Company: GEDC
Filing Date: 2025-04-02
Form Type: 10-K
Source: 0001641172-25-002190
Chunk: 378

Company: CalEthos, Inc.
Filing Date: 2025-04-02
Form: 10-K
Item: Item 2
Chunk 378
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 per share, subject to appropriate adjustment in the event of any stock dividend,
stock split, stock combination or other similar recapitalization with respect to the common stock, or (ii) the execution by the Company
of a long-term lease with a data center client for all or a substantial portion of the Company’s planned data center development
project.

In
December 2023, the Company offered the holders of the Company’s outstanding convertible promissory notes in the aggregate principal
amount of $341,000 the option to convert such notes into the Company’s common stock at a price ranging from $0.51 to $0.54 per
share. During the three months ended March 31, 2024, the Company converted principal and interest of approximately $341,000 and $119,000,
respectively (a total of $460,000), for 884,942 shares of the Company’s common stock with a fair market value of approximately
$6,928,000 as of the dates of conversion. As the terms of the conversion were not in accordance with the original conversion feature,
the holders of such notes did not provide any concession to the Company, and there was not an inducement to the holders to convert. As
the offer did not have a time limit, the Company has accounted for the conversion in accordance with ASC 470-50-40-4. The difference
between the fair value of the consideration paid of approximately $6,928,000 and the liability of $460,000 was approximately $6,468,000,
which was accounted for as a loss on liability settlement. The loss on the settlement was recorded as a loss on extinguishment of debt
on the statement of operations for the three months ended March 31, 2024.

Interest
expense on these convertible promissory notes amounted to $32,000
and $439,000
for the years ended December 31, 2024
and 2023, respectively, of which $21,000
and $203,000,
respectively, was capitalized as Data Center Campus Cost.

Note
5 – Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES 

Litigation

From
time to time, the Company may become subject to legal proceedings, claims and litigation arising in the ordinary course of business.
The Company is not currently a party to any material legal proceedings, nor is the Company aware of any pending or threatened litigation
that would have a material adverse effect on