Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the financial statements and related notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2025.

This discussion contains certain forward-looking statements that involve risks and uncertainties. Our actual results and the timing of certain events could differ materially from those discussed in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth herein and elsewhere in this Quarterly Report and in our other filings with the Securities and Exchange Commission. See "Cautionary Note Regarding Forward Looking Statements."

Plan of Operations

We are a developer of large-scale data center infrastructure designed to power the digital economy. Our primary focus is the development of a "master-planned" data center campus in a business-friendly Northwestern U.S. location. Unlike traditional developments, our campus will be designed to be onsite-powered, meaning we intend to provide our tenants with dedicated, reliable energy generated on the property.

Our proposed solution is a Physical Infrastructure-as-a-Service (PIaaS) platform that will integrate onsite behind-the-meter (BTM) power with construction-ready data center building sites that include utilities and fiber connectivity. We plan to provide a turnkey solution with power and utilities to hyperscaler, neocloud, and colocation data center companies seeking to deploy new capacity faster than with traditional power and transmission from a local electric utility company. We are currently focused on a location where onsite power production using natural gas turbines and reciprocating engines is allowed under local and state building codes and where there is direct access to a natural gas pipeline with capacity for delivery within a reasonable timeframe.

In April 2026, we entered into a natural gas supply agreement (the "Supply Agreement") with a natural gas marketing company ("Fuel Supplier") pursuant to which the Fuel Supplier agreed to provide us with 55,000 MMBTU per day of natural gas for our planned onsite powered data center campus in Southeast Idaho on the Northwest Natural Gas Pipeline. Pursuant to the Supply Agreement, in May 2026, we paid to the Fuel Supplier a natural gas reservation fee in the amount of $3,832,500, and in August 2026, we delivered to the Fuel Supplier a letter of credit in the maximum drawable amount of $6,000,000 to secure our obligations under the Supply Agreement. The Supply Agreement also provides for comprehensive fuel management services provided by the Fuel Supplier, that will allow us to better manage our customer's needs and power plant fluctuations to ensure maximum cost-effectiveness and operational reliability as data center buildings are completed and commence operation.

We are currently negotiating with a number of landowners to purchase properties in Southeast Idaho on the Northwest Natural Gas pipeline that we deem sufficient for a large-scale onsite powered data center campus. As of the date of this Report, we have commenced the initial phase of our data center campus development process, which includes working with the local county planning and development department on land-use applications, zoning amendments, and studies and reports that will be required for the county to approve our plans once we gain site control of a property, which we expect will be within the next 60 days.

Concurrently, we also are finalizing timelines and budgets for all necessary county and state environmental assessments. These studies cover the data center campus, the onsite power plant, electrical distribution systems, and critical utility infrastructure (water, sewer, fiber, and gas). We expect to file these reports before the end of 2026, with the aim of securing all necessary construction approvals by the second quarter of 2027. Additionally, we expect to submit to applicable county and state agencies all design and environmental documentation for land use and conditional zoning amendment approvals, which include the onsite natural gas power plant and data center campus development, by year-end 2026.

However, there can be no assurance that we will be able to successfully negotiate or enter into a definitive purchase agreement for targeted properties or to gain all required approvals for land use or conditional zoning amendments.

It is anticipated that we will incur significant expenses in the implementation of our business plan as described herein. In April 2026, we borrowed $15,000,000 to fund certain expenses related to the Supply Agreement and preliminary permitting for our planned data center campus. It is anticipated that we will require substantial additional financing to complete the development and construction of the planned data center campus. A failure to obtain this necessary capital when required on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our development plans, any commercialization efforts and any other operations. We may not be able to secure financing on favorable terms, or at all, to meet our future capital needs. In addition, even if we are able to obtain sufficient funding to commence our business operations, we may need to pursue additional financing in the future to make expenditures and/or investments to support the growth of our business. In addition, we may require additional capital to pursue our business objectives and respond to new competitive pressures, pay extraordinary expenses or fund our growth, including through acquisitions. Additional funding, however, may not be available when required on terms that are acceptable to us, or at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when it is required, our ability to commence and grow our proposed business operations, to support our business and to respond to business challenges could be significantly limited.

To fund our business plan going forward, we intend to raise funds from investors by issuing common stock, preferred stock and/or debt securities.

