# EDGAR Filing Document

**Accession Number:** 0001416090
**File Stem:** 0001493152-26-018066
**Filing Date:** 2026-4
**Character Count:** 264986
**Document Hash:** 6024a9bec0d216be47e31e3ca9294233
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001493152-26-018066.hdr.sgml**: 20260420

**ACCESSION NUMBER**: 0001493152-26-018066

**CONFORMED SUBMISSION TYPE**: 1-A/A

**PUBLIC DOCUMENT COUNT**: 4

**FILED AS OF DATE**: 20260420

**DATE AS OF CHANGE**: 20260420

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** BLUSKY AI INC.
- **CENTRAL INDEX KEY:** 0001416090
- **STANDARD INDUSTRIAL CLASSIFICATION:** GOLD & SILVER ORES [1040]
- **ORGANIZATION NAME:** 01 Energy & Transportation
- **EIN:** 352302128
- **STATE OF INCORPORATION:** NV
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 1-A/A
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 024-12711
- **FILM NUMBER:** 26874676

**BUSINESS ADDRESS:**
- **STREET 1:** 5330 SO  900 E
- **STREET 2:** STE 280
- **CITY:** MURRAY
- **STATE:** UT
- **ZIP:** 84117
- **BUSINESS PHONE:** 801-312-8113

**MAIL ADDRESS:**
- **STREET 1:** 5330 SO  900 E
- **STREET 2:** STE 280
- **CITY:** MURRAY
- **STATE:** UT
- **ZIP:** 84117

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** INCEPTION MINING INC.
- **DATE OF NAME CHANGE:** 20130520

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** GOLD AMERICAN MINING CORP.
- **DATE OF NAME CHANGE:** 20100628

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** SILVER AMERICA, INC.
- **DATE OF NAME CHANGE:** 20100310

## Part

**(Amendment No. 1)**

**AN OFFERING CIRCULAR PURSUANT TO REGULATION A RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION"). INFORMATION CONTAINED IN THIS PRELIMINARY OFFERING CIRCULAR IS SUBJECT TO COMPLETION OR AMENDMENT. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED BEFORE THE OFFERING CIRCULAR FILED WITH THE COMMISSION IS QUALIFIED. THIS PRELIMINARY OFFERING CIRCULAR SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR MAY THERE BE ANY SALES OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL BEFORE REGISTRATION OR QUALIFICATION UNDER THE LAWS OF SUCH STATE. THE COMPANY MAY ELECT TO SATISFY ITS OBLIGATION TO DELIVER A FINAL OFFERING CIRCULAR BY SENDING YOU A NOTICE WITHIN TWO BUSINESS DAYS AFTER THE COMPLETION OF THE COMPANY'S SALE TO YOU THAT CONTAINS THE URL WHERE THE FINAL OFFERING CIRCULAR OR THE OFFERING CIRCULAR IN WHICH SUCH FINAL OFFERING CIRCULAR WAS FILED MAY BE OBTAINED.**

**PRELIMINARY OFFERING CIRCULAR DATED ________, 2026**

**BLUSKY AI, INC.**

![](form1a_001.jpg)

 **5330 South 900 East, Suite 280**

**Murray, UT 84117**

**(801) – 810-8790**

**<u>www.bluskyaidatacenters.com</u>**

**Up to 12,500,000 Shares and up to 2,500,000 Bonus Shares**

**Maximum offering of $75,000,000 at a price between $4.00 and $6.00 per share**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Price to public** |  | **Underwriting discount and commissions (1)** | **Proceeds to issuer (2)** | **Proceeds to other persons (3)** |
| **Per Share** | $5.00 |  | $0.2586 | $4.7414 | $- |
| **Total Cash Value** | 62500000 |  | 3232500 | 59267500 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- |
| **Total Bonus Share Value**  | 12500000 |  |  |  |  |
| **Total Maximum Value** | $75000000 | (4) | $3232500 | $59267500 | $- |

---

(1) The Company has engaged DealMaker Securities LLC ("Broker") to serve as its sole and
 exclusive placement agent to assist in the placement of its securities on a best effort, non-contingency basis, and its affiliates
 to perform broker-dealer administrative and compliance related functions in connection with this offering. The Broker does not
 purchase any securities from the issuer with a view to sell those for the issuer as part of the distribution of the securities. The
 Company will pay Broker, and affiliates in accordance with the terms of the Order Form between the Company and Broker and its
 affiliates, a copy of which is filed as an exhibit to the Offering Circular of which this Offering Circular is a part. The Company
 has paid Broker and affiliates a one-time advance of $50,000 and monthly payments of $10,000 for three months (total of $30,000)
 for accountable expenses for services. Once the Offering commences, the Company will pay Broker's affiliates a monthly fee of
 $10,000 for account management services not to exceed $90,000. The Broker will charge an amount equal to 4.5% of all
 proceeds of the Offering (excluding Bonus Shares). There is also a supplemental marketing budget of $250,000. If the Offering is fully subscribed, the total
 compensation payable to Broker and affiliates shall not exceed $3,232,500. See " <u>Plan of Distribution</u> " for details
 of compensation to be paid to the placement agent.

(2) This amount excludes the
 expenses of the offering. See " <u>Use of Proceeds</u> " for estimated offering expenses payable by the Company in
 connection with this offering. The Company expects that the amount of other expenses of the offering that it will pay will be
 approximately $1,326,000, including, among other things, $76,000 in legal fees, accounting costs, compliance fees, and
 Blue Sky fees, and $1,250,000 in payment processing fees payable to Stripe.

(3) There are no finder's fees or other fees being paid to third parties from the proceeds.

(4) BluSky AI, Inc. ("BluSky AI,"
 "BluSky," or the "Company") is offering up to 12,500,000 shares (each a "Share"
 or collectively, the "Shares") of Common Stock, par value $0.00001 per share, plus up to 2,500,000 additional
 shares of Common Stock eligible to be issued as bonus shares (the "Bonus Shares") to investors based upon an investor's
 investment level. No additional consideration will be received by the Company for the issuance of Bonus Shares and the company
 will absorb the cost of the issuance of the Bonus Shares. The Price per Share above does not include the effective discount that
 would result from the issuance of Bonus Shares. If eligible for Bonus Shares, investors will receive the greater amount of Bonus
 Shares for which they are eligible and are not cumulative even if investors would qualify for multiple eligibility categories
 for receipt of Bonus Shares. *See* "Plan of Distribution" on page 17 and "Securities Being Offered"
 on page 42 for further details. The Company is seeking to raise up to $62,500,000
from the sale of Common Stock. The Total Maximum Amount does not include $12,500,000, the value of the Bonus Shares (assuming the maximum
number of Bonus Shares are issued in this Offering). The Company shall not receive such amounts because investors are not paying the
purchase price for such Bonus Shares. The offering price will be between $4.00 and $6.00 to be determined at the time of qualification. Offering price will be disclosed via a supplemental filing within 2 days
 of Qualification.

All investors will be required to purchase securities pursuant to a subscription agreement which appears as an Exhibit to the Offering Circular of which this Offering Circular forms a part, and which is irrevocable.

Our common stock is currently quoted on the OTCID Basic Market tier of the OTC Link ATS (alternative trading system), the over-the-counter markets administered by OTC Markets Group, Inc., under the symbol "BSAI".

**The offering will terminate at the earlier of: (1) the date at which the maximum offering amount has been sold, (2) one year from the date upon which the Securities and Exchange Commission qualifies the Offering Circular of which this Offering Circular forms a part, or (3) the date at which the offering is earlier terminated by the Company in its sole discretion. The Company may undertake one or more closings on a rolling basis. There is no minimum amount for this offering. After each closing, funds tendered by investors will be available to the Company. The offering is being conducted on a best-efforts basis without any minimum target.** 

**INVESTING IN THE COMMON STOCK OF BLUSKY AI, INC. IS SPECULATIVE AND INVOLVES SUBSTANTIAL RISKS. YOU SHOULD PURCHASE THESE SECURITIES ONLY IF YOU CAN AFFORD A COMPLETE LOSS OF YOUR INVESTMENT. SEE "RISK FACTORS" BEGINNING ON PAGE 7 TO READ ABOUT THE MORE SIGNIFICANT RISKS YOU SHOULD CONSIDER BEFORE BUYING THE COMMON STOCK OF THE COMPANY.**

**THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OR GIVE ITS APPROVAL OF ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SOLICITATION MATERIALS. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED ARE EXEMPT FROM REGISTRATION.**

**GENERALLY, NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF YOUR ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(d)(2)(i)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO <u>WWW.INVESTOR.GOV</u> AND CONSULTING WITH YOUR INDIVIDUAL FINANCIAL AND LEGAL ADVISORS.**

**Sales of these securities will commence on approximately ________, 2026.**

**The Company is following the "Offering Circular" format of disclosure under Regulation A.**

**TABLE OF CONTENTS**

---

| | |
|:---|:---|
| [SUMMARY](#a_01) | 3 |
| [THE OFFERING](#a_02) | 4 |
| [RISK FACTORS](#a_03) | 7 |
| [DILUTION](#a_04) | 15 |
| [PLAN OF DISTRIBUTION](#a_05) | 17 |
| [USE OF PROCEEDS TO ISSUER](#a_06) | 23 |
| [THE COMPANY'S BUSINESS](#a_07) | 23 |
| [THE COMPANY'S PROPERTY](#a_07a) | 30 |
| [MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](#a_08) | 31 |
| [DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES](#a_09) | 35 |
| [COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS](#a_10) | 38 |
| [SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS](#a_11) | 39 |
| [INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS](#a_12) | 41 |
| [SECURITIES BEING OFFERED](#a_13) | 42 |
| [FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2025, AND 2024](#a_14) | F-1 |

---

 

*In this Offering Circular, the term "BluSky AI", "BluSky" "we", "us", "our" or "the Company" refers to BluSky AI Inc.*

THIS OFFERING CIRCULAR MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY'S MANAGEMENT. WHEN USED IN THE OFFERING MATERIALS, THE WORDS "ESTIMATE," "PROJECT," "BELIEVE," "ANTICIPATE," "INTEND," "EXPECT" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT'S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

**SUMMARY**

**Overview**

BluSky AI Inc. is a Neocloud purpose-built for artificial intelligence/machine learning (AI/ML) and high-performance computing (HPC) that was originally formed in Nevada on July 2, 2007. BluSky AI's core infrastructure is defined by its rapidly deployable *SkyMod* data centers. *SkyMods* next-generation, scalable AI Factories can accelerate speed-to-market and have the potential for energy optimization to support high-performance machine learning workloads. BluSky AI empowers small, mid-sized, enterprise, and academic entities from start-up to scale-up to help drive innovation without compromise.

