended March 31, 2021 and 2020, the Company had the following customers that represented more than 10% of our sales.

For the three months ended March 31, 2021 and 2020, the Company had the following suppliers that represented more than 10% of our direct material costs. Internally developed product costs and labor for services rendered are excluded from the calculation.

We disclose segment information that is consistent with the way in which management operates and views the business. Our operating structure contains the following reportable segments:

Energy Segment – Consisting of our CleanSpark, LLC, CleanSpark Critical Power Systems, Inc., GridFabric, and SWS. lines of business, this segment provides services, equipment, and software to the energy industry.

Digital Agency Segment – p2k provides design, software development, and other technology-based consulting services.

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

~~For the nine months ended June 30, 2020 and 2019, the Company had the following customers that represented more than 10% of sales.~~

For the nine months ended June 30, 2020 and 2019, the Company had the following suppliers that represented more than 10% of direct material costs. Internally developed product costs and labor for services rendered are excluded from the calculation.

~~On July 7, 2020, the Company received its~~ ~~$660,000~~ in initial capital from the Contractual joint venture. The Company plans to continue to evaluate opportunities under the joint venture and will continue to provide capital for the procurement of PPE under this agreement as future opportunities continue to arise. (See note 5 for details).

On July 16, 2020, the Company filed a preliminary information statement wherein the Company’s shareholders approved to grant the Board authority to effectuate an increase in the number of authorized shares of Common Stock from 20,000,000 to no more than 50,000,000 and amend the Company’s 2017 Incentive Plan to increase the number of shares issuable from 300,000 to 1,500,000. The effective date of these actions is determined by the Board in its sole discretion.

~~On July 20, 2020, the Company sold~~ ~~1,230,770~~ ~~shares to an existing accredited investor at a price of~~ ~~$3.25~~ ~~per share for gross proceeds of~~ ~~$4,000,000~~.

An investor has advised us that it considers the July 21, 2020 filing of the Form 8-K without that investor’s prior review to be a contractual breach. We believe the investor’s position is without merit given that the governing contract does not provide that investor any right to prior review of the Form 8-K. We intend to vigorously defend against any claims brought by the investor related to the filing of the Form 8-K. We are not in a position to estimate potential impact at this time.

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

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

On April 2, April 6, April 9, April 14, and April 29, 2021 theCompany entered into agreements with cryptocurrency mining equipment suppliers to purchase an aggregate of approximately 23,900 mining servers for an aggregate purchase price of $192,307,550.We paid $90,164,750 towards these miner purchases in April 2021.

On April 16, 2021, as more specifically described in that certain Current Report on Form 8-K filed by the Company with the SEC on April 16, 2021, at the recommendation of the Company’s Compensation Committee, the Company’s board of directors approved certain executive compensation matters with key executives Zachary Bradford, Lori Love and S. Matthew Schultz (the “Executives”). Specifically, amendments to the employment agreements of the Executives were approved which provided (i) an additional cash bonus incentive for Ms. Love based on the Company achieving certain annual gross revenues plus realized gains/losses for the current fiscal year, (ii) the addition of non-cash components to the base salaries of Mr. Bradford and Mr. Schultz in the form of certain monthly payments of Bitcoin, and (iii) additional cash and equity bonus incentives for Mr. Bradford and Mr. Schultz based on the Company achieving certain annual gross revenues plus realized gains/losses in the current fiscal year as well as certain market capitalization milestone targets for the current fiscal year. Additionally, the Executives received (i) one-time cash incentive bonuses, (ii) one-time grants of fully vested RSUs and (iii) option grants to acquire shares of common stock that vest over 36 months.

Certain of the additional equity incentive grants set forth above will be granted to the extent there are available shares under the Company’s 2017 Equity Incentive Plan (the “Plan”) with any remaining equity grants to be granted when the Company obtains shareholder approval to increase the shares available under the Plan.

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

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

We are in the business of providing advanced ~~energy~~ software and ~~control~~controls technology ~~that enables a plug-and-play enterprise solution~~solutions to solve modern energy challenges. We have a suite of software solutions that provide end-to-end microgrid energy modeling, energy market communications, and energy management solutions. Our ~~services~~offerings consist of intelligent energy monitoring and controls, intelligent microgrid design ~~and~~software, middleware communications protocols for the energy industry, energy system engineering, and software consulting services.

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

In addition, following our acquisition of Solar Watt Solutions, Inc. (“Solar Watt”) in February 2021, we are in the process of developing our mVoult platform, which we expect will be a proprietary platform that would enable integration and optimization of solar, energy storage and back-up generators for residential applications.

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

We also own patented gasification technologies. Our ~~software is uniquely capable of enabling a microgrid to be scaled to the user's specific needs and~~technology converts any organic material into SynGas, which can be ~~widely implemented across commercial, industrial, military~~used as fuel for a variety of applications and ~~municipal deployment.~~as feedstock for the generation of DME (Di-Methyl Ether). As previously disclosed, we plan to continue to focus on our other product offerings, as opposed to expending significant efforts on the Gasifier side of the business.

~~We refer~~Integral to ~~the operations surrounding the above plug-and-play energy solution as~~our business is our Distributed Energy Management ~~Business (the “DER Business”~~(or “DER”). business. The main assets of our DER ~~Business~~business include our ~~propriety~~proprietary software systems (“Systems”) and ~~also~~ our engineering and methodology trade secrets. The ~~Distributed Energy Systems~~distributed energy systems and microgrids that utilize our Systems are capable of providing secure, sustainable energy with significant cost savings for ~~our~~ energy customers. ~~The~~Through the Systems, ~~allow~~ customers are able to design, engineer, ~~construct~~ and then efficiently communicate with and manage renewable energy generation, storage and consumption.

Integral to our business is our mPulse and mVSO software platforms (the “Platforms”). When the Platforms are implemented on a customer’s power system, they are able to control the distributed energy resources on site to provide secure, sustainable energy often at significant cost savings for our energy customers. The Platforms allows customers to efficiently manage renewable energy generation, other distributed energy generation technologies including energy generation assets, energy storage assets, and energy consumption assets. By having autonomous control over the ~~distributed~~multiple facets of energy usage and ~~energy~~ storage, customers are able to reduce their dependency on utilities, thereby keeping energy costs relatively constant over time. The overall aim is to transform energy consumers into intelligent energy producers ~~by supplying~~that supply and manage power in a manner that ~~anticipates their routine instead of interrupting it.~~avoids interruptions.

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

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

As an energy technology company, part of our business model is to assess our technologies, product offerings and business direction and determine whether any strategic acquisitions would benefit us. In line with our focus, on January 22, 2019, we acquired the outstanding capital stock of Pioneer Critical Power, Inc., a Delaware corporation (“Pioneer”), which we have since renamed and redomiciled to the State of Nevada and changed the name to CleanSpark Critical Power Systems Inc.