Results of Operations for the Three Months Ended June 30, 2026 and 2025

The following table summarizes our results of operations for the three months ended June 30, 2026 and 2025:

		Three Months Ended June 30,								Change
		2026				2025				Dollar				Percentage
Revenues		$	-			$	-			$	-				-	%
Operating Expenses
Professional fees			210,000				81,000				129,000				159.3
Equity-based compensation			315,000				(145,000	)			460,000				317.2
General and administrative			15,000				12,000				3,000				25.0
Payroll and related expense			247,000				187,000				60,000				32.1
Amortization of gas reservation fee			160,000				-				160,000				100.0
Total operating expenses		$	947,000			$	135,000			$	812,000				601.5	%
Other (expenses) income
Interest income		$	54,000			$	1,000			$	53,000				5,300.0	%
Financing costs			(54,000	)			(55,000	)			(1,000	)			(1.8	)
Financing costs - related party			(488,000	)			(75,000	)			413,000				550.7
Abandoned project costs			-				(4,581,000	)			(4,581,000	)			(100.0	)
Total other expense		$	(488,000	)		$	(4,710,000	)		$	(4,222,000	)			(89.6	)%

Revenues

For the three months ended June 30, 2026 and 2025, we had no revenues.

Operating Expenses

Professional fees

Professional fees increased to $210,000 for the three months ended June 30, 2026 from $81,000 for the three months ended June 30, 2025, an increase of approximately $129,000, or 159.3%. The increase was primarily attributable to (i) an increase in legal fees of approximately $94,000, (ii) an increase in consulting fees of approximately $31,000, and (iii) political contributions of $30,000, partially offset by (iv) decreases in accounting, filing and transfer agent fees aggregating approximately $1,000 and (v) geologist costs of approximately $25,000 incurred during 2025 that did not recur in 2026.

Equity-based compensation

Equity-based compensation increased to $315,000 for the three months ended June 30, 2026 from a credit of $(145,000) for the three months ended June 30, 2025, an increase of approximately $460,000. The equity-based compensation expense for the three months ended June 30, 2026 included approximately $285,000 recognized upon the achievement of the first performance milestone of our performance-based stock options in May 2026, with the remaining $30,000 related to time-based equity awards issued in prior years. The credit for the three months ended June 30, 2025 resulted from the reversal of previously recognized compensation expense in connection with the forfeiture of stock options held by terminated employees and consultants.

General and administrative

General and administrative expenses increased to $15,000 for the three months ended June 30, 2026 from $12,000 for the three months ended June 30, 2025, an increase of approximately $3,000, or 25.0%, with no individually material changes.

Payroll and related cost

Payroll and related cost increased to $247,000 for the three months ended June 30, 2026 from $187,000 for the three months ended June 30, 2025, an increase of approximately $60,000, or 32.1%. The increase was primarily attributable to the employment agreement entered into with our Chief Executive Officer in March 2026 and increased staffing to support our expanded development activities.

Amortization of gas reservation fee

For the three months ended June 30, 2026, we recognized amortization of the gas reservation fee of $160,000 related to the reservation fee paid under the Supply Agreement we entered into in April 2026. There was no comparable cost during the three months ended June 30, 2025.

Other (expenses) income

Interest income

Interest income increased to $54,000 for the three months ended June 30, 2026 from $1,000 for the three months ended June 30, 2025, an increase of approximately $53,000. The increase was attributable to interest earned on higher average cash balances following our receipt of $15,000,000 of proceeds from the issuance of a promissory note to a related party in April 2026.

Financing costs

Financing costs decreased to $54,000 for the three months ended June 30, 2026 from $55,000 for the three months ended June 30, 2025, a decrease of approximately $1,000, or 1.8%, with no material change between periods.

Financing costs - related party

Financing costs - related party increased to $488,000 for the three months ended June 30, 2026 from $75,000 for the three months ended June 30, 2025, an increase of approximately $413,000, or 550.7%. The increase was attributable to interest on, and amortization of the debt discount associated with, the $16,000,000 promissory note issued to a related party in April 2026, as compared to lower average related party borrowings outstanding during the three months ended June 30, 2025.