The company's mission is to empower AI innovators in an attempt to eliminate infrastructure bottlenecks and can accelerating time-to-compute with energy-efficient, scalable solutions.

Previously known as Inception Mining Inc., the company underwent a significant transformation and rebranding in March 2025 to align with its new strategic direction and name change to "BluSky AI Inc." This change reflects BluSky AI Inc.'s commitment to address the universal need for compute power—positioning itself as a foundational layer in the AI revolution, which Grandview Research predicts to be a $1.81 trillion marketplace by 2030. Its infrastructure-first approach will help enable clients to focus on innovation while the company plans to deliver the critical backbone, powering tomorrow's breakthroughs.

BluSky AI's *SkyMod* AI Factories are focused on high-performance computing infrastructure, strategic land site selection, and operational risk management. The BluSky AI "Neocloud" refers to a new breed of cloud providers that specialize in offering high-performance computing, particularly GPU-as-a-Service (GPUaaS), tailored specifically for demanding AI and machine learning workloads and millisecond edge compute inferencing. The company is dedicated to delivering state-of-the-art infrastructure and solutions tailored to meet the demands of modern AI applications and computational workloads.

The Company's business model is centered on pre-fabricated modular data center development. The company has announced letters of intent to lease or acquire multiple site locations while targeting an additional 20+- locations and 150+- MW of compute power. The GPU-as-a-Service (GPUaaS) offering marks a strategic pivot toward scalable, AI-optimized infrastructure. The Company designs and has plans to deploy proprietary modular data centers called *SkyMod* AI Factories engineered for rapid deployment, energy efficiency, and geographic flexibility, enabling tailored solutions for high-performance computing environments. As a planned Neocloud operator, BluSky AI offers could include GPUaaS to enterprise and institutional clients, delivering dedicated, on-demand access to advanced GPU clusters optimized for artificial intelligence, machine learning, and large-scale simulation workloads. This model will integrate site-specific risk management, regulatory compliance, and sustainability into every deployment, positioning BluSky AI as a next-generation infrastructure provider for mission-critical AI applications.

Historically, we operated in the mining industry, serving as a consultant to mining companies and as an operator of a mine engaged in the production of precious metals. From 2013 to 2020, the Company owned certain real property, and the associated exploration permits and mineral rights commonly known as the UP and Burlington Gold Mine in Idaho ("UP and Burlington"). From 2015 through January 24, 2023, the Company operated the Clavo Rico mine in Honduras through its wholly-owned subsidiary, Compañía Minera Cerros del Sur, S.A de C.V. ("CMCS") and other mining concessions. The Clavo Rico mine's workings included several historical underground mining operations dating back to the early Mayan and Spanish occupation, and the primary mine operated through 2022 was located on the 200-hectare Clavo Rico Concession, located in southern Honduras.

**The Offering**

---

| | |
|:---|:---|
| **Securities offered:** | Maximum of 12,500,000 Shares at an estimated public offering price of $5.00 per share (based on the assumed public offering price of $5.00, which is the midpoint of the anticipated price range included on the cover page of this prospectus), plus up to 2,500,000 shares of Common Stock eligible to be issued as Bonus Shares for no additional consideration. |
| <br>**Securities outstanding <u>before</u> the Offering (as of March 31, 2026):**  |  |
| **Common Stock, $0.00001 par value per share** | 24,992,505 shares |
| **Series A Preferred Stock, $0.00001 par value per share** | 51 shares |
| **Securities outstanding <u>after</u> the Offering (1):** |  |
| **Common Stock** | 39,992,505 shares |
| **Series A Preferred Stock** | 51 shares |
| <br> **Use of proceeds:**<br>**Dividend policy:**<br>**Transfer agent:**<br>**Risk Factors:** | <br>We estimate that the net proceeds to us from this offering will be approximately $57,941,500, assuming an offering price of $5.00 per share, after deducting commissions, estimated offering expenses and payment processing fees payable by us.<br>We intend to use the net proceeds of this offering primarily for general corporate purposes, including capital expenditures, labor, real estate, marketing and sales, technology development, and other expenses. See "*Use of Proceeds*" for additional information.<br>We have not historically paid dividends on our Common Stock and do not anticipate paying dividends on our Common Stock for the foreseeable future.<br>Colonial Stock Transfer Company, Inc.<br>See "*Risk Factors*" beginning on page 7 and the other information contained in this prospectus for a discussion of factors you should carefully consider before investing in our securities. |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) Assumes
 that all Shares offered are sold in this offering, and assumes the issuance of
 all Bonus Shares available to investors in this offering.

&nbsp;&nbsp;&nbsp;&nbsp;(2) The total number of shares of Common Stock
 that will be outstanding after this offering is based on 24,992,505 shares of Common Stock outstanding as of March 31,
 2026.

Except as otherwise indicated herein, all information in this prospectus assumes, including the number of shares of common stock that will be outstanding after this offering, assumes or gives effect to:

● no shares of Common Stock have been issued pursuant to any warrants or options; and

● no exercise of outstanding options after.

**Selected Risks Associated with Our Business**

Our business is subject to a number of risks and uncertainties, including those highlighted in the section titled "Risk Factors" immediately following this summary. These risks include, but are not limited to, the following:

● We rely on third parties and disruptions in the supply chain could cause significant delays.

● We rely on the existing U.S. energy grid.

● We operate in a highly competitive and growing market.

● Limited availability and rising costs of GPUs could constrain our growth.

● An occurrence of an uncontrollable event such as the COVID-19 pandemic may negatively affect our operations.

● We have incurred losses since our inception in 2007 and may never be profitable, which raises doubt about our ability to continue as a going concern.

● We are subject to legal proceedings.

● We do not currently carry any property or casualty insurance.

● Uncertain customer adoption of AI-specific infrastructure may affect demand.

● We face resource acquisition challenges due to our size and recent expansion into these operations.

● The existing scarcity of powered lands makes our potential acquisitions more expensive and we face increased competition in making acquisitions.

● There is a limited availability of quality properties that would be potential business targets for our business.

● We face acquisition disadvantages due to our size and lack of funding.

● We face ongoing challenges in retaining talent and recruiting contractors with expertise in our industry.

● Our operations require high infrastructure costs.

● We may experience difficulty raising capital to fund our operations.

● We depend on our Chief Executive Officer and Chief Financial Officer and the loss of this individual could adversely affect our business.

● Rapid technological change may result in our technology becoming obsolete or in our competitors having an advantage.

● The timelines for integration and deployment may cause uncertainty and unpredictability in our results of operations.

● Our component and infrastructure dependency may result in supply chain delays and disruption.

● We rely on strategic partnerships with third parties to advance our business strategy.

● There is uncertainty that the markets will adopt AI compute infrastructure as it is a relatively new industry.

● We face a changing regulatory landscape and increasing compliance costs that must be paid to continue our operations.

● Our reliance on technology makes us vulnerable to cybersecurity threats.

● We require additional, significant capital to fund our expansion; none of which is committed at this time.

● Our commitment to sustainability adds additional costs and obligations to our business.

● We face reputational risks if we experience bad publicity or adverse results in our operations.

● We face regional operational challenges that may result in additional administrative expense and complexity in our operations.

● Our independent auditors have expressed substantial doubt about our ability to continue as a going concern.

● Trading on the Over-the-Counter markets may be volatile and sporadic, which could depress the market price of our common stock and make it difficult for our stockholders to resell their shares.

● Our stock has been a penny stock. Trading of our stock may be restricted by the SEC's penny stock regulations and the FINRA's sales practice requirements, which may limit a stockholders' ability to buy and sell our stock.

● Our common stock may be affected by limited trading volume and price fluctuation which could adversely impact the value of our common stock.

● FINRA sales practice requirements may also limit a stockholders' ability to buy and sell our stock.

● Because the SEC imposes additional sales practice requirements on brokers who deal in shares of penny stocks, some brokers may be unwilling to trade our securities. This means that you may have difficulty reselling your shares, which may cause the value of your investment to decline.

● A decline in the price of our common stock could affect our ability to raise further working capital, it may adversely impact our ability to continue operations and we may go out of business.

● Our stock price may be volatile.

● We have never paid a cash dividend on our common stock and we do not anticipate paying any in the foreseeable future.

● We have not voluntarily implemented various corporate governance measures, in the absence of which, shareholders may have more limited protections against interested director transactions, conflicts of interest and similar matters.

● Difficulties we may encounter managing our growth could adversely affect our results of operations.

● If we lose key personnel or are unable to attract and retain additional qualified personnel, we may not be able to successfully manage our business and achieve our objectives.

● Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

**RISK FACTORS**

The purchase of the Shares involves substantial risks. You should carefully consider the following risk factors in addition to any other risks associated with this investment. The Shares offered by the Company constitute a highly speculative investment and you should be in an economic position to lose your entire investment. The risks listed do not necessarily comprise all those associated with an investment in the Shares and are not set out in any particular order of priority. Additional risks and uncertainties may also have an adverse effect on the Company's business and your investment in the Shares. An investment in the Company may not be suitable for all recipients of this Offering Circular. You are advised to consult an independent professional adviser or attorney who specializes in investments of this kind before making any decision to invest. You should consider carefully whether an investment in the Company is suitable in the light of your personal circumstances and the financial resources available to you.

The discussions and information in this Offering Circular may contain both historical and forward-looking statements. To the extent that the Offering Circular contains forward-looking statements regarding the financial condition, operating results, business prospects, or any other aspect of the Company's business, please be advised that the Company's actual financial condition, operating results, and business performance may differ materially from that projected or estimated by the Company in forward-looking statements. The Company has attempted to identify, in context, certain factors it currently believes may cause future experience and actual results to differ from the Company's current expectations.

