Company: GEDC
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001641172-25-023834
Chunk: 58

Company: CalEthos, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Item 8
Chunk 58
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The
Company will continue to evaluate, at each reporting date, whether it has become probable that the new performance milestone will be
achieved. Factors considered include, but are not limited to:

    ●
    Progress
    on negotiations for land acquisition or lease agreements.

    ●
    Developments
    in regulatory approvals or permitting for onsite power and geothermal projects.

    ●
    Changes
    in the competitive or market landscape for onsite power and geothermal sites.

Once
management concludes that achieving the milestone has become probable, the Company will begin recognizing compensation cost for the modified
options, reflecting the fair value at the modification date. If it becomes probable, the cumulative catch-up adjustment will be recognized
in that period, and expense will be recognized prospectively over the vesting period for any remaining requisite service.

The
historical performance-based compensation costs, related to the outstanding 2,425,000 stock options, was approximately $817,000 of which
$581,000 was capitalized as data center development costs and $236,000 was expensed as equity-based compensation. The recaptured capitalized
cost was classified as abandoned project cost and the recaptured expense was classified as equity-based compensation.

In
January 2025, the Company issued, to the Vice President and Sr, counsel, Real Estate, Land Use and Governmental Affairs, a non-qualified
stock option agreement for the purchase of 350,000 shares of the Company’s common stock for an exercise price of $1.99, which was
the fair value of the Company’s common stock on the grant date. The option vests as to 350,000 shares of common stock as follows:

    ●
    The
    option becomes exercisable as to 43,750 shares of common stock on January 16, 2026 and shall vest and become exercisable as to an
    additional 43,750 shares of common stock on each of January 16, 2027, January 16, 2028, and January 16, 2029 provided that the optionee
    is a consultant, an employee or a Board member in good standing with the Company on such applicable vesting date. 

    ●
    The
    option vests as to the remaining 175,000 shares of common stock based on the employees completing the modified milestones, as disclosed
    above. 

    14

The
Company’s management has accounted for the options in accordance with ASC 718, which requires the