Abandoned project costs

During the three months ended June 30, 2025, we recorded abandoned project costs of approximately $4,581,000 in connection with our decision to abandon our planned data center project in Imperial County, California. There were no comparable costs during the three months ended June 30, 2026.

Results of Operations for the Six Months Ended June 30, 2026 and 2025

The following table summarizes our results of operations for the six months ended June 30, 2026 and 2025:

		Six Months Ended June 30,								Change
		2026				2025				Dollar				Percentage
Revenues		$	-			$	-			$	-				-	%
Operating Expenses
Professional fees			316,000				177,000				139,000				78.5
Equity-based compensation			637,000				(103,000	)			740,000				718.4
General and administrative			16,000				13,000				3,000				23.1
Payroll and related expenses			414,000				268,000				146,000				54.5
Amortization of gas reservation fee			160,000				-				160,000				100.0
Total operating expenses		$	1,543,000			$	355,000			$	1,188,000				334.6	%
Other (expenses) income
Interest income		$	55,000			$	2,000			$	53,000				2,650.0	%
Financing costs			(108,000	)			(77,000	)			31,000				40.3
Financing costs - related party			(649,000	)			(75,000	)			574,000				765.3
Abandoned project costs			-				(4,581,000	)			(4,581,000	)			(100.0	)
Total other expense		$	(702,000	)		$	(4,731,000	)		$	(4,029,000	)			(85.2	)%

Revenues

For the six months ended June 30, 2026 and 2025, we had no revenues.

Operating Expenses

Professional fees

Professional fees increased to $316,000 for the six months ended June 30, 2026 from $177,000 for the six months ended June 30, 2025, an increase of approximately $139,000, or 78.5%. The increase was primarily attributable to (i) an increase in legal fees of approximately $81,000, (ii) an increase in consulting fees of approximately $49,000, (iii) an increase in filing fees of approximately $9,000, and (iv) political contributions of $30,000, partially offset by (v) a decrease in accounting fees of approximately $8,000 and (vi) geologist costs of approximately $25,000 incurred in 2025 that did not recur in 2026.

Equity-based compensation

Equity-based compensation increased to $637,000 for the six months ended June 30, 2026 from a credit of $(103,000) for the six months ended June 30, 2025, an increase of approximately $740,000. The equity-based compensation expense for the six months ended June 30, 2026 included $260,000 related to the stock option issued to our Chief Executive Officer as a signing bonus pursuant to his employment agreement executed in March 2026, approximately $285,000 recognized upon the achievement of the first performance milestone of our performance-based stock options in May 2026, and the remaining $92,000 related to time-based equity awards issued in prior years. The credit for the six months ended June 30, 2025 resulted from the reversal of previously recognized compensation expense in connection with the forfeiture of stock options held by terminated employees and consultants.

General and administrative

General and administrative expenses increased to $16,000 for the six months ended June 30, 2026 from $13,000 for the six months ended June 30, 2025, an increase of approximately $3,000, or 23.1%, with no individually material changes.

Payroll and related cost

Payroll and related cost increased to $414,000 for the six months ended June 30, 2026 from $268,000 for the six months ended June 30, 2025, an increase of approximately $146,000, or 54.5%. During the six months ended June 30, 2025, we incurred total payroll costs of approximately $497,000, of which approximately $229,000 was capitalized as project development cost and the remaining $268,000 was expensed. On a gross basis, the 2026 payroll cost decreased by approximately $83,000 compared to the 2025 payroll cost, primarily due to a decrease in headcount; following the abandonment of the Imperial County project in 2025, no payroll costs were capitalized during 2026.

Amortization of gas reservation fee

For the six months ended June 30, 2026, we recognized amortization of the gas reservation fee of $160,000 related to the reservation fee paid under the Supply Agreement we entered into in April 2026. There was no comparable cost during the six months ended June 30, 2025.

Other (expenses) income

Interest income

Interest income increased to $55,000 for the six months ended June 30, 2026 from $2,000 for the six months ended June 30, 2025, an increase of approximately $53,000. The increase was attributable to interest earned on higher average cash balances following our receipt of $15,000,000 of proceeds from the issuance of a promissory note to a related party in April 2026.