Before investing, you should carefully read and consider the following risk factors:

**Risks Related to Our Company**

***We rely on third parties and disruptions in the supply chain could cause significant delays.***

One of the primary risks comes from our reliance on modular data center providers. Any disruptions in the supply chain, such as delays in manufacturing, installation, or shipping, could affect deployment schedules. Furthermore, standardization challenges across different jurisdictions may require design adjustments, increasing both costs and deployment times. The need for specialized equipment, such as liquid cooling systems for high-performance AI workloads, also introduces compatibility risks with various modular providers. Another significant risk revolves around the GPU supply chain and performance. GPUs are essential for BluSky AI's high-performance computing infrastructure, particularly for AI and machine learning workloads. However, the global semiconductor supply chain remains volatile, with shortages, geopolitical restrictions, and high demand from cloud and AI companies impacting availability and pricing. BluSky AI's dependence on a few major GPU manufacturers, such as NVIDIA and AMD, increases procurement risks, as delays or price hikes from these suppliers can directly affect operational costs and scalability.

***We rely on the existing U.S. energy grid.***

Additionally, there are risks related to the U.S. energy grid. The growing demand for data centers, combined with aging energy infrastructure in some regions, poses a risk to BluSky AI's ability to secure reliable power for its facilities. Regulatory restrictions on energy consumption and sustainability requirements may also affect site selection and operational costs. Power-intensive AI workloads require stable energy supplies, and any potential grid instabilities could necessitate costly backup solutions, such as on-site renewables or energy storage systems. For BluSky AI's government contracts, any portion of its business tied to these agreements may be subject to renegotiation of profits or termination at the government's discretion. Changes in federal or state regulations, budget reallocations, or shifts in policy could impact existing agreements, and government contracts often include termination clauses, meaning the government can end agreements without cause, potentially leading to financial losses. Additionally, the company must comply with evolving security and data protection requirements in government contracts, which may require additional investment in infrastructure and regulatory compliance measures.

***We operate in a highly competitive and growing market.***

BluSky AI operates in a highly competitive data center market that is rapidly evolving in response to the growing demand for AI computing, particularly GPU on-demand services. The company faces competition from traditional hyperscale data center providers like AWS, Google, and Microsoft, as well as specialized modular data center firms.

***Limited availability and rising costs of GPUs could constrain our growth.***

Our business depends heavily on the availability of high-performance GPUs from third-party manufacturers such as NVIDIA and AMD. Global supply shortages, high demand, and market constraints have led to increased prices and limited availability of GPUs. A continued shortfall in GPU supply could delay deployments, increase costs, or reduce the performance of our offerings, negatively affecting our competitive position.

***An occurrence of an uncontrollable event such as the COVID-19 pandemic may negatively affect our operations.***

The occurrence of an uncontrollable event such as the COVID-19 pandemic may negatively affect our operations. A pandemic typically results in social distancing, travel bans and quarantine, and this may limit access to our facilities, customers, management, support staff and professional advisors. These factors, in turn, may not only impact our operations, financial condition and demand for our goods and services but our overall ability to react timely to mitigate the impact of this event. Also, it may hamper our efforts to comply with our filing obligations with the Securities and Exchange Commission.

***We have incurred losses since our inception in 2007 and may never be profitable, which raises doubt about our ability to continue as a going concern.***

Since our inception in 2007, we have incurred operating losses. As of December 31, 2025, our accumulated deficit since inception was $34,378,880. We have substantial current obligations and at December 31, 2025, we had $3,416,051 of current liabilities as compared to $1,122,661 of current assets. Since inception, we have been able to raise only minimal additional capital, and we have minimal cash on hand. Accordingly, the Company does not have sufficient cash resources or current assets to pay its current obligations, and we have been meeting many of our obligations through the issuance of our common stock to our employees, consultants, and advisors as payment for the goods and services.

Our management continues to search for additional financing; however, considering the difficult U.S. and global economic conditions along with the substantial turmoil in the capital and credit markets, there is a significant possibility that we will be unable to obtain financing to continue our operations.

These circumstances raise substantial doubt about our ability to continue as a going concern as described in an explanatory paragraph to our independent registered public accounting firm's report on our audited financial statements as of and for the year ended December 31, 2025. If we are unable to continue as a going concern, investors will likely lose all of their investment in our company.

***We are subject to legal proceedings.***

We are subject to legal proceedings and litigation, which can be expensive and unpredictable.

***We do not currently carry any property or casualty insurance.***

Our business is subject to a number of risks and hazards generally, including but not limited to potential disruptions from natural disasters, such as earthquakes or floods, which could impact data center operations. Cybersecurity threats pose another significant risk, as data centers are prime targets for malicious attacks. Additionally, the company must navigate regulatory compliance challenges, particularly in meeting environmental standards and data protection laws. Market volatility and competition in the rapidly evolving AI and HPC sectors also present operational risks.

Such occurrences could result in damage to our properties, equipment, and infrastructure, personal injury or death, environmental damage, delays, monetary losses, and possible legal liability. You could lose all or part of your investment if any such catastrophic event occurs. We do not carry any property or casualty insurance at this time (but we will carry all insurances that we are required to by law, such as motor vehicle and workers' compensation, plus other coverage that may be in the best interest of the Company). Even if we do obtain insurance, it may not cover all of the risks associated with our operations. Insurance against risks such as environmental pollution or other hazards as a result of exploration and operations are often not available to us or to other companies in our business on acceptable terms. Should any events against which we are not insured occur, we may become subject to substantial losses, costs, and liabilities, which will adversely affect our financial condition.

***Uncertain customer adoption of AI-specific infrastructure may adversely affect demand.***

Our growth depends on increased demand for modular, dedicated AI compute infrastructure. However, customer preferences and adoption timelines are difficult to predict. A slowdown in AI investments, greater reliance on in-house or cloud-based solutions, or emerging competing technologies may affect demand for our services and negatively impact our business.

***We face resource acquisition challenges due to our size and recent expansion into these operations.***

Competing companies often have the greater financial muscle to secure highly desirable properties, equipment, and technical expertise. This imbalance may hinder BluSky AI's ability to compete for necessary capital and strategic partnerships, ultimately affecting growth prospects.

***The existing scarcity of Powered Lands makes our potential acquisitions more expensive, and we face increased competition in making acquisitions.***

"Powered land" in the context of data centers refers to land that is pre-equipped with a committed power infrastructure, often including a signed agreement with a utility provider. This ensures that the site has a guaranteed power load available, typically ranging from 50 to 1000 MW, before construction begins. Such arrangements significantly reduce delays and risks associated with securing power during the development phase. As data center power demands surge across the U.S., securing access to "powered land" with adequate grid connectivity has also become increasingly competitive. Any delays in obtaining utility approvals, interconnections, or sufficient power supply could hinder our ability to deploy or operate facilities, limiting revenue and scalability.

***There is a limited availability of quality properties that would be potential business targets for our business.***

BluSky AI's business model depends on securing powered lands and suitable properties for data center exploration. However, there is a limited supply of such lands, especially in high-demand regions like the United States. Larger competitors, with established networks and deeper pockets, are often better positioned to claim or lease these sites.

***We face acquisition disadvantages due to our size and lack of funding.***

The competitive market for powered lands means BluSky AI may face higher acquisition costs or be unable to secure properties that meet its operational requirements. This scarcity can delay project timelines and limit geographic expansion, thereby reducing the company's competitive edge.

***We face ongoing challenges in retaining talent and recruiting contractors with expertise in our industry.***

In addition to competing for physical assets, BluSky AI faces stiff competition in recruiting and retaining skilled professionals. Larger companies can offer more attractive compensation packages and benefits, which may impede BluSky AI's efforts to build and maintain a high-caliber technical and operational team. The inability to secure or retain top talent not only affects day-to-day operations but also limits the company's ability to innovate and execute its long-term strategy. This talent gap can lead to delays in property development and operation, further disadvantaging the company relative to its competitors.

***Our operations require high infrastructure costs.***

Developing and operating data centers is capital-intensive. BluSky AI must invest heavily in infrastructure to compete effectively. Limited financial resources, compared to competitors, can constrain the company's ability to fund rapid expansion and state-of-the-art technology deployment.

***We may experience difficulty raising capital to fund our operations.***

The need for continuous investment in property acquisition, infrastructure development, and talent recruitment increases the company's dependency on raising capital. Difficulty in securing adequate funding could lead to reduced operational capacity, stalled expansion plans, and, ultimately, material adverse effects on business performance.

***We depend on our Chief Executive Officer and Chief Financial Officer and the loss of this individual could adversely affect our business.***

Our company is completely dependent on Trent D'Ambrosio, our Chief Executive Officer and Chief Financial Officer. Mr. D'Ambrosio is also a member of our Board of Directors. The loss of Mr. D'Ambrosio could significantly and adversely affect our business and could even result in a complete failure of the Company. We do not carry any life insurance on the life of Mr. D'Ambrosio.

***Rapid technological change may result in our technology becoming obsolete or in our competitors having an advantage.***

BluSky AI's reliance on cutting-edge AI compute technology, including quantum encryption and advanced GPU chip technology, exposes the company to the risk of rapid technological obsolescence. New developments in chip architecture, cooling systems, or deployment models may reduce demand for our current solutions. New developments by competitors or unforeseen technical challenges may also render current solutions less competitive or require significant reinvestment if we fail to adapt quickly to these changes.

***The timelines for integration and deployment may cause uncertainty and unpredictability in our results of operations.***

While the modular container centers are designed for rapid deployment, any delays in installation, integration of renewable energy sources, or unforeseen engineering challenges may extend timelines and impair revenue recognition.

***Our component and infrastructure dependency may result in supply chain delays and disruption.***

The company's model depends heavily on securing critical components—from renewable energy infrastructure (solar, wind, geothermal) to GPU chips. Disruptions in these supply chains or changes in supplier terms could lead to increased costs or reduced capacity expansion.

***We rely on strategic partnerships with third parties to advance our business strategy.***

Partnerships with key technology suppliers and energy infrastructure providers are central to BluSky AI's strategy. Any breakdown or change in these relationships could impact deployment capabilities and market competitiveness.