~~As consideration for~~A microgrid is comprised of any number of energy generation, energy storage, and smart distribution assets that serve a single or multiple load, both connected to the ~~transaction,~~ we ~~issued~~utility grid and “islanded,” separate from the utility grid. In the past, distributed energy management systems and microgrids have consisted of off-grid generators organized with controls to its sole shareholder Pioneer Power Solutions, Inc. (“Pioneer Power”) a total of 175,000 shares of our common stock, a 5-year warrant to purchase 50,000 shares of our common stock at an exercise price of $16.00 per shareprovide power where utility lines cannot run. Today, modern distributed energy management systems and ~~a 5-year warrant to purchase 50,000 shares of our common stock at an exercise price of $20.00 per share.~~

~~The parties also signed additional agreements in connection~~microgrids integrate renewable energy generation systems (REGS) with advanced energy storage devices and interoperate with the ~~transaction, as previously disclosed~~local utility grid. Advanced autonomous cyber-secure microgrid controls relay information between intelligent hardware and servers to make decisions in ~~our SEC filings, mainly requiring Pioneer Power to indemnify us in certain circumstances and restricting Pioneer Power from engaging in a competing business.~~

We also signed a Contract Manufacturing Agreement, whereby Pioneer Power shall exclusively manufacture parallel switchgears, automatic transfer switches and related control and circuit protective equipment for us, for a period of eighteen months.

We plan to utilize the new intellectual property we gained from the acquisition and the manufacturing agreement in place to enter into the switchgear equipment sales industry. We acquired executed contracts and purchase orders, which we expect will result in significant gross sales, as well as hired personnel to operate this new line of business.

~~As a result of this transaction, the parties terminated a contemplated asset purchase arrangement previously disclosed in our SEC filings.~~real-time that deliver optimum power where it is needed, when it is needed.

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

Our ~~acquisition~~mPulse software also serves as an integrated distributed energy management control platform that seamlessly integrates and controls all forms of ~~p2kLabs, Inc.~~energy generation with energy storage devices to provide energy security in real time, free of cyber threats to service facility loads. As a DER system, mPulse is able to interoperate with the local utility grid and bring users the ability to choose when to buy or sell power to and from the utility grid. mPulse is designed and intended for commercial, industrial, defense, campus and residential users and ranges in capacity from 4 kilowatts to 100 megawatts and beyond.

As CleanSpark continues to drive towards profitability and further market and sell CleanSpark software and controls, our acquisition of p2kLabs, Inc. not only contributes additional revenues, but also adds depth to our team in sales, marketing, design and software development.

~~We plan to maximize the value of our offering, internalize what would otherwise be expenses, and diversify our ability to better serve our valued clients.~~

~~As consideration for the transaction,~~ we ~~issued to its sole shareholder, Amer Tadayon, a total of 95,699 shares of our common stock and paid $1,155,000 in cash.~~

~~The parties also signed additional agreements in connection with the transaction, as previously disclosed in our SEC filings, mainly an employment agreement with Amer Tadayon. See note 3 for details.~~

~~On January 24, 2020, the Company was approved for listing on the Nasdaq Capital Market (“Nasdaq”).~~

CleanSpark entered into an agreement with partners to procure, distribute and supply Personal Protective Equipment (PPE) for hospitals and frontline medical personnel. The agreement is effective until December 31, 2020, unless otherwise extended by mutual consent.

The Company contributed capital in the amount of $660,000 on April 6, 2020 to assist with the procurement of these products, with the potential for additional monies to be lent by the Company to the contractual joint venture, upon mutual consent if necessary.

Under the agreement, the Company will receive $0.20 per unit for each mask sold and a mutually agreeable amount for other types of PPE’s sold through the use of its funds. Such proceeds are distributed to the Company as soon as commercially reasonable after receipt from such customer or at the Company’s option reinvested for additional purchases.

~~CleanSpark recognized and received $20,000 in other income from this agreement for the period ended June 30, 2020. See note 5 for details.~~

~~On July 7, 2020, the Company received its $660,000~~mPulse supports our innovative fractal approach to microgrid design, which enables multiple microgrids on a single site to interact in ~~initial capital~~a number of different ways, including as peers, in a parent-child relationship, and in parallel or completely disconnected. Each grid can have different operational objectives, and those operational objectives can change over time. Any microgrid can be islanded from the ~~JV.~~rest of the microgrid as well as the larger utility grid. The ~~Company plans~~mPulse software can control the workflow required in both the islanding steps as well as the reconnecting steps of this maneuver and coordinate connected equipment such that connections are only made when it is safe to ~~continue to evaluate opportunities under the JV and will continue to provide capital for the procurement of PPE under this agreement as future opportunities continue to arise.~~

~~Revenues increased~~mVoult is a smart power system that is under development and is expected to ~~$3,438,674 during the three months ended June 30, 2020, as compared~~provide a single solution for resilient, reliable and cost-effective energy for residential properties of all sizes. Our systems will be able to be configured to a homeowner’s needs upon installation, with ~~$1,222,736 in revenues~~flexibility for ~~the same period ended 2019 primarily due to revenue from our switchgear products and mPulse sales.~~

Our cost of revenues was $2,893,939 for the three months ended June 30, 2020, resulting in gross profit of $544,735, as compared with cost of revenues of $1,006,144 for the three months ended June 30, 2019, resulting in gross profit of $216,592.future expansion.

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

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

Critical power switchgear and hardware solutions — CleanSpark Critical Power Systems

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

Through our wholly-owned subsidiary, GridFabric, LLC, (“GridFabric”) we offer Open Automated Demand Response (or OpenADR) solutions to commercial and utility customers. We provide middleware software solutions for utilities and IoT products that manage energy loads. OpenADR 2.0b is now the basis for the ~~three months ended June 30, 2020 was mainly~~standard to be developed by the ~~result~~International Electrotechnical Commission, which is an organization that prepares and publishes international standards for all electrical, electronic and related technologies. Our core products in this area of ~~manufacturing, hardware,~~our business are Canvas and ~~service expenses.~~Plaid.

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

Cost of goods sold increased to $2,751,964 for the three months ended June 30, 2020, from $914,220 for the same period ended 2019. Our product sale expense consisted mainly of the cost of contract manufacturing for our switchgear products and hardware costs.

~~Our cost of services~~increased to 141,975 for the three months ended June 30, 2020, from $91,924 for the same period ended 2019. Our service, software and related revenues expenses for the three months ended June 30, 2020, and 2019 consisted mainly of allocated payroll costs of employees and consultants and subcontractors for services rendered from our acquisition of p2k and installation of solar panels and energy storage.

~~We had operating expenses of $2,688,334 for the three months ended June 30, 2020, as compared with $2,693,290 for the three months ended June 30, 2019.~~

Professional fees decreased to $709,367 for the three months ended June 30, 2020, from $1,296,993 for the same period ended June 30, 2019. Our professional fees expenses for the three months ended June 30, 2020 consisted mainly of officers and directors’ consulting fees of $105,500, consulting fees of $434,236, and accounting, audit and review fees of $25,900 and stock-based compensation of $143,731. Our professional fees expenses for the three months ended June 30, 2019 consisted mainly of officers’ consulting fees of $375,500, consulting fees of $436,653, and audit and review fees of $11,000 and stock-based compensation of $431,721. Professional fees decreased in 2020 mainly as a result of decreased stock-based compensation and officers and directors’ consulting fees.