Financing costs

Financing costs increased to $108,000 for the six months ended June 30, 2026 from $77,000 for the six months ended June 30, 2025, an increase of approximately $31,000, or 40.3%. The increase was attributable to a higher average balance of convertible debentures outstanding during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.

Financing costs - related party

Financing costs - related party increased to $649,000 for the six months ended June 30, 2026 from $75,000 for the six months ended June 30, 2025, an increase of approximately $574,000. The increase was attributable to interest on, and amortization of the debt discounts associated with, the related party notes payable outstanding during 2026, including the $16,000,000 promissory note issued to a related party in April 2026, as compared to minimal related party borrowings during the six months ended June 30, 2025.

Abandoned project costs

During the six months ended June 30, 2025, we recorded abandoned project costs of approximately $4,581,000 in connection with our decision to abandon our planned data center project in Imperial County, California. There were no comparable costs during the six months ended June 30, 2026.

Liquidity and Capital Resources

Our working capital (deficit) as of June 30, 2026 and December 31, 2025 was as follows:

		As of
		June 30, 2026				December 31, 2025
Current assets		$	10,708,000			$	295,000
Current liabilities			2,598,000				3,095,000
Working capital (deficit)		$	8,110,000			$	(2,800,000	)

Our working capital improved from a working capital deficit of $2,800,000 as of December 31, 2025 to working capital of $8,110,000 as of June 30, 2026, an improvement of approximately $10,910,000. The improvement was primarily attributable to (i) an increase of $10,402,000 in our cash and cash equivalents, primarily resulting from the $15,000,000 of proceeds received from the issuance of a promissory note to a related party in April 2026, and (ii) the cancellation of $739,000 of related party notes payable, net of discounts, that were previously classified as current liabilities, in exchange for the $16,000,000 promissory note, which is classified as a non-current liability, partially offset by (iii) an increase of $215,000 in our accounts payable and accrued expenses and an increase of $27,000 in the carrying value of our convertible debentures due to the amortization of debt discounts.

Cash Flows for the six months ended June 30, 2026 and 2025

		Six Months Ended June 30,
		2026				2025
Net cash used in operating activities		$	(765,000	)		$	(227,000	)
Net cash used in investing activities			(3,833,000	)			(464,000	)
Net cash provided by financing activities			15,000,000				465,000
Change in cash and cash equivalents during the period			10,402,000				(226,000	)
Cash and cash equivalents, beginning of period			287,000				286,000
Cash and cash equivalents, end of period		$	10,689,000			$	60,000

Cash Flows from Operating Activities

Cash used in operating activities increased to approximately $765,000 for the six months ended June 30, 2026 from approximately $227,000 for the six months ended June 30, 2025, an increase of approximately $538,000. The increase was predominantly related to the increases in our professional fees, payroll and related cost and other operating expenses during the six months ended June 30, 2026 to support our expanded development activities.

Cash Flows from Investing Activities

Cash used in investing activities increased to approximately $3,833,000 for the six months ended June 30, 2026 from approximately $464,000 for the six months ended June 30, 2025, an increase of approximately $3,369,000. The increase was attributable to the payment of the $3,833,000 reservation fee under the natural gas supply agreement entered into in April 2026, whereas the prior year period included approximately $464,000 of development costs related to the abandoned Imperial County project.

Cash Flows from Financing Activities

Cash provided by financing activities increased to $15,000,000 for the six months ended June 30, 2026 from approximately $465,000 for the six months ended June 30, 2025, an increase of approximately $14,535,000. The 2026 amount reflects the $15,000,000 advanced by an entity related to a significant shareholder and board member in connection with the issuance of the $16,000,000 promissory note in April 2026, whereas the 2025 amount consisted of $250,000 of proceeds from notes payable - related party and $225,000 of proceeds from the issuance of convertible debentures, net of $10,000 of issuance costs.

Liquidity and Material Cash Requirements

For the six months ended June 30, 2026, we funded our operations with our existing cash reserves and the proceeds from the issuance of a promissory note to an entity that is related to a significant shareholder and board member. As of June 30, 2026, we had cash and cash equivalents of approximately $10,689,000, with convertible debentures in the aggregate principal amount of $1,635,000 that mature in December 2026 and a related party promissory note in the amount of $16,000,000 that matures in April 2028.