***There is uncertainty that the markets will adopt AI compute infrastructure as it is a relatively new industry.***

While demand for AI compute infrastructure is surging, there remains uncertainty about the pace of market adoption, customer retention, and the ability to scale operations profitably amid evolving client needs.

***We face a changing regulatory landscape and increasing compliance costs that must be paid to continue our operations.***

Operating on powered land assets and harnessing renewable energy exposes the company to diverse regulatory and permitting environments. Changes in local, state, or federal regulations—especially those related to energy use and environmental standards—could delay project timelines or increase costs.

Ensuring compliance with evolving industry, environmental, and cybersecurity standards may necessitate additional investments in technology and personnel, impacting overall margins.

***Our reliance on technology makes us vulnerable to cybersecurity threats.***

Our modular data centers and customer operations depend on robust IT security. A successful cyberattack could result in service disruptions, data loss, or reputational damage. While we employ security measures, no system is infallible. We may be required to expend significant resources to prevent or respond to such incidents, which could materially impact our operations.

***We require additional, significant capital to fund our expansion; none of which is committed at this time.***

Rapid deployment across multiple sites and the significant capital expenditure required for modular scalability might strain financial resources. Inadequate funding or unfavorable capital market conditions could hamper growth and increase dilution risks for current shareholders. Difficulties in coordinating large-scale, geographically diverse projects may result in inefficiencies and increased operational costs.

***Our commitment to sustainability adds additional costs and obligations to our business.***

The focus on green power and renewable energy, while a competitive differentiator, also exposes the company to risks if renewable energy prices fluctuate or if new environmental regulations are enacted that affect operational costs.

***We face reputational risks if we experience bad publicity or adverse results in our operations.***

As a public company, BluSky AI's commitment to sustainability and security must be consistently upheld. Any lapses in ESG performance or publicized operational failures could lead to reputational damage and reduced investor confidence.

***We face regional operational challenges that may result in additional administrative expense and complexity in our operations.***

While geographic diversification offers resilience, it also introduces complexity. Variations in local regulatory environments, infrastructure readiness, and market demand across different states or regions may result in inconsistent performance and increased management challenges.

These risk factors, while not exhaustive, highlight key areas where BluSky AI Inc. may face uncertainties that could impact its business model, operational performance, and financial outcomes. Investors and stakeholders should consider these factors alongside the company's strategic initiatives and market opportunities when evaluating its long-term prospects.

***Our independent auditors have expressed substantial doubt about our ability to continue as a going concern.***

In their audit opinion issued in connection with our consolidated balance sheets as of December 31, 2025 and our related consolidated statements of operations and comprehensive loss, stockholders' deficit, and cash flows for the year ended December 31, 2025, our auditors have expressed substantial doubt about our ability to continue as a going concern given our recurring net losses, negative cash flows from operations and the limited amount of funds on our balance sheet. We have prepared our financial statements on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The consolidated financial statements do not include any adjustments that might be necessary should we be unable to continue in existence. This could make it more difficult to raise capital in the future.

**Risks Associated with Our Common Stock**

***Trading on the over-the-counter markets may be volatile and sporadic, which could depress the market price of our common stock and make it difficult for our stockholders to resell their shares.***

Our common stock is quoted on the OTCID Basic Market tier of the OTC Link ATS (alternative trading system), the over-the-counter markets administered by OTC Markets Group, Inc., under the symbol "BSAI," but the common stock is currently not eligible for proprietary broker-dealer quotations. Trading in stock quoted on over-the-counter markets is often thin, volatile, and characterized by wide fluctuations in trading prices due to many factors that may have little to do with our operations or business prospects. This volatility could depress the market price of our common stock for reasons unrelated to operating performance. Moreover, the Over-the-Counter markets are not a stock exchange, and trading of securities on the over-the-counter markets is often more sporadic than the trading of securities listed on other stock exchanges such as the NASDAQ Stock Market, New York Stock Exchange or American Stock Exchange. Accordingly, our shareholders may have difficulty reselling any of their shares.

***Our stock has been a penny stock. Trading of our stock may be restricted by the SEC's penny stock regulations and the FINRA's sales practice requirements, which may limit a stockholders' ability to buy and sell our stock.***

Our stock has recently been a penny stock. The SEC has adopted Rule 15g-9 which generally defines penny stock to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited investors. The term accredited investor refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customers' account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability or willingness of broker-dealers to trade our securities. We believe that the penny stock rules discourage broker-dealer and investor interest in, and limit the marketability of, our common stock.

***Our common stock may be affected by limited trading volume and price fluctuation which could adversely impact the value of our common stock.***

There has been limited trading in our common stock and there can be no assurance that an active trading market in our common stock will either develop or be maintained. Our common stock has experienced, and is likely to experience in the future, significant price and volume fluctuations which could adversely affect the market price of our common stock without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the price of our common stock to fluctuate substantially. These fluctuations may also cause short sellers to periodically enter the market in the belief that we will have poor results in the future. We cannot predict the actions of market participants and, therefore, can offer no assurances that the market for our common stock will be stable or appreciated over time.

***FINRA sales practice requirements may also limit a stockholders' ability to buy and sell our stock.***

In addition to the penny stock rules promulgated by the SEC, which are discussed in the immediately preceding risk factor, FINRA rules require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit the ability to buy and sell our stock and have an adverse effect on the market value for our shares.

***Because the SEC imposes additional sales practice requirements on brokers who deal in shares of penny stocks, some brokers may be unwilling to trade our securities. This means that you may have difficulty reselling your shares, which may cause the value of your investment to decline.***

Our shares have recently been classified as penny stocks and are covered by Section 15(g) of the Securities Exchange Act of 1934 (the "Exchange Act") which imposes additional sales practice requirements on broker-dealers who sell our securities in this offering or in the aftermarket. For sales of our securities, broker-dealers must make a special suitability determination and receive a written agreement prior from you to making a sale on your behalf. Because of the imposition of the foregoing additional sales practices, it is possible that broker-dealers will not want to make a market in our common stock. This could prevent you from reselling your shares and may cause the value of your investment to decline.

***A decline in the price of our common stock could affect our ability to raise further working capital, it may adversely impact our ability to continue operations and we may go out of business.***

A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital. Because we may attempt to acquire a significant portion of the funds, we need in order to conduct our planned operations through the sale of equity securities, or convertible debt instruments, a decline in the price of our common stock could be detrimental to our liquidity and our operations because the decline may cause investors to not choose to invest in our stock. If we are unable to raise the funds, we require for all our planned operations, we may be forced to reallocate funds from other planned uses and may suffer a significant negative effect on our business plan and operations, including our ability to develop new products and continue our current operations. As a result, our business may suffer and not be successful and we may go out of business. We also might not be able to meet our financial obligations if we cannot raise enough funds through the sale of our common stock and we may be forced to go out of business.

***Our stock price may be volatile.***

The stock market in general has experienced volatility that often has been unrelated to the operating performance of any specific public company. The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following:

● changes in our industry;

● competitive pricing pressures;

● our ability to obtain working capital financing;

● additions or departures of key personnel;

● limited "public float" in the hands of a small number of persons whose sales or lack of sales could result in positive or negative pricing pressure on the market prices of our common stock;

● sales of our common stock;

● our ability to execute our business plan;

● operating results that fall below expectations;

● loss of any strategic relationship;

● regulatory developments;

● economic and other external factors; and

● period-to-period fluctuations in our financial results.

In addition, the securities markets have from time-to-time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.

***We have never paid a cash dividend on our common stock, and we do not anticipate paying any in the foreseeable future.***

We have not paid a cash dividend on our common stock to date, and we do not intend to pay cash dividends in the foreseeable future. Our ability to pay dividends will depend on our ability to successfully develop one or more properties and generate revenue from operations. Notwithstanding, we will likely elect to retain any earnings, if any, to finance our growth. Future dividends may also be limited by bank loan agreements or other financing instruments that we may enter into in the future. The declaration and payment of dividends will be at the discretion of our Board of Directors.

***We have not voluntarily implemented various corporate governance measures, in the absence of which, shareholders may have more limited protections against interested director transactions, conflicts of interest and similar matters.***

Recent federal legislation, including the Sarbanes-Oxley Act of 2002 and the Jumpstart our Business Startups Act of 2012, among others, has resulted in the adoption of various corporate governance measures designed to promote the integrity of the corporate management and the securities markets. Some of these measures have been adopted in response to legal requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, such as the NYSE or The NASDAQ Stock Market, on which their securities are listed. Among the corporate governance measures that are required under the rules of national securities exchanges and NASDAQ are those that address board of directors' independence, audit committee oversight and the adoption of a code of ethics. While our Board of Directors has adopted a Code of Ethics and Business Conduct, we have not yet adopted any of these corporate governance measures and, since our securities are not listed on a national securities exchange or NASDAQ, we are not required to do so. It is possible that if we were to adopt some or all of these corporate governance measures, shareholders would benefit from somewhat greater assurances that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define responsible conduct. For example, in the absence of audit, nominating and compensation committees comprised of at least a majority of independent directors, decisions concerning matters such as compensation packages to our senior officers and recommendations for director nominees may be made by a majority of directors who have an interest in the outcome of the matters being decided. Prospective investors should bear in mind our current lack of corporate governance measures in formulating their investment decisions.

***Difficulties we may encounter managing our growth could adversely affect our results of operations.***

As our business needs expand, we may need to hire a significant number of employees. This expansion may place a significant strain on our managerial and financial resources. To manage the potential growth of our operations and personnel, we will be required to:

● improve existing, and implement new, operational, financial and management controls, reporting systems and procedures;

● install enhanced management information systems; and

● train, motivate, and manage our employees.

We may not be able to install adequate management information and control systems in an efficient and timely manner, and our current or planned personnel, systems, procedures and controls may not be adequate to support our future operations. If we are unable to manage growth effectively, our business would be seriously harmed.

***If we lose key personnel or are unable to attract and retain additional qualified personnel, we may not be able to successfully manage our business and achieve our objectives.***

We believe our future success will depend upon our ability to retain our key management, primarily Mr. D'Ambrosio, our Chief Executive Officer and Chief Financial Officer. We may not be successful in attracting, assimilating and retaining our employees in the future.

***Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.***

If our stockholders sell substantial amounts of our common stock in the public market upon the expiration of any statutory holding period, under Rule 144, or issued upon the exercise of outstanding options or warrants, it could create a circumstance commonly referred to as an "overhang" and in anticipation of which the market price of our common stock could fall. The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.

**DILUTION**

Dilution means a reduction in value, control, or earnings of the shares the investor owns.

*Immediate dilution*

An early-stage company typically sells its shares (or grants options on its shares) to its founders and early employees at a low cash price, as they are typically putting their "sweat equity" into the company. When the company seeks cash investments from outside investors, the new investors typically pay a higher price for their shares than the founders or earlier investors.

The following table compares the price that new investors are paying for their shares with the effective cash price paid by existing stockholders, assuming that the new shares are sold at an estimated price of $5.00 per Share (the midpoint between the estimated offering price range of $4.00 to $6.00 per Share). The schedule presents the number of shares and pricing as issued and reflects all transactions in the past five years, so investors can understand what they will pay for their investment compared to what earlier parties have paid.

The following table presents the approximate effective cash price paid for all shares and potential shares issuable by the Company as of December 31, 2025.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Date Issued** | **Issued Shares** | **Potential Shares** | **Total Issued and Potential Shares** | **Effective Cash Price per Share at Issuance or Potential Conversion** |
| **<u>Common Shares:</u>** |  |  |  |  |  |
| Common Shares | 2/17/2023 | 60002 |  | 60002 | $0.00001 |
| Common Shares | 9/22/2023 | 157143 |  | 157143 | $0.00001 |
| Common Shares | 4/1/2025 | 200000 |  | 200000 | $0.00001 |
| Common Shares | 6/10/2025 | 1100000 |  | 1100000 | $0.00001 |
| Common Shares | 6/24/2025 | 500000 |  | 500000 | $0.00001 |
| Common Shares | 7/7/2025 | 20000000 |  | 20000000 | $4.0800 |
| Common Shares | 9/4/2025 | 25500 |  | 25500 | $0.00001 |
| Common Shares | 9/23/2025 | 433750 |  | 433750 | $4.0000 |
| Common Shares | 9/30/2025 | 33415 |  | 33415 | $5.9800 |
| Common Shares | 10/31/2025 | 5000 |  | 5000 | $4.0600 |
| Common Shares | 12/12/2025 | 13441 |  | 13441 | $5.6600 |
| Common Shares | 12/15/2025 | 2500 |  | 2500 | $6.2000 |
| **<u>Preferred Shares:</u>** |  |  |  |  |  |
|  | N/A | N/A | N/A | N/A | $- |
| **<u>Options:</u>** |  |  |  |  |  |
|  | N/A | N/A | N/A | N/A | $- |
| **<u>Warrants:</u>** |  |  |  |  |  |
|  | N/A | N/A | N/A | N/A | $- |

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The following table describes the dilution that new investors will experience when they invest in the Company and relative to the Company's existing holders of securities. This calculation is based on the net tangible assets of the Company; as such calculations are based on net tangible book value of $(2,475,501) as of December 31, 2025, and as summarized in our audited financial statements.

Offering costs assumed in the following table include up to $2,812,500 (or 4.5% of the proceeds from this offering) in commissions, compensation of $420,000 paid to Broker affiliates, processing fee of $1,250,000 (2%), as well as $76,000 direct legal and accounting fees incurred in support of this Offering.

The table presents three amount raised scenarios: a $5,000,000 raise from this offering, a $31,250,000 raise from this offering, and a fully subscribed $62,500,000 raise from this offering.

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| | | | |
|:---|:---|:---|:---|
|  | **$5000000**<br>**Raise** | **$31250000**<br>**Raise** | **$62500000**<br>**Raise** |
| Price per Share | $5.00 | $5.00 | $5.00 |
| Shares Issued | 1000000 | 6250000 | 12500000 |
| Bonus Shares Issued | 200000 | 1250000 | 2500000 |
| Capital raised | 5000000 | 31250000 | 62500000 |
| Less: Offering Costs | 821000 | 2527250 | 4558500 |
| Net Offering Proceeds | 4179000 | 28722750 | 57941500 |
| Net Tangible Book Value Pre-Financing as of December 31, 2025 | (2475501) | (2475501) | (2475501) |
| Net Tangible Book Value Post-Financing\* | 1703499 | 26247249 | 55465999 |
| Shares Issued and Outstanding Pre-Offering\* | 24992505 | 24992505 | 24992505 |
| Shares Issued and Outstanding Post-Offering\* | 26192505 | 32492505 | 39992505 |
| Net Tangible Book Value per Share Prior to Offering | (0.10) | (0.10) | (0.10) |
| Increase/(Decrease) per Share Attributable to New Investors | 0.16 | 0.91 | 1.49 |
| Net Tangible Book Value per Share After Offering | 0.07 | 0.81 | 1.39 |
| Dilution per Share to New Investors ($) | 4.93 | 4.19 | 3.61 |
| Dilution per Share to New Investors (%) | 98.7% | 83.8% | 72.3% |

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\* Based on Net Tangible Book Value as of December 31, 2025, and 24,978,811 shares of common stock outstanding as December 31, 2025, and excludes shares of common stock issued subsequent to December 31, 2025.

*Future dilution*

Another aspect of dilution is the dilution that happens due to future actions by the Company. The investor's stake in the Company could be diluted due to the Company issuing additional shares. In other words, when the Company issues more shares, the percentage of the Company that each investor owns will go down, even though the value of the Company may go up. In that event, the investor will own a smaller piece of a larger company. This increase in number of shares outstanding could result from a stock offering (such as an initial public offering, a crowdfunding round, a venture capital round, or angel investment), employees exercising stock options, or by conversion of certain instruments (ex. convertible bonds, preferred shares or warrants) into stock.

If the Company decides to issue more shares, an investor could experience value dilution, with each share being worth less than before, and control dilution, with the total percentage an investor owns being less than before. There may also be earnings dilution, with a reduction in the amount earned per share, although earnings per share typically occurs only if the Company offers dividends, and most early-stage companies are unlikely to offer dividends, preferring to invest any earnings into the Company.

The type of dilution that hurts early-stage investors most occurs when the Company sells more shares in a "down round," meaning at a lower valuation than in earlier offerings. The example provided below is hypothetical and for illustrative purposes only:

● In June 2024, Jane invests $20,000 for shares that represent 2% of a company valued at $1 million.

● In December, the Company is doing very well and sells $5 million in shares to venture capitalists on a valuation (before the new investment) of $10 million. Jane now owns only 1.3% of the Company, but her stake is worth $200,000.

● In June 2025, the Company has serious problems and in order to continue to operate raises $1 million at a valuation of only $2 million (the "down round"). Jane now owns only 0.89% of the Company, and her stake is now worth only $26,660.

This type of dilution might also happen upon conversion of convertible notes into shares. Typically, the terms of convertible notes issued by early-stage companies provide that in the event of another round of financing, the holders of the convertible notes get to convert their notes into equity at a "discount" to the price paid by the new investors. They receive more shares than the new investors would for the same price because of their earlier investment which may have been associated with greater risk. Additionally, convertible notes may have a "price cap" on the conversion price, which effectively acts as a share price ceiling. Either way, the holders of the convertible notes receive more shares for the same dollar amount of investment than new investors receive. In the event that the financing is a "down round" the holders of the convertible notes will dilute existing equity holders, and even more than the new investors do, because they get more shares for their money. Investors should pay careful attention to the number of convertible notes that the Company has issued and may issue in the future, and the terms of those notes.

If you are making an investment expecting to own a certain percentage of the Company or expecting each share to hold a certain amount of value, it's important to realize how the value of those shares can decrease by actions taken by the Company. Dilution can make drastic changes to the value of each share, ownership percentage, voting control, and earnings per share.

**PLAN OF DISTRIBUTION**

**Plan of Distribution**

The Company is offering up to 12,500,000 Shares (the "Shares"), plus up to 2,500,000 shares of Bonus Shares par value $0.00001 per share (the "Shares") on a "best efforts" basis at an assumed public offering price of $5.00, which is the mid-point of the estimated offering price range between $4.00-$6.00 per Share. No additional consideration will be received by the company for the issuance of Bonus Shares and the company will absorb the cost of the issuance of the Bonus Shares. The minimum subscription is $1,000.00.

The Company intends to market the shares in this offering primarily through online means. Online marketing may take the form of contacting potential investors through electronic media and posting our offering circular on an online investment platform. This offering circular will be furnished to prospective investors via download 24 hours per day, 7 days per week on the Company's website on a landing page (<u>www.invest.bluskyaidatacenters.com</u>) that relates to the offering.

The offering will terminate at the earliest of (i) the date at which the maximum offering amount has been sold, (ii) three years from the date upon which the Commission qualifies the Offering Circular of which this offering circular forms a part or (iii) the date at which the offering is earlier terminated by the Company, in its sole discretion.

The Company intends to complete multiple closings on a rolling basis. After each closing, funds tendered by investors will be available to the Company.

Further, after each closing, funds tendered by investors will be held in a segregated account owned by the Company, but with viewing privileges assigned to Broker, and will remain in that account until cleared (AML/KYC). After the initial closing of this Offering, we expect to hold closings on at least a monthly basis.

**Agreement with DealMaker Securities, LLC**

DealMaker Securities, LLC, a broker-dealer registered with the SEC and a member of FINRA, has been engaged to provide operational processing, compliance, and administration of the Company's best efforts offering. This role differs from that of a traditional underwriter in that the Broker does not purchase any securities from the Company with a view to sell such for the Company as part of the distribution of the security. Affiliates of Broker have also been engaged to provide technology services and marketing advisory services, specifically Novation Solutions Inc. O/A DealMaker and DealMaker Reach, LLC.

Broker and its affiliates will receive an advance against accountable expenses of $50,000 and a cash commission equal to four-and one-half percent (4.5%) of the amount raised in the Offering. Broker's affiliates have also been engaged for services associated with the Offering.