Payroll expenses increased to $996,555 for the three months ended June 30, 2020, from $211,129 for the same period ended 2019. Our payroll expenses for the three months ended June 30, 2020 consisted mainly of salary and wages expense of $967,355 and employee stock-based compensation of $29,200. Our payroll expenses for the three months ended June 30, 2019 consisted mainly of salary and wages expense of $209,879 and employee stock-based compensation of $1,250.

General and administrative fees increased to $279,045 for the three months ended June 30, 2020, from $222,167 for the same period ended 2019. Our general and administrative expenses for the three months ended June 30, 2020 consisted mainly of marketing expenses of $32,322, rent expenses of $34,445, insurance expenses of $65,833, dues and subscriptions of $61,675 and office expense of $6,267. Our general and administrative expenses for the three months ended June 30, 2019 consisted mainly of travel expenses of $32,994, rent expenses of $17,575, insurance expenses of $36,626, dues and subscriptions of $37,093 and office expense of $17,391.

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

Through our wholly-owned subsidiaries, ATL Data Centers LLC (“ATL”) and our recently-formed subsidiary, CleanBlok, LLC, we mine bitcoin.

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

Factors such as access to computer processing capacity, interconnectivity, electricity cost, environmental factors (such as cooling capacity) and location play an important role in mining. Our current facilities are capable of producing an over 300 PH/s in hash rate capacity. In cryptocurrency mining, “hash rate” is a measure of the processing capacity and speed by a mining computer to mine and process transactions on the bitcoin network. Our activities in this area, in addition to generating revenue in the form of bitcoin, creates an advantageous business opportunity for us to operate a full-scale, demonstration facility of our energy-related products and solutions. We plan to deploy our energy technologies and trade secrets in our bitcoin mining operations with the goal of maximizing energy savings, expanding total power capacity, providing resilient electricity, and reducing greenhouse gas emissions. We anticipate that implementing this strategy will involve the design and installation of multiple microgrids at the ATL Data Center facility. We are in the process of actively expanding this aspect of our business and are working toward expanding our hash rate capacity, with the goal of exceeding 1.0 EH/s in hash rate capacity in fiscal year 2021.

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

As with many new and emerging technologies, our bitcoin mining activities present potentially significant risks to our business. Businesses (including ours) that seek to develop, promote, adopt, transact or rely upon blockchain technologies and bitcoin may have a limited track record and operate within novel and developing environments. These risks are not only related to the businesses we are pursuing, but also the industry as a whole and the concept behind blockchain and cryptocurrency as value creation. In addition, our holding and selling of bitcoin may subject us to additional risks, including the possibility that our activities may become subject to additional regulation or regulatory scrutiny.

Following our acquisition of Solar Watt Solutions, Inc. in February 2021, we provide solar and alternative energy solutions for homeowners and commercial businesses in Southern California. These energy solutions include implementation and installation services for solar panels, energy storage and electric vehicle charging station systems. Solar Watt has historically been focused on serving the communities throughout California, and we intend to work to further expand those services to other regions outside of Southern California. Through these efforts, we expect to leverage those services and capacities to further expand our residential and commercial initiatives, including our mVoult product line for residential microgrids and our mPulse product line for commercial microgrids.

Through our wholly-owned subsidiary, p2kLabs, Inc., we provide a suite of digital services from creative design to technical development ~~expense decreased~~for products and services through the entire product/service lifecycle. Such services are provided through “labs,” with each lab containing its own unique offering, including design, marketing/digital content, engineering and SalesForce development, and strategy services.

We own patented gasification technologies that convert any organic material into synthesis gas (“SynGas”). Our patents protect our gasification technology and process for using feedstock comprising gaseous fuel. Our patented process involves the grinding, drying, separating, mixing, and then pelletizing of solid waste. These pellets constitute the feedstock for the gasifier. Gasifying feedstock using our technology converts waste and organic material into SynGas, which can then be converted into multiple forms of fuel for power plants, motor vehicles, jets, duel-fuel diesel engines, gas turbines, and steam boilers and as feedstock for the generation of DME (Di-Methyl Ether). The SynGas produced is mostly hydrogen and carbon monoxide, which are primary building blocks for many fuels and chemicals. SynGas is sufficiently clean that, if processed directly, it generally does not require costly hot-gas cleanup.

Our gasification technologies and prototype will require additional testing to $0further establish their commercial capability of producing large volumes of clean, renewable energy from any carbon compound (municipal solid waste (MSW), coal, sewage sludge) into clean SynGas. Our prototype gasifier is still under development and a commercially viable gasifier is not expected to be viable for sale until we expend additional resources on its testing and development. A third-party consulting firm has independently tested the gasifier’s performance and certified the results of its performance. Upon completion of the testing, an initial white paper was published outlining the results and suggested improvements for commercialization. We anticipate that the investment to complete these improvements would be approximately $500,000. Upon completion of the improvements, we would be required to conduct an extended test run with an independent third party to verify the results needed to prove its commercial viability, at which time we could begin to actively market our gasifier units. We do not anticipate deploying significant resources on the gasification business at this time. As opportunities arise, we may utilize the gasification assets and intellectual properties through licensing or sales agreements.

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

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

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

Results of operations for the three months ended ~~June 30,~~March 31, 2021 and 2020 ~~from $344,871~~

Revenues increased to $8,119,688 during the three months ended March 31, 2021, as compared with $3,658,283 in revenues for the same period ended ~~2019.~~ 2020 primarily due to revenues from our digital agency and digital currency mining segments.

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

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

Professional fees increased to $2,456,554 for the three months ended March 31, 2021, from $1,005,991 for the same period ended March 31, 2020. Our professional fees expenses for the three months ended ~~June 30, 2020 and 2019~~March 31, 2021 consisted mainly of ~~amortization~~legal fees of ~~capitalized software.~~$1,625,715, consulting fees of $469,029, external marketing fees of $206,923, and accounting, audit and review fees of $149,872. Our professional fees expenses for the three months ended March 31, 2020 consisted mainly of officers and directors’ consulting fees of $184,115, consulting fees of $286,903, and accounting, audit and review fees of $77,684 and stock-based compensation of $245,231.

Payroll expenses increased to $3,262,097 for the three months ended March 31, 2021, from $984,380 for the same period ended 2020. Our payroll expenses for the three months ended March 31, 2021 consisted mainly of salary and wages expense of $2,428,083 and employee stock-based compensation of $834,014. Our payroll expenses for the three months ended March 31, 2020 consisted mainly of salary and wages expense of $955,680 and employee stock-based compensation of $28,700.

General and administrative fees increased to $1,243,154 for the three months ended March 31, 2021, from $311,131 for the same period ended 2020. The increase in our general and administrative expenses for the three months ended March 31, 2021 consisted mainly as a result of an increase in our marketing expenses of $87,276, dues and subscriptions of $233,608, insurance expenses of $172,482, and rent expenses of $286,904. Our general and administrative expenses for the three months ended March 31, 2020 consisted mainly of travel expenses of $48,378, rent expenses of $27,141, insurance expenses of $50,785, dues and subscriptions of $117,671 and office expense of $10,755.