It is anticipated that we will incur expenses in the implementation of our business plan described above, and such expenses will require substantial financing to complete the development of the property for a data center operation and to achieve our goals. While we received net proceeds in the amount of $15,000,000 from the issuance of our debt securities in April 2026 to fund our business plan going forward, as of date of the filing of this Report, we have expended approximately $3,833,000 for the payment of the reservation fee to our natural gas supplier and have deposited $6,000,000 as security for a letter of credit that we have delivered under our natural gas supply agreement. Once we secure suitable land for our master-planned data center campus, we expect to expend the remaining net proceeds of approximately $5,100,000 over the next 12 months to complete the zoning and permitting process for the land we acquire, and the required design, engineering and regulatory studies for our planned gas power plant and campus layout, as well as for working capital for salaries, regulatory reporting and other miscellaneous expenses. In order to start the construction phase of our planned campus, we intend to raise additional funds from investors by issuing common stock, preferred stock and/or debt securities. We are currently in discussions with several potential funding sources. However, there can be no assurance that we will be able to successfully raise additional funds when required, if at all.

The failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our development plans, any commercialization efforts or other operations. We may not be able to secure financing on favorable terms, or at all, to meet our future capital needs. In addition, even if we are able to obtain sufficient funding to commence our business operations, we may need to pursue additional financing in the future to make expenditures and/or investments to support the growth of our business and may require additional capital to pursue our business objectives and respond to new competitive pressures, pay extraordinary expenses or fund our growth, including through acquisitions. Additional funds, however, may not be available when we need them on terms that are acceptable to us, or at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to commence our proposed business operations, to continue to grow and support our business and to respond to business challenges could be significantly limited.

Going Concern

The unaudited condensed consolidated financial statements included in this filing have been prepared on a going concern basis, which implies that our company will continue to realize its assets and discharge its liabilities and commitments in the normal course of business. We are presently in the development stage and, apart from our cash balances, have only limited assets. We have not generated revenues in the last two fiscal years, have never paid any dividends and we are unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of our company as a going concern is dependent upon: (i) continued financial support from our shareholders; (ii) our ability to continue raising necessary debt or equity financing to achieve our operating objectives; and (iii) our ability to acquire assets and establish a business or merge or otherwise acquire business opportunities.

Our independent auditors included an explanatory paragraph in their report on our financial statements for the year ended December 31, 2025 regarding concerns about our ability to continue as a going concern. In addition, our financial statements contain further note disclosures in this regard. The implementation of our business plan is dependent upon our ability to continue raising sufficient new capital from equity or debt markets in order to fund our on-going operating losses and real estate acquisition activities. The issuance of additional equity securities could result in a significant dilution in the equity interests of our current stockholders.

Application of Critical Accounting Policies

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures of our company. Although these estimates are based on management's knowledge of current events and actions that our company may undertake in the future, actual results may differ from such estimates.

Principles of Consolidation

The unaudited condensed consolidated financial statements include the accounts of our company and our wholly-owned subsidiary from the formation date. All material intercompany transactions and balances have been eliminated in consolidation.

Debt and Debt Discounts

In accordance with ASC 470-20, Debt with Conversion and Other Options, we first allocate the cash proceeds of any notes we sell with warrants between the notes and any warrants on a relative fair value basis. Proceeds are then allocated to the conversion feature.

We account for debt discounts originating in connection with conversion features that remain embedded in the related notes in accordance with ASC 470-20. These costs are classified on the balance sheet as a direct deduction from the debt liability. We amortize these costs over the term of our debt agreements as financing cost in the unaudited condensed consolidated statement of operations.

Stock-Based Compensation

We account for our stock-based compensation under ASC 718, "Compensation - Stock Compensation" using the fair value based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments.

We use the fair value method for equity instruments granted to non-employees and use the BSM model for measuring the fair value of options. The stock-based fair value compensation is determined as of the date of the grant (measurement date) and is recognized over the vesting periods.

Recent Accounting Pronouncements

Our management reviewed all recently-issued accounting standard updates ("ASUs") not yet adopted by our company and does not believe the future adoption of any such ASUs may be expected to cause a material impact on our unaudited condensed consolidated financial condition or the results of our operations.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial position, revenues and expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.