**Commissions and Discounts**

The following table shows the total discounts and commissions payable to the placement agents in connection with this Offering:

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| | | |
|:---|:---|:---|
|  | Per Share |  |
| Public offering price | $5.00 |  |
| Commissions | $0.23 | (1) |
| Proceeds, before expenses, to us | $4.77 |  |

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(1) Broker will receive commissions of 4.5% of the Offering proceeds, not including the Bonus Shares.

**Bonus Shares**

Investors in this offering are eligible to receive bonus shares of Common Stock, which effectively gives them a discount on their investment. Those investors will receive, as part of their total investment in the Offering, up to 20% of the total shares they purchased, depending upon the amount they invest as described below (the "Bonus Shares"). Investors receiving the Bonus Shares will pay an effective price of less than $5.00 per share (which is the mid-point of the estimated offering price range between $4.00-$6.00 per Share).

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| | | |
|:---|:---|:---|
| **Total Investment** | **Bonus Shares** | **Effective Price Per Share** |
| $2000 | 2% Bonus Shares | $4.90 |
| $5000 | 5% Bonus Shares | $4.76 |
| $10000 | 10% Bonus Shares | $4.55 |
| $25000 | 15% Bonus Shares | $4.35 |
| $50000 | 20% Bonus Shares | $4.17 |

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We believe that Bonus Shares simply reduce the cost basis per share of the investment. However, it is recommended that investors consult with their own tax professionals to fully understand any tax implications of receiving Bonus Shares.

**Administrative and Compliance Related Functions**

Broker will provide administrative and compliance related functions in connection with this Offering, including:

● Review investor information, including KYC ()"**Know Your Customer**") data, AML ()"**Anti Money Laundering**") and other compliance background checks, and provide a recommendation to the Company whether to accept investor as a customer.

● Review each investor's subscription agreement to confirm such investor's participation in the Offering and provide a determination to the Company whether to accept the use of the subscription agreement for the investor's participation.

● Contact and/or notify the company, if needed, to gather additional information or clarification on an investor.

● Not provide any investment advice nor any investment recommendations to any investor.

● Keep investor details and data confidential and not disclose to any third party except as required by regulators or pursuant to the terms of the agreement (e.g. as needed for AML and background checks).

● Responsibility for all FINRA 5110 filings and updates.

● Review of written communications for compliance with applicable rules. Coordinate with third party providers to ensure adequate review and compliance. It is ultimately the responsibility of the Company as to whether to accept the recommendations of DealMaker with respect to compliance with written communications.

● Provide, or coordinate the provision by a third party, of an "invest now" payment processing mechanism.

For these services, we have agreed to pay Broker:

● A one-time $20,000 advance against accountable expenses for the pre-Offering analysis; and

● A cash compensation equal to 4.5% of the amount raised in the Offering.

The maximum fee for these services provided by Broker is $2,832,500.

**Technology Services**

The Company has also engaged Novation Solutions Inc., operating as DealMaker ("DealMaker"), an affiliate of Broker, to create and maintain the online subscription processing platform for the Offering.

After the qualification by the Commission of the Offering Circular of which this Offering Circular is a part, this Offering will be conducted using the online subscription processing platform of DealMaker Platform through our website at www.invest.bluskyaidatacenters.com, whereby investors will receive, review, execute and deliver subscription agreements electronically as well as make payment of the purchase price through a third party processor by ACH debit transfer or wire transfer or credit card to an account we designate. There is no escrow established for this Offering. We will hold closings upon the receipt of investors' subscriptions and our acceptance of such subscriptions.

For these services, we have agreed to pay DealMaker:

● A one-time payment of $5,000 plus a monthly payment of $1,000 for three months ($3,000) in accountable expenses paid in advance of the commencement of the Offering prepaid for self-directed electronic roadshow; and

● a monthly account management fee of $1,000, not to exceed $9,000, would be charged after the commencement of the Offering.

The maximum fees to be paid to DealMaker for Technology services is $17,000.

**Marketing and Advisory Services**

The Company has also engaged DealMaker Reach, LLC ("**Reach**"), an affiliate of Broker, for certain marketing advisory and consulting services. Reach will consult and advise on the design and messaging on creative assets, website design and implementation, paid media and email campaigns, advise on optimizing the company's campaign page to track investor progress, and advise on strategic planning, implementation, and execution of company's capital raise marketing budget.

For these services, we have agreed to pay Reach:

● A one-time payment of $25,000 plus a monthly payment of $9,000 for three months ($27,000) in accountable expenses paid in advance of the commencement of the Offering for consulting and developing materials for self-directed electronic roadshow;

● A monthly marketing advisory fee of $9,000, not to exceed $81,000, would be charged after the commencement of the Offering; and

● A supplementary marketing services budget of $250,000 in fees to be charged on a case-by-case basis, as may be authorized by the Company.

The maximum fees to be paid to Reach for contracted marketing services is $383,000.

In the event of a fully subscribed offering, total compensation payable to Broker and affiliates shall not exceed $3,232,500 (5.17% of the Offering proceeds).

**Other Terms**

Except as set forth above, the Company is not under any contractual obligation to engage Dealmaker to provide any services to the Company after this Offering, and has no present intent to do so. However, Dealmaker may, among other things, introduce the Company to potential target businesses or assist the Company in raising additional capital, as needs may arise in the future. If Dealmaker provides services to the Company after this Offering, the Company may pay Dealmaker fair and reasonable fees that would be determined at that time in an arm's length negotiation.

Dealmaker intends to use an online platform at the domain name www.dealmaker.tech (the "**Online Platform**") to provide technology tools to allow for the sales of securities in this Offering.

**Subscription Procedures**

After the Offering Circular has been qualified by the Commission, the Company will accept tenders of funds to purchase Shares. The Company may close on investments on a "rolling" basis (so not all investors will receive their Shares on the same date). Investors may subscribe by tendering funds via wire, credit or debit card, or ACH only. Checks will not be accepted. Investors will subscribe via the Company's investment website and investor funds will be processed via DealMaker's integrated payment solutions. Funds will be held in the Company's payment processor account until the Broker has reviewed the proposed subscription, and the Company has accepted the subscription. The initial closing will occur as soon as funds clear. We expect to hold subsequent closings on at least a monthly basis.

Assuming additional information does not need to be provided for due diligence (AML/KYC) and the investment has been funded it will take up to three (3) business days to determine whether a subscription agreement has been accepted or rejected. In the event additional information is required from the subscriber, within three (3) business days, Broker will reach out to the subscriber for that information.

The Company will then close on that subscription in the following closing, after which the funds will then be released to the Company.

Upon each closing, funds tendered by investors will be made available to the Company for their use.

In order to invest you will be required to subscribe to the offering via the Company's website integrating DealMaker's technology and agree to the terms of the offering, subscription agreement, and any other relevant exhibit attached thereto.

Investors will be required to complete a subscription agreement in order to invest. The subscription agreement includes a representation by the investor to the effect that, if the investor is not an "accredited investor" as defined under securities law, the investor is investing an amount that does not exceed the greater of 10% of their annual income or 10% of their net worth (excluding the investor's principal residence).

Any potential investor will have ample time to review the subscription agreement, along with their counsel, prior to making any final investment decision. Broker will review all subscription agreements completed by the investor.

The Company maintains the right to accept or reject subscriptions in whole or in part, for any reason or for no reason, including, but not limited to, in the event that an investor fails to provide all necessary information, even after further requests from the Company, in the event an investor fails to provide requested follow up information to complete background checks or fails background checks, and in the event the Company receives oversubscriptions in excess of the maximum offering amount.

In the interest of allowing interested investors as much time as possible to complete the paperwork associated with a subscription, the Company has not set a maximum period of time to decide whether to accept or reject a subscription. If a subscription is rejected, funds will not be accepted by wire transfer or ACH, and payments made by debit card or check will be returned to subscribers within thirty (30) days of such rejection without deduction or interest. Upon acceptance of a subscription, the Company will send a confirmation of such acceptance to the subscriber.

Broker has not investigated the desirability or advisability of investment in the Shares, nor approved, endorsed or passed upon the merits of purchasing the Shares. Broker is not participating as an underwriter and under no circumstance will it recommend the Company's securities or provide investment advice to any prospective investor or make any securities recommendations to investors. Broker is not distributing any Offering Circulars or making any oral representations concerning this Offering Circular or this Offering. Based upon Broker's anticipated limited role in this Offering, it has not and will not conduct extensive due diligence of this Offering and no investor should rely on the involvement of Broker in this offering as any basis for a belief that it has done extensive due diligence. Broker does not expressly or impliedly affirm the completeness or accuracy of the Offering Circular and/or Offering Circular presented to investors by the Company. All inquiries regarding this offering should be made directly to the Company.

Upon confirmation that an investor's funds have cleared, the Company will instruct the transfer agent to issue shares to the investor. The transfer agent will notify an investor when shares are ready to be issued and the Transfer Agent has set up an account for the investor.

**No Escrow**

The proceeds of this Offering will not be placed into an escrow account. We will offer our Shares on a best-efforts basis. As there is no minimum offering amount, upon the clearance of any subscription to this Offering Circular, the Company shall immediately deposit said proceeds into the bank account of the Company and may dispose of the proceeds in accordance with the Use of Proceeds.

**Investor Suitability Standards**

Our Shares are being offered and sold only to "qualified purchasers" (as defined in Regulation A under the Securities Act) include: (i) "accredited investors" under Rule 501(a) of Regulation D and (ii) all other investors so long as their investment in any of the interests of our company (in connection with any series offered under Regulation A) does not represent more than 10% of the greater of their annual income or net worth (for natural persons), or 10% of the greater of annual revenue or net assets at fiscal year-end (for non-natural persons). We reserve the right to reject any investor's subscription in whole or in part for any reason, including if we determine in our sole and absolute discretion that such investor is not a "qualified purchaser" for purposes of Regulation A.

For an individual potential investor to be an "accredited investor" for purposes of satisfying one of the tests in the "qualified purchaser" definition, the investor must be a natural person who has:

1. an individual net worth, or joint net worth with the person's spouse, that exceeds $1,000,000 at the time of the purchase, excluding the value of the primary residence of such person and the mortgage on that primary residence (to the extent not underwater), but including the amount of debt that exceeds the value of that residence and including any increase in debt on that residence within the prior 60 days, other than as a result of the acquisition of that primary residence; or

2. earned income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.