Depreciation and amortization expense increased to ~~$703,367~~$2,117,172 for the three months ended ~~June 30, 2020,~~March 31, 2021, from ~~$618,130~~$715,005 for the same period ended ~~2019.~~2020 mainly due to the depreciation expense related to the equipment used in the data center and digital currency miners.

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

Other income/(expenses) increased to $9,897,012 for the three months ended March 31, 2021, from ($3,543,046) for the same period ended March 31, 2020. Our other income for the three months ended March 31, 2021 consisted mainly of income related to the forgiveness of debt of $541,576, realized gain on sales of digital currency of $585,709, an unrealized gain on equity securities of $343,000, derivative gain of $8,400,629, and net interest income of $26,098. Our other (expenses) for the three months ended March 31, 2020 consisted mainly of an unrealized loss on equity securities of ($210,000), derivative loss of ($1,441,763)and interest expense of ($1,891,283).

We recorded net income of $7,400,040 for the three months ended March 31, 2021, as compared with a net loss of ($5,815,098) for the same period ended March 31, 2020 mainly due to an increase in revenues and unrealized gains on equity and derivative securities.

Revenues increased to $10,377,258 during the six months ended March 31, 2020, as compared with $4,635,107 in revenues for the same period ended 2020 primarily due to revenue from our Cryptocurrency mining.

Our cost and expenses were $19,044,328 for the six months ended March 31, 2021, resulting in loss from operations of ($8,667,070), as compared with cost and expenses of $9,898,620 for the six months ended March 31, 2020, resulting in loss from operations of ($5,263,513).

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

Professional fees increased to $4,169,277 for the six months ended March 31, 2021, from $2,522,578 for the same period ended March 31, 2020. Our professional fees expenses for the six months ended March 31, 2021 consisted mainly of legal fees of $2,856,077, consulting fees of $620,063, external marketing fees of $327,761, accounting, audit and review fees of $303,882. Our professional fees expenses for the six months ended March 31, 2020 consisted mainly of officers and directors’ consulting fees of $466,154, consulting fees of $755,858, and accounting, audit and review fees of $94,160 and stock-based compensation of $831,412. Professional fees increased in 2021 mainly as a result of increased legal fees.

Payroll expenses increased to $6,576,298 for the six months ended March 31, 2021, from $1,695,919 for the same period ended 2020. Our payroll expenses for the six months ended March 31, 2021 consisted mainly of salary and wages expense of $4,810,244 and employee stock-based compensation of $1,766,054. Our payroll expenses for the six months ended March 31, 2020 consisted mainly of salary and wages expense of $1,636,231 and employee stock-based compensation of $59,688.

General and administrative fees increased to $2,193,293 for the six months ended March 31, 2021, from $541,792 for the same period ended 2020. The increase in our general and administrative expenses for the six months ended March 31, 2021 consisted mainly as a result of an increase in our marketing expenses of $688,662, dues and subscriptions of $405,600, insurance expenses of $244,641, rent expenses of $317,297, and bad debt expenses of $231,932. Our general and administrative expenses for the six months ended March 31, 2020 consisted mainly of travel expenses of $79,963, rent expenses of $48,459, insurance expenses of $93,686, dues and subscriptions of $169,038 and office expense of $21,200.

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

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

Other income/(expenses) increased to ~~($6,407,702)~~ $8,899,580for the ~~three~~six months ended ~~June 30, 2020,~~March 31, 2021, from ($~~1,495,213)~~2,467,839) for the same period ended ~~June 30, 2019.~~March 31, 2020. Our other ~~income/~~income for the six months ended March 31, 2021 consisted mainly of income related to the forgiveness of debt of $541,576, realized gain on sales of digital currency of $635,627, an unrealized gain on equity securities of $269,500, derivative gain of $7,380,135, and net interest income of $72,742. Our other (expenses) for the ~~three~~six months ended ~~June 30,~~March 31, 2020 consisted mainly of an unrealized ~~loss~~gain on equity securities of ~~($80,500),~~$158,868, derivative gain of ~~$719,294~~$824,891 and interest expense of ($~~7,066,496)~~3,451,598). ~~Our other expenses~~

We recorded net income of $232,510 for the ~~three~~six months ended ~~June 30, 2019 consisted of interest expense of ($1,495,213).~~

~~We recorded a net loss of $8,551,301 for the three months ended June 30, 2020,~~March 31, 2021, as compared with a net loss of ~~$3,971,911~~($7,731,352) for the same period ended ~~June 30, 2019.~~

Revenues increased to $8,073,781 during the nine months ended June 30, 2020, as compared with $2,209,542 in revenues for the same period ended 2019 primarily due to revenue from our switchgear products and mPulse sales.March 31, 2020.

Our cost of revenues was $6,730,906 for the nine months ended June 30, 2020, resulting in gross profit of $1,342,875, as compared with cost of revenues of $1,821,488 for the nine months ended June 30, 2019, resulting in gross profit of $388,054.

~~Our cost of revenues for the nine months ended June 30, 2020 was mainly the result of product sale and service, software and related revenues expenses.~~

~~Cost of goods sold~~increased to $6,458,086 for the nine months ended June 30, 2020, from $1,245,102 for the same period ended 2019. Our product sale expense for the nine months ended June 30, 2020 consisted mainly of the cost of contract manufacturing for our switchgear products.

~~Cost of services~~decreased to $272,820 for the nine months ended June 30, 2020, from $576,386 for the same period ended 2019. Our service, software and related revenues expenses for the nine months ended June 30, 2020, and 2019 consisted mainly of allocated payroll costs of employees and consultants and subcontractors for services rendered from our acquisition of p2k and installation of solar panels and energy storage.

~~We had operating expenses of $8,749,987 for the nine months ended June 30, 2020, as compared with $7,192,344 for the nine months ended June 30, 2019.~~

Professional fees increased to $3,231,945 for the nine months ended June 30, 2020, from $3,719,269 for the same period ended June 30, 2019. Our professional fees expenses for the nine months ended June 30, 2020 consisted mainly of officers and directors’ consulting fees of $571,654, consulting fees of $1,233,008, legal fees of $332,020 and accounting, audit and review fees of $120,060 and stock-based compensation of $975,143. Our professional fees expenses for the nine months ended June 30, 2019 consisted mainly of officers’ consulting fees of $848,489, consulting fees of $1,071,107, legal fees of $146,682, and audit and review fees of $95,349 and stock-based compensation of $1,540,503. Professional fees increased in 2019 mainly as a result of increased stock-based compensation and other consulting related to increased business development efforts and audit and legal fees in connection with our SEC reporting obligations.

Payroll expenses increased to $2,692,474 for the nine months ended June 30, 2020, from $684,650 for the same period ended 2019. Our payroll expenses for the nine months ended June 30, 2020 consisted mainly of salary and wages expense of $2,606,586 and employee stock-based compensation of $85,888. Our payroll expenses for the nine months ended June 30, 2019 consisted mainly of salary and wages expense of $508,400 and employee stock-based compensation of $176,250.

General and administrative fees increased to $820,837 for the nine months ended June 30, 2020, from $478,564 for the same period ended 2019. Our general and administrative expenses for the nine months ended June 30, 2020 consisted mainly of marketing expenses of $108,869, travel expenses of $80,648, rent expenses of $82,904, insurance expenses of $159,519, dues and subscriptions of $230,713 and office expense of $27,467. Our general and administrative expenses for the nine months ended June 30, 2019 consisted mainly of travel expenses of $60,028, rent expenses of $52,378, insurance expenses of $79,939, dues and subscriptions of $136,092 and office expense of $30,116.

Product development expense decreased to $0 for the nine months ended June 30, 2020, from $1,034,612 for the same period ended 2019. Our product development expenses for the nine months ended June 30, 2020 and 2019 consisted mainly of amortization of capitalized software.

~~Depreciation and amortization expense increased to $2,004,731 for the nine months ended June 30, 2020, from $1,275,249 for the same period ended 2019.~~

~~Other income/(expenses) increasedto ($8,875,541)~~for the nine months ended June 30, 2020, from ($7,215,712) for the same period ended June 30, 2019. Our other income/(expenses) for the nine months ended June 30, 2020 consisted mainly of an unrealized gain on equity securities of $78,368, derivative gain of $1,544,185 and interest expense of ($10,518,094). Our other expenses for the nine months ended June 30, 2019 consisted of interest expense of ($7,196,287), and loss on settlement of debt of (19,425).

~~We recorded a net loss of $16,282,653 for the nine months ended June 30, 2020, as compared with a net loss of $14,020,002 for the same period ended June 30, 2019.~~

As of ~~June 30, 2020,~~March 31, 2021, we had total current assets of ~~$7,220,044,~~$178,459,063, consisting of cash, digital currency, accounts receivable, and prepaid expenses and other current assets, and total assets in the amount of ~~$20,628,304.~~$292,612,596. Our total current and total liabilities as of ~~June 30, 2020~~March 31, 2021 were ~~$1,588,880~~$7,340,445 and ~~$2,270,049,~~$8,892,137 respectively. We had working capital of ~~$5,631,164~~$171,296,123 as of ~~June 30, 2020.~~March 31, 2021.

Operating activities used ~~$3,679,081~~$11,686,460 in cash for the ~~nine~~six months ended ~~June 30, 2020,~~March 31, 2021, as compared with ~~$5,792,028~~$1,263,055 for the same period ended ~~June 30, 2019.~~March 31, 2020. Our use of net cash in operating activities were primarily driven by gain on derivative asset of $7,380,135, realized gain on sale of digital currency of $635,627, and PPA loan forgiveness of $531,169, offset mainly by stock based compensation of $5,199,658, depreciation and amortization of $3,226,263, and bad debt provision of $231,932. Other components of our negative operating cash flow are the changes in operating assets and liabilities including increase in prepaid expenses and other current assets of $(1,130,741), decrease in accounts payable of ($2,890,270), increase in digital currency of ($7,449,202), increase in contract liabilities of $487,779, decrease in accounts receivable of $114,285, and increase in inventory of ($793,945). Our net loss of ~~$16,282,653~~$7,731,352 was the main component of our negative operating cash flow for the ~~nine~~six months ended ~~June 30,~~March 31, 2020, offset mainly by unrealized gain on equity security of ($~~78,368)~~158,868), gain on derivative asset of ($~~1,544,185)~~824,891), depreciation and amortization of ~~$2,004,731, amortization of capitalized software of $121,582,~~$1,381,069, amortization of debt discounts of ~~$9,022,759, accounts payable of $2,347,566, and~~$3,000,959, stock-based compensation of ~~$1,171,632.~~$910,200, and change in operating and assets and liabilities of $2,138,102.

Investing activities used ($55,909,101) during the six months ended March 31, 2021, as compared with ($2,001,825) for the same period ended March 31, 2020. Our ~~net loss~~increase in deposits on mining equipment of ~~$14,020,002~~45,488,258 was the main component of our negative ~~operating~~investing cash flow for the ~~nine~~six months ended ~~June 30, 2019, offset mainly by loss on settlement~~March 31, 2021. Our sale of ~~debt~~digital currencies of ~~$19,425, depreciation~~$2,422,282, acquisition of ATL Data Centers, LLC of $45,783, acquisition of Solar Watt Solutions, Inc. of ($1,000,337), investment in infrastructure development of ($2,830,860), and ~~amortization~~purchase of ~~$1,275,249, amortization~~property and equipment of ~~capitalized software~~($9,058,011) were the main components of ~~$1,034,612, amortization of debt discounts of $5,674,800, stock based compensation of $1,716,753 and an increase in accounts payable of $1,653,821.~~

~~Cash flows used by~~our investing ~~activities during~~cash flow for the ~~nine~~six months ended ~~June 30, 2020 was $2,667,702, as compared with $598,763 for the same period ended June 30, 2019.~~March 31, 2021. Our acquisition of ~~p2kLabs, Inc.~~p2K of ~~$1,141,990,~~($1,141,990) and investment in ~~International Land Alliance~~debt and ~~other~~ equity securities of ~~$750,000, investment in Contractual Joint Venture of $660,000, and purchase of fixed assets of $30,787~~$(750,000) were the main components of our negative investing cash flow for the ~~nine~~six months ended ~~June 30,~~March 31, 2020. ~~Our investment in the capitalized software of $569,043 and purchase of fixed assets of $27,570 were the main components of our negative investing cash flow for the nine months ended June 30, 2019.~~

Cash flows ~~provided by~~received from financing activities during the ~~nine~~six months ended ~~June 30, 2020~~March 31, 2021 amounted to ~~$463,702,~~$221,743,901, as compared with ~~$13,994,092~~($67,467) for the ~~nine~~six months ended ~~June 30, 2019.~~March 31, 2020. Our cash flows from financing activities for the ~~nine~~six months ended ~~June 30,~~March 31, 2021 consisted of repayments of ($5,865,476) on promissory notes, proceeds from exercise of warrants of $3,346,559, and proceeds from underwritten offerings of $224,262,818. Our negative cash flows from financing activities for the six months ended March 31, 2020 consisted of repayments of ($67,467) on promissory ~~note and proceeds from promissory notes of $531,169. Our positive cash flows from financing activities for the nine months ended June 30, 2019 consisted of $361,800~~ notes.in proceeds from the sale of common stock, $14,995,000 in net proceeds from convertible notes and $75,030 from related party debts off-set by repayments of $507,876 on promissory note, repayments of $555,000 on convertible debts and repayments of $457,820 on related party debts.

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

Management believes that the Company has sufficient liquidity to satisfy its anticipated cash requirements for the next twelve months. However, there can be no assurance that our operations will become profitable or that external sources of financing, including the issuance of debt and/or equity securities, will be available at timesmonths and ~~on terms acceptable to us, or at all.~~beyond. The Company’s management prepares budgets and monitors the financial results of the Company as a tool to align liquidity needs to the recurring business requirements.