If the investor is not a natural person, different standards apply. See Rule 501 of Regulation D for more details. For purposes of determining whether a potential investor is a "qualified purchaser," annual income and net worth should be calculated as provided in the "accredited investor" definition under Rule 501 of Regulation D. In particular, net worth in all cases should be calculated excluding the value of an investor's home, home furnishings and automobiles."

Investors will be required to complete an Investment Subscription Agreement in order to invest. The Investor Subscription Agreement includes a representation by the investor to the effect that, if the investor is not an "accredited investor" as defined under securities law, the investor is investing an amount that does not exceed the greater of 10% of his or her annual income or 10% of your net worth (calculated by excluding the value of the investor's principal residence).

Colonial Stock Transfer Company, Inc., is the transfer agent of the Company and will maintain stockholder information on a book-entry basis. We will not issue shares in physical or paper form. Instead, our shares will be recorded and maintained on our stockholder register.

In the event that it takes some time for the Company to raise funds in this offering, the Company may rely on cash on hand, or may seek to raise funds by conducting a new offering of equity or debt securities.

**Provisions of Note in Our Subscription Agreement**

***Forum Selection Provision***

***Jury Trial Waiver***

Investors in this offering will be bound by the subscription agreement, which includes a provision under which investors waive the right to a jury trial of any claim they may have against the Company arising out of or relating to the agreement, including any claims made under the federal securities laws. By signing the agreement, the investor warrants that the investor has reviewed this waiver with his or her legal counsel, and knowingly and voluntarily waives the investor's jury trial rights following consultation with the investor's legal counsel.

If we opposed a jury trial demand based on the waiver, a court would determine whether the waiver was enforceable based on the facts and circumstances of that case in accordance with the applicable state and federal law. To our knowledge, the enforceability of a contractual pre-dispute jury trial waiver in connection with claims arising under the federal securities laws has not been finally adjudicated by a federal court. However, we believe that a contractual pre-dispute jury trial waiver provision is generally enforceable, including under the laws of the State of Nevada, which governs the agreement, by a federal or state court in the State of Nevada. In determining whether to enforce a contractual pre-dispute jury trial waiver provision, courts will generally consider whether the visibility of the jury trial waiver provision within the agreement is sufficiently prominent such that a party knowingly, intelligently and voluntarily waived the right to a jury trial. We believe that this is the case with respect to the subscription agreement. You should consult legal counsel regarding the jury waiver provision before entering into the subscription agreement.

If you bring a claim against the Company in connection with matters arising under the agreement, including claims under the federal securities laws, you may not be entitled to a jury trial with respect to those claims, which may have the effect of limiting and discouraging lawsuits against the Company. If a lawsuit is brought against the Company under the agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may result in different outcomes than a trial by jury would have had, including results that could be less favorable to the plaintiff(s) in such an action.

Nevertheless, if the jury trial waiver provision is not permitted by applicable law, an action could proceed under the terms of the agreement with a jury trial. No condition, stipulation or provision of the subscription agreement serves as a waiver by any holder of the Company's securities or by the Company of compliance with any substantive provision of the federal securities laws and the rules and regulations promulgated under those laws.

In addition, when the shares are transferred, the transferee is required to agree to all the same conditions, obligations and restrictions applicable to the shares or to the transferor with regard to ownership of the shares that were in effect immediately prior to the transfer of the shares, including but not limited to the subscription agreement.

**Selling Securityholders**

No securities are being sold for the account of securityholders; all net proceeds of this offering will go to the Company**.**

**Transfer Agent and Registrar**

Colonial Stock Transfer Company, Inc. has been engaged to be the transfer agent for the Common Stock and maintains shareholder information on a book-entry basis. We will not issue shares in physical or paper form.

**Investors' Tender of Funds and Return of Funds**

After the Commission has qualified the Offering Circular, and prior to any closing date agreed upon by DealMaker and the Company, the Company will accept tenders of funds to purchase the Shares. The Company may close on investments on a "rolling" basis (so not all investors will receive their shares on the same date). Upon closing, funds tendered by investors will be made available to the Company for its use.

In the event that it takes some time for the Company to raise funds in this offering, the Company may rely on cash on hand, or may seek to raise funds by conducting a new offering of equity or debt securities.

In order to invest you will be required to subscribe to the offering via the Online Platform and agree to the terms of the offering, the subscription agreement and any other relevant exhibits attached thereto.

**USE OF PROCEEDS TO ISSUER**

Assuming a maximum raise of $62,500,000, the net proceeds of this offering would be approximately $57,941,500 after subtracting estimated offering costs of $3,232,500 to DealMaker in fees and commissions, $10,000 in audit and accounting fees, $45,000 for Blue Sky registration fees, and $21,000 in legal fees. There are also additional expenses of approximately 2% on the processing of the payments from the Investors (payable to Stripe), or $1,250,000 that would also be subtracted from the maximum raise. We intend to use the proceeds respective to this maximum raise for general working capital purposes.

Assuming a raise of $31,250,000, representing 50% of the maximum offering amount, the net proceeds would be approximately $28,722,750 after subtracting estimated offering costs of $1,826,250 to DealMaker in fees and commissions, $10,000 in audit and accounting fees, $45,000 in Blue Sky related filing fees and $21,000 in legal fees. There are also additional expenses of approximately 2% on the processing of the payments from the Investors, or $625,000 that would also be subtracted from the maximum raise. In such event we would use the proceeds respective to this 50% raise to conduct normal business operations, including payments to officers, and conduct the needed research and development, allowing us to develop new data centers.

The Company intends to use the proceeds of this offering for general working capital expenses, to cover general and administrative costs and for marketing and public relations efforts, which includes pay for employees/officers. The Company does not anticipate any material change in the use of proceeds if all of the securities being qualified on the Offering Circular are not sold; it will simply have to spend less on each category in this use of proceeds section on an adjusted basis.

During the course of the offering, the company may issue Bonus Shares as described under the "Plan of Distribution" and "Securities Being Offered" sections herein. The issuance of Bonus Shares does not affect the potential proceeds that may be received by the company.

***The Company reserves the right to change the above intended use of proceeds if management believes it is in the best interests of the Company.***

**THE COMPANY'S BUSINESS**

**Overview**

BluSky AI Inc. is a pre-fabricated modular data center provider specializing in artificial intelligence (AI) and high-performance computing (HPC) that was originally formed in Nevada on July 2, 2007. The company is dedicated to delivering state-of-the-art infrastructure and solutions tailored to meet the demands of modern AI applications and computational workloads with a focus on innovation, scalability, and environmental sustainability.

Previously known as Inception Mining Inc., the company underwent a significant transformation and rebranding in March 2025 to align with its new strategic direction. This change reflects BluSky AI Inc.'s commitment to advancing technology and providing unparalleled services in the data center industry. The Company is headquartered in Murray, Utah.

Historically, we operated within the mining industry, serving as a consultant to mining companies and as an operator of a mine engaged in the production of precious metals. From 2015 through January 24, 2023, the Company operated the Clavo Rico mine in Honduras through its wholly owned subsidiary, Compañía Minera Cerros del Sur, S.A de C.V. ("CMCS") and other mining concessions.

***<u>2023 Divestiture of the Clavo Rico Mine and Legacy Mining Matters</u>***

On January 12, 2023, the Company entered into a non-binding Letter of Intent (the "LOI") with Mother Lode Mining, Inc. ("MLM"). The LOI became binding on January 24, 2023, when the final installment of initial payment set forth under the LOI was received by the Company.

Pursuant to the terms of the LOI, the Company agreed to sell all of the shares of its wholly owned subsidiary, Compañía Minera Cerros Del Sur, S.A. de C.V. ("CMCS"), to MLM. CMCS is the Honduran-based company that owns the Clavo Rico mine.

Following the divestiture of the Clavo Rico Mine, the Company operated as a consultant and advisor to the mining industry, including to Mother Lode Mining in connection with the Clavo Rico mine. It also had an ongoing financial interest in the Clavo Rico Mine under the LOI. Pursuant to the terms of the LOI, the Company was entitled to receive cash payments totaling $2,700,000 through January 2025. These payments were secured by a 10% net smelter royalty on production from the Clavo Rico mine. The Company also held a carried-forward net profits interest royalty equal to 5% of mine production until cumulative payments reached $1,000,000, subject to certain allowable Clavo Rico operating expense offsets.

During the year ended December 31, 2025, the Company did not receive any payments under the LOI, the Company believed Mother Lode Mining was in default, the Company recorded a full allowance for the outstanding receivable, and the Company pursued litigation to enforce its rights and recover amounts it believed it was owed under the LOI.

On February 4, 2026, the Company and Mother Lode Mining entered into a settlement agreement resolving all disputes in connection with the LOI and the Clavo Rico mine. Under the settlement, the parties agreed to a mutual dismissal with prejudice of all claims, counterclaims, and causes of action asserted or that could have been asserted in United States District Court for the District of Utah, Central Division, Case No. 2:24-cv-00171-TS-CMR, or in any other forum. As part of the settlement, the parties executed a mutual general release of all claims and potential claims against the other parties and their affiliates. Following the settlement, no further amounts are expected to be collected under the LOI.

*Current Operations*

BluSky AI Inc. is rapidly emerging as a pivotal force in the Neocloud ecosystem, with plans to deliver high-performance infrastructure tailored for artificial intelligence workloads. Unlike traditional hyperscalers, BluSky AI Inc. is a Neocloud purpose-built for artificial intelligence/machine learning (AI/ML) and high-performance computing (HPC). BluSky AI's core infrastructure is defined by its rapidly deployable *SkyMod* data centers. *SkyMods* next-generation, scalable AI Factories provide speed-to-market and energy optimization to support high-performance machine learning workloads. BluSky AI plans to empowers small, mid-sized, enterprise, and academic entities from start-up to scale-up to drive innovation without compromise.