We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise monies on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, operating results and financial condition would be adversely affected.

As of ~~June 30, 2020,~~March 31, 2021, there were no off-balance sheet arrangements.

In August 2018, the FASB issued ASU 2018-15, "Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract," which allows for the capitalization of certain implementation costs incurred in a hosting arrangement that is a service contract. ASU 2018-15 allows for either retrospective adoption or prospective adoption to all implementation costs incurred after the date of adoption. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019. We are currently evaluating the impact the adoption of this new standard will have on our financial position and results of operations.

In January 2017, the FASB issued guidance within ASU 2017-04, Intangibles-Goodwill and Other. The amendments in ASU 2017-04 simplify the subsequent measurement of goodwill by comparing the fair value of a reporting unit with its carrying amount. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019. We are currently evaluating the impact the adoption of this new standard will have on our financial position and results of operations.

In June 2016, the FASB issued guidance within ASU 2016-13, Financial Instruments – Credit Losses. The amendments in ASU 2016-13 require assets measured at amortized cost and establishes an allowance of credit losses for available for sale debt securities. ASU 2016-13 is effective for fiscal years beginning after December 15, 2020. We are currently evaluating the impact the adoption of this new standard will have on our financial position and results of operations.

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

In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

Our accounting policies are discussed in detail in the footnotes to our financial statements included in our Annual Report on Form 10-K for the year ended September 30, ~~2019, however~~2020. However, we consider our critical accounting policies to be those related to revenue recognition, long-lived assets, accounts receivable, fair value of financial instruments, cash and cash equivalents, accounts receivable, warranty liability and stock-based compensation.

Not applicable to a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic and current reports that we file with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

The design of any control system is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals. The inherent limitations in any control system include the realities that judgments related to decision-making can be faulty, and that reduced effectiveness in controls can occur because of simple errors or mistakes. Due to the inherent limitations in a cost-effective control system, misstatements due to error may occur and may not be detected.

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of ~~June 30, 2020.~~March 31, 2021. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of ~~June 30, 2020,~~March 31, 2021, our disclosure controls and procedures were not effective due to ~~the presence of material weaknesses in internal control over financial reporting.~~our recently acquired entity (i.e., ATL Data Centers LLC)

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified material weaknesses in the ~~design~~process of internal control related to the following areas: (i) Lack of documentation around the components of internal control and inadequate risk assessment process over the Company’s internal controls; and (ii) Inadequate controls over information technology.

~~Remediation Plan to Address the Material Weaknesses in Internal Control over Financial Reporting~~

Management has implemented and continues to implement measures designed to ensure that control deficiencies contributing to the material weakness are remediated, such that these controls are designed, implemented, and operating effectively. The remediation actions include: (i) we intend to adopt a different financial reporting software that has increased controls built into the system functionality by the end of the current fiscal year, in the interim we plan to implement additional controls to mitigate existing controls risks inherent to our existing accounting software; (ii) additional controls to improve risk assessment procedures to ensure all risks have been addressed.

~~We believe that these actions will remediate the material weaknesses, once management has performed its assessment of~~adopting our internal controls ~~over financial reporting including the remedial measures described above. The weakness will not be considered remediated, however, until the applicable controls operate for a sufficient period of time~~ and ~~management has concluded, through testing, that these controls are operating effectively. We expect that the remediation of this material weakness will be completed prior to the end of fiscal 2020.~~procedures.

Other than ~~continuing with the~~ remediation actions ~~described above~~ related to ~~the~~a previous material weakness in our internal controls, there has been no change in our internal control over financial reporting during the quarter ended ~~June 30, 2020~~March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We are subject to litigation, claims, investigations and audits arising from time to time in the ordinary course of our business.

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

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

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

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

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

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

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

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

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

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

~~We are not~~On January 20, 2021, Scott Bishins (“Bishins”), individually, and on behalf of all others similarly situated (together, the “Class”), filed a class action complaint (the “Class Complaint”) in the United States District Court for the Southern District of New York against the Company, its Chief Executive Officer, Zachary Bradford (“Bradford”), and its Chief Financial Officer, Lori Love (“Love”) (the “Class Action”). The Class Complaint alleges that, between December 31, 2020 and January 14, 2021, the Company, Bradford, and Love “failed to disclose to investors: (1) that the Company had overstated its customer and contract figures; (2) that several of the Company’s recent acquisitions involved undisclosed related party ~~to any pending legal proceeding which would have~~transactions; and (3) that, as a ~~material impact~~result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.” (the “Class Allegations”). The Class Complaint seeks: (a) certification of the Class, (b) an award of compensatory damages to the ~~Company. We~~Class, and (c) an award of reasonable costs and expenses incurred by the Class in the litigation. To date, no class has been certified in the Class Action.

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

Notwithstanding the Class Allegations’ lack of merit, however, the Class Action may distract the Company and cost the Company’s management time, effort and expense to defend against the claims made in the Class Complaint. Notwithstanding the Company’s belief that the Company and its management have complied with all of their obligations under applicable securities regulations, no assurance can be given as to the outcome of the Class Action, and in the event the Company does not ~~aware~~prevail in such action, the Company, its business, financial condition and results of ~~any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.~~operations would be materially and adversely affected.

Please carefully consider the information set forth in this Quarterly Report on Form 10-Q and the risk factors discussed in Part I, Item I1 A. of our Annual Report on Form 10-K for the year ended September 30, ~~2019,~~2020, Part II, Item 1. A of our Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2020, and the risk factors starting on page S-11 of our recent Prospectus Supplement filed on March 18, 2021 (the “Prospectus Supplement”), each of which is incorporated by reference in this Quarterly Report on Form 10-Q, which could materially affect our business, financial condition or future results. In evaluating our business, you should carefully consider the risk factors discussed in our Annual Report on Form 10-K, as updated by our subsequent filings under the Exchange ~~Act.~~Act and the Prospectus Supplement. The occurrence of any of the risks discussed in such filings, or other events that we do not currently anticipate or that we currently deem immaterial, could harm our business, prospects, financial condition and results of operations. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.

~~Our business may be subject to risks arising from pandemic, epidemic, or an outbreak of diseases, such as the recent outbreak of the COVID-19 illness.~~

The recent outbreak of the novel strain of coronavirus, or COVID-19, which has been declared by the World Health Organization to be a “public health emergency of international concern,” has spread across the globe and is impacting worldwide economic activity. A public health pandemic, including COVID-19, poses the risk that we or our employees, contractors, suppliers, and other partners may be prevented from conducting business activities for an indefinite period of time, including due to shutdowns that may be requested or mandated by governmental authorities. While it is not possible at this time to estimate the impact that COVID-19 could have on our business, the continued spread of COVID-19 and the measures taken by the governments of countries affected could disrupt the supply chain and adversely impact our business, financial condition or results of operations. The COVID-19 outbreak and mitigation measures may also have an adverse impact on global economic conditions which could have an adverse effect on our business and financial condition. The extent to which the COVID-19 outbreak impacts our results will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of the virus and the actions to contain its impact.

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

During the period commencing ~~October~~January 1, ~~2019~~2021 through ~~June 30, 2020,~~March 31, 2021, the Company issued ~~47,019~~19,429 shares of common stock ~~and 750,000 shares of preferred stock,~~ as in relation to compensation for services.

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

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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

For the quarterly period ended ~~June 30, 2020~~March 31, 2021

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

For the transition period from __________ to __________

Commission File Number: 001-39187

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

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

	TABLE OF CONTENTS	Page
PART I – FINANCIAL INFORMATION
Item 1:	Financial Statements	3
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	1113
Item 4:	Controls and Procedures	1113
PART II – OTHER INFORMATION
Item 1:	Legal Proceedings	1214
Item 1A:	Risk Factors	1215
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	1215
Item 3:	Defaults Upon Senior Securities	1216
Item 4:	Mine Safety Disclosures	1316
Item 5:	Other Information	1316
Item 6:	Exhibits	1316

	June 30, 2020			September 30, 2019
ASSETS
Current assets
Cash	$	1,955,776		$	7,838,857
Accounts receivable, net		1,744,704			777,716
Contract assets		—			57,077
Prepaid expense and other current assets		1,066,091			1,210,395
Derivative investment asset		1,544,185			—
Investment equity security		421,500			—
Investment debt security, AFS, at fair value		487,788			—
Total current assets		7,220,044			9,884,045

Fixed assets, net		129,891			145,070
Operating lease right of use asset		52,280			—
Capitalized software, net		1,018,540			1,055,197
Intangible assets, net		6,645,303			7,430,082
Goodwill		5,562,246			4,919,858

Total assets	$	20,628,304		$	23,434,252

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	1,366,388		$	848,756
Contract liabilities		149,493			499,401
Lease liability		52,999			—
Due to related parties		20,000			86,966
Loans payable, net of unamortized discounts		—			67,467
Total current liabilities		1,588,880			1,502,590

Long- term liabilities
Convertible notes, net of unamortized discounts		—			2,896,321
Loans payable		681,169			150,000

Total liabilities		2,270,049			4,548,911

Stockholders' equity
Common stock; $0.001 par value; 20,000,000 shares authorized; 16,123,507 and 4,679,018 shares issued and outstanding as of June 30, 2020 and September 30, 2019, respectively		16,124			4,679
Preferred stock; $0.001 par value; 10,000,000 shares authorized; Series A shares; 2,000,000 authorized; 1,750,000 and 1,000,000 issued and outstanding as of June 30, 2020 and September 30, 2019, respectively		1,750			1,000
Additional paid-in capital		127,679,497			111,936,125
Accumulated deficit		(109,339,116	)		(93,056,463)
Total stockholders' equity		18,358,255			18,885,341

Total liabilities and stockholders' equity	$	20,628,304		$	23,434,252

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

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

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

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

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

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


	For the Three Months Ended						For the Nine Months Ended
	June 30, 2020			June 30, 2019			June 30, 2020			June 30, 2019

Revenues, net
Sale of goods revenues	$	2,995,332		$	1,142,448		$	7,272,826		$	1,516,016
Service, software and related revenues		443,342			80,288			800,955			693,526
Total revenues, net		3,438,674			1,222,736			8,073,781			2,209,542

Cost of revenues
Cost of goods sold		2,751,964			914,220			6,458,086			1,245,102
Cost of services		141,975			91,924			272,820			576,386
Total cost of revenues		2,893,939			1,006,144			6,730,906			1,821,488

Gross profit		544,735			216,592			1,342,875			388,054

Operating expenses
Professional fees		709,367			1,296,993			3,231,945			3,719,269
Payroll expenses		996,555			211,129			2,692,474			684,650
Product development		—			344,871			—			1,034,612
General and administrative expenses		279,045			222,167			820,837			478,564
Depreciation and amortization		703,367			618,130			2,004,731			1,275,249
Total operating expenses		2,688,334			2,693,290			8,749,987			7,192,344

Loss from operations		(2,143,599	)		(2,476,698	)		(7,407,112	)		(6,804,290)

Other income (expense)
Other income		20,000			—			20,000			—
Loss on settlement of debt		—			—			—			(19,425)
Unrealized gain/(loss) on equity security		(80,500	)		—			78,368			—
Unrealized gain on derivative asset		719,294			—			1,544,185			—
Interest expense, net		(7,066,496	)		(1,495,213	)		(10,518,094	)		(7,196,287)
Total other income (expense)		(6,407,702	)		(1,495,213	)		(8,875,541	)		(7,215,712)

Net loss	$	(8,551,301	)	$	(3,971,911	)	$	(16,282,653	)	$	(14,020,002)

Loss per common share - basic and diluted	$	(0.77	)	$	(0.90	)	$	(2.32	)	$	(3.45)

Weighted average common shares outstanding - basic and diluted		11,119,288			4,418,344			7,003,927			4,059,527


	For the Three Months Ended						For the Six Months Ended
	March 31, 2021			March 31, 2020			March 31, 2021			March 31, 2020

Revenues, net
Sale of goods revenues	$	891,965		$	3,352,098		$	1,979,999		$	4,277,494
Service, software and related revenues	$	511,931		$	306,185		$	948,057		$	357,613
Cryptocurrency mining revenue	$	6,715,792			—		$	7,449,202			—
Total revenues, net		8,119,688			3,658,283			10,377,258			4,635,107

Costs and expenses
Cost of revenues (exclusive of depreciation and amortization shown below)		1,537,683			2,913,828			2,879,197			3,757,262
Professional fees		2,456,554			1,005,991			4,169,277			2,522,578
Payroll expenses		3,262,097			984,380			6,576,298			1,695,919
General and administrative expenses		1,243,154			311,131			2,193,293			541,792
Depreciation and amortization		2,117,172			715,005			3,226,263			1,381,069
Total costs and expenses		10,616,660			5,930,335			19,044,328			9,898,620

Loss from operations		(2,496,972	)		(2,272,052	)		(8,667,070	)		(5,263,513)

Other income (expense)
Other income		541,576			—			541,576			—
Realized gain on sale of digital currency		585,709			—			635,627			—
Unrealized gain/(loss) on equity security		343,000			(210,000	)		269,500			158,868
Unrealized gain on derivative security		8,400,629			(1,441,763	)		7,380,135			824,891
Interest income (expense), net		26,098			(1,891,283	)		72,742			(3,451,598)
Total other income (expense)		9,897,012			(3,543,046	)		8,899,580			(2,467,839)

Net Income/(loss) attributable to the Company	$	7,400,040		$	(5,815,098	)	$	232,510		$	(7,731,352)

Preferred stock dividends	$	177,505		$	—		$	177,505		$	—

Net Income (loss) attributable to the Company’s common shareholders	$	7,222,535		$	(5,815,098	)	$	55,005		$	(7,731,352)

Earnings/(loss) per common share - basic	$	0.28		$	(1.13	)	$	0.00		$	(1.56)

Weighted average common shares outstanding - basic		25,925,259			5,135,802			24,025,557			4,957,491

Earnings/(loss) per common share - diluted	$	0.22		$	(1.13	)	$	0.00		$	(1.56)

Fully diluted weighted average common shares outstanding		32,697,863			5,135,802			30,798,161			4,957,491


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


For the Nine Months Ended June 30, 2020
	Preferred Stock				Common Stock
	Shares		Amount		Shares			Amount			Additional Paid-in Capital			Accumulated Deficit			Total Stockholders' Equity
Balance, September 30, 2019		1,000,000	$	1,000		4,679,018		$	4,679		$	111,936,125		$	(93,056,463	)	$	18,885,341
Shares issued for services		750,000		750		2,000			2			33,348			—			34,100
Options and warrants issued for services		—		—		—			—			602,169			—			602,169
Shares issued upon conversion of debt and accrued interest		—		—		187,100			187			(187	)		—			—
Rounding shares issued for stock split		—		—		793			1			(1	)		—			—
Net loss		—		—		—			—			—			(1,916,254	)		(1,916,254)
Balance, December 31, 2019		1,750,000	$	1,750		4,868,911		$	4,869		$	112,571,454		$	(94,972,717	)	$	17,605,356
Shares returned and cancelled		—		—		(30,000	)		(30	)		30			—			—
Options issued for business acquisition		—		—		—			—			88,935			—			88,935
Options and warrants issued for services		—		—		—			—			273,931			—			273,931
Shares issued for business acquisition		—		—		95,699			96			444,904			—			445,000
Shares issued upon conversion of debt and accrued interest		—		—		810,505			810			(810	)		—			—
Net loss		—		—		—			—			—			(5,815,098	)		(5,815,098)
Balance, March 31, 2020		1,750,000		1,750		5,745,115			5,745			113,378,444			(100,787,815	)		12,598,124
Shares issued for services		—		—		45,019			45			91,455			—			91,500
Options and warrants issued for services		—		—		—			—			169,932			—			169,932
Shares issued upon conversion of debt and accrued interest		—		—		10,333,373			10,334			14,039,666			—			14,050,000
Net loss		—		—		—			—			—			(8,551,301	)		(8,551,301)
Balance, June 30, 2020		1,750,000		1,750		16,123,507			16,124			127,679,497			(109,339,116	)		18,358,255

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

For the Nine Months Ended June 30, 2019
	Preferred Stock				Common Stock
	Shares		Amount		Shares			Amount			Additional Paid-in Capital			Accumulated Deficit			Total Stockholders' Equity
Balance, September 30, 2018		1,000,000	$	1,000		3,611,645		$	3,612		$	82,990,994		$	(66,939,531	)	$	16,056,075
Shares issued for services		—		—		12,000			12			271,719			—			271,731
Options and warrants issued for services		—		—		—			—			377,475			—			377,475
Shares issued upon exercise of warrants		—		—		300			—			1,088			—			1,088
Beneficial conversion feature and shares and warrants issued with convertible debt		—		—		10,000			10			4,994,990			—			4,995,000
Shares issued for direct investment		—		—		45,225			45			361,755			—			361,800
Shares issued for settlement of debt		—		—		2,500			3			51,222			—			51,225
Commitment shares returned and cancelled		—		—		(13,750	)		(14	)		14			—			—
Net loss				—					—			—			(2,283,551	)		(2,283,551)
Balance, December 31, 2018		1,000,000	$	1,000		3,667,920		$	3,668		$	89,049,257		$	(69,223,082	)	$	19,830,843
Shares issued for services		—		—		9,000			9			328,679			—			328,688
Options and warrants issued for services		—		—		—						350,888			—			350,888
Shares issued upon exercise of warrants		—		—		217,896			218			(218	)		—			—
Shares issued upon conversion of debt		—		—		249,862			250			4,724,750			—			4,725,000
Shares and warrants issued under asset purchase agreement		—		—		175,000			175			6,071,849			—			6,072,024
Commitment shares returned and cancelled		—		—		(13,750	)		(14	)		14			—			—
Net loss				—					—			—			(7,764,540	)		(7,764,540)
Balance, March 31, 2019		1,000,000		1,000		4,305,928			4,306			100,525,219		$	(76,987,622	)	$	23,542,903
Shares issued for services		—		—		34,000			34			295,192			—			295,226
Options and warrants issued for services		—		—		—			—			161,495			—			161,495
Shares issued upon exercise of warrants		—		—		900			1			3,266			—			3,267
Beneficial conversion feature and shares and warrants issued with convertible debt		—		—		125,000			125			9,999,875			—			10,000,000
Net loss				—					—			—			(3,971,911	)		(3,971,911)
Balance, June 30, 2019		1,000,000		1,000		4,465,828			4,466			110,985,047		$	(80,959,533	)	$	30,030,980

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


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

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

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

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

	Amount		Level 1		Level 2		Level 3
Derivative asset	$	1,544,185	$	—	$	—	$	1,544,185
Investment in equity security		421,500		421,500		—	$	—
Investment in debt security		487,788		—		—		487,788
Total	$	2,453,473	$	421,500	$	—	$	2,031,973

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

	Amount
Balance at September 30, 2019	$	—
Fair value at issuance, net of premium		487,788
Gain on derivative asset		1,544,185
Balance at June 30, 2020	$	2,031,973

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

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

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

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

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

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

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

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

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

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

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

Purchase Price Allocation:
Customer list	$	1,045,000
Design and other assets	$	123,000
Goodwill	$	642,388
Other assets and liabilities assumed, net	$	(121,453)
Total	$	1,688,935

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


	For the Three Months Ended						For the Nine months ended
	June 30, 2020			June 30, 2019			June 30, 2020			June 30, 2019
Net sales	$	3,438,674		$	1,432,942		$	8,445,480		$	2,842,848

Net loss	$	(8,551,301	)	$	(3,948,319	)	$	(16,402,974	)	$	(13,993,029)

Loss per common share - basic and diluted	$	(0.77	)	$	(0.87	)	$	(2.33	)	$	(3.37)

Weighted average common shares outstanding - basic and diluted		11,119,288			4,514,043			7,053,523			4,155,226

Fair value assumptions:	~~June 30, 2020~~March 31, 2021
Risk free interest rate		~~0.13%~~0.09%
Expected term (months)		11.5
Expected volatility		~~131%~~141.83%
Expected dividends		0%

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

	June 30, 2020			September 30, 2019
Patents	$	74,112		$	74,112
Websites		8,115			16,482
Customer list and non-compete agreement		6,767,024			5,722,024
Design assets		123,000			—
Trademarks		5,928			5,928
Trade secrets		4,370,269			4,370,269
Intangible assets:		11,348,448			10,188,815
Less: accumulated amortization		(4,703,145	)		(2,758,733)
Intangible assets, net	$	6,645,303		$	7,430,082

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

Long-term loans payable consist of the following:	June 30, 2020		September 30, 2019

Promissory notes	$	681,169	$	150,000

Total	$	681,169	$	150,000