*SkyMods* are pre-configured AI "factories" engineered to meet the surging demand for compute power driven by generative models, machine learning inference, and large-scale training pipelines. With operations anchored in Salt Lake City, BluSky AI is positioning itself as a nimble alternative to legacy cloud providers, offering speed-to-market and network scalability through planned multiple locations without the multi-year buildout timelines.

At the heart of BluSky AI's offering is its GPU-as-a-Service model, which will provide clients with flexible access to top-tier GPUs, including plans for numerous configurations. This consumption-based model allows enterprises, research institutions, and startups to scale their AI workloads without the capital burden of owning and maintaining hardware. Each *SkyMod* unit—will be available in various configurations— and will come fully assembled and ready for plug-and-play operations, dramatically reducing deployment friction. BluSky AI's planned infrastructure is optimized for low-latency networking, supporting model parallelism and high-throughput inference across multi-tenant environments.

As a Neocloud provider, BluSky AI is part of a new generation of AI-first infrastructure companies that prioritize performance, transparency, and agility. Neoclouds are defined by their ability to deliver bare-metal GPU access, simplified pricing, and orchestration tools that support hybrid and multi-cloud environments. BluSky AI's approach aligns with this ethos, offering transparent hourly GPU rates and integrated support for AI-ready networking solutions from industry leaders. This plan positions BluSky AI to serve not just commercial clients, but also government and academic institutions seeking sovereign AI infrastructure with predictable cost structures.

Operationally, BluSky AI plans to expand its Neocloud footprint through strategic site acquisitions and partnerships, which signals the company's intent to scale its modular deployments across energy-rich regions. By leveraging existing energy infrastructure and deploying *SkyMods* in various zones, BluSky AI is the potential to sidestep the bottlenecks that plague traditional data center development. This decentralized, modular strategy not only has the potential to accelerate time-to-value for clients, but also could align with ESG goals around energy optimization and infrastructure reuse. In a market racing to meet AI's insatiable demand, BluSky AI Inc. plans to build the backbone behind the intelligence to meet the industry's needs as they continue to grow.

BluSky AI's planned operational footprint includes a growing portfolio of strategically located sites across the western and central United States, each selected for power availability, scalability, and proximity to key transmission infrastructure. The company currently controls or has executed letters of intent for multiple properties intended to support near term and long term deployment of its modular SkyMod AI Factory systems.

BluSky AI maintains a growing portfolio of development stage sites selected for power availability, scalability, and alignment with the company's modular deployment strategy. In Milford, Utah, the Company controls 51 acres under a ground lease and is pursuing power to support initial deployment activities. The Company has also announced a letter of intent for a 0.375 acre site in Nephi, Utah, with an estimated 4 MW of available power.

In addition to these Utah locations, BluSky AI has entered into 9 additional letters of intent to acquire or lease sites totaling more than 100 acres. These prospective sites provide an estimated potential power capacity exceeding 150 MW and are intended to support the company's continued expansion of its modular AI infrastructure footprint.

Collectively, these locations reflect BluSky AI's strategy of targeting energy-rich, infrastructure-ready regions to accelerate deployment and meet rising demand for AI compute. Across its current portfolio, the Company's potential power capacity exceeds 250 MW, supporting both near-term activation and scalable long-term growth.

**BluSky AI Operations**

The Company is focusing its operations on artificial intelligence compute infrastructure and participating in the dynamic and expanding AI industry. The Company has plans to grow its AI operations organically. BluSky AI was established by drawing on extensive industry expertise, insights from outside experts, and a careful evaluation of current conditions in the data center markets. The innovative concept is built around a pre-fabricated modular design that leverages existing power infrastructure. BluSky AI plans to develop multiple modular data center sites across various U.S. jurisdictions, with artificial intelligence/machine learning (AI/ML) focus, specifically targeting facilities with the potential to develop power capacity or utilize existing power capacities. Many of these sites may have been in process for years. This strategy enables a potential faster time to market, scalable deployment, and a cost-effective approach that meets the evolving needs of the data center market.

BluSky AI is planning to revolutionize the artificial intelligence compute landscape by addressing the immediate global supply shortage with a cutting-edge, turnkey solution. Our strategy centers on rapidly deployable, plug-and-play, modular compute centers called *SkyMods* on powered land assets—sites that already possess permitted energy infrastructure. This approach not only accelerates time to market but also positions BluSky AI as a premier AI compute infrastructure provider dedicated to meeting the surging demand for advanced AI services.

*BluSky AI's Neocloud—A Next-Generation Compute Infrastructure*

BluSky AI Inc. is planned as a Neocloud purpose-built for artificial intelligence/machine learning (AI/ML) and high-performance computing (HPC). BluSky AI's planned core infrastructure is defined by its rapidly deployable *SkyMod* data centers. *SkyMods* next-generation, scalable AI Factories provide speed-to-market and energy optimization to support high-performance machine learning workloads. With plans to scale across multiple sites and deliver high compute capacity (ranging from 1 MW to 60 MW per site), BluSky AI plans to provide a client-tailored scalability to empower small, mid-sized, enterprise, and academic partners from start-up to scale-up to drive innovation without compromise.

The company's mission is to empower AI innovators by eliminating infrastructure bottlenecks and accelerating time-to-compute with energy-efficient, scalable solutions.

*Meeting the AI Compute Shortfall*

BluSky AI's plan is to design leading AI compute provisioning. By placing our modular units on strategically locations, with existing power where available, and plans will provide the essential backbone for AI inferences—enabling trained AI models to recognize patterns and draw conclusions on demand. Our unique offering may minimize technical deployment risks while maximizing opportunities for immediate incremental revenue generation and rapid market capture.

Our Neocloud developing portfolio of *SkyMod* AI factories plans to serve as a core infrastructure asset for the massive need for AI compute that is currently 3x the amount of the current data center capacity, providing strategic growth and innovation in the era of IoT and big data.

We are targeting initial sites ranging from 1 MW to 60 MW across various states, targeting robust geographic diversification to capture regional and global demand.

We are committed to delivering cutting-edge, environmentally conscious, and modular compute solutions that will empower AI companies to realize their full potential, driving the next generation of AI applications and safeguarding data with the industry leading-level security.

We believe BluSky AI's unique approach to its future operations—combining turnkey-powered land assets, rapid deployment, and scalable modular compute centers— could deliver the critical infrastructure needed to bridge the AI compute gap that exists in the marketplace today. While today's market focus is primarily on the 80% demand coming from Large Language and Training Models, 80% of the future demand will rely on inferencing needing low-latency millisecond compute. Our solutions not only address today's pressing needs but also lay a solid foundation for AI inference for sustained growth and technological advancement in the future of AI.

BluSky AI's plans are built around a revenue model focused on delivering modular data center solutions that leverage existing power infrastructure for rapid, scalable, and cost-effective deployments. The company will generate revenue primarily through:

● **Leasing and Subscription Services:** BluSky AI plans to provide a modular, turnkey data center solutions to customers on a subscription or leasing basis. These planned services include the design, deployment, and ongoing management of facilities tailored to support power capacities of less than 50MW, which accelerates time to market and reduces capital expenditure compared to traditional builds.

● **Integrated Infrastructure Services:** Beyond physical infrastructure, BluSky AI plans to offer advanced operational monitoring, predictive maintenance, and energy management analytics. These value-added services may help clients optimize performance and minimize downtime, creating additional revenue streams.

● **Strategic Partnerships and Government Contracts:** With a growing demand for secure, sustainable, and energy-efficient data center operations, BluSky AI plans to position itself to serve a diverse customer base—including private enterprises and governmental agencies. Current negotiations are underway with chip partners and others who have client bases that they also need to serve through potential BluSky AI's solutions. This dependency on revenue-generating activities from both commercial and public sectors is key to its expansion strategy.

Key plans for products and service families revolve around pre-fabricated modular data center designs, scalable power and cooling solutions, and integrated management systems—all aimed at delivering predictable quality and cost efficiency. This planned operational focus not only drives revenue but also underpins the company's broader strategy to expand its footprint across multiple U.S. jurisdictions while meeting the evolving needs of high-value clients, including government, education, and others.

BluSky AI plans include accelerating its development efforts to enhance its suite of *SkyMod* AI factories. The company's R&D team is developing new modules that integrate advanced power management, enhanced cooling, and remote monitoring capabilities, which are designed to improve deployment speed and scalability. These enhancements target facilities with existing power infrastructure under 60MW, a segment that is seeing robust market demand due to the growing need for sustainable, cost-effective, and rapidly deployable data centers.

Market trends indicate a steady increase in demand for modular data centers driven by rising energy efficiency requirements and the need for quicker, scalable solutions. Competitive conditions are intensifying as traditional hyperscale data center operators and emerging off-grid, sustainable providers vie for market share. In response, BluSky AI is strategically refining its business plans and product offerings and operational efficiencies while building relationships to forge key partnerships with both commercial enterprises and governmental customers. This dual focus not only supports its revenue generation strategy but also positions the company to remain competitive in a dynamic and rapidly evolving market landscape.

**Pricing Program for Modular AI Data Center**

Our pricing program in development will be structured to provide flexibility and transparency for AI workloads. It balances resource utilization with modular scalability, catering to training, inference, and mixed AI workflows.

**Development plans include:**

**Base Structure**

Individual blocks of power supports a defined compute capacity, which is billed based on:

-Resource Usage (Compute Time, Memory, and Storage)

-Workload Type (Training vs. Inference)

-Service Plan (On-Demand vs. Reserved)

**Key Benefits**

Key benefits may include:

1. Scalability: Modular increments allow gradual scaling up to meet demand.

2. Cost Efficiency: Discounts for reserved plans and spot pricing reduce long-term costs.

3. Flexibility: Tailored configurations for training, inference, or mixed workloads.

4. Sustainability: Carbon-neutral options available, appealing to ESG-conscious clients.

**Usage Metrics**

BluSky AI data centers plans to offer usage metrics calculated by the amount of compute time utilized, measured in CPU and GPU hours. Customers will be billed according to the number of hours their CPUs or GPUs are in use, with GPU pricing typically being higher than CPU pricing due to the greater processing power offered by GPUs.

**Compute Time(CPU/GPU Hours):**

- Customers are billed based on the number of hours the CPUs or GPUs are used.

- GPU pricing is typically higher than CPU pricing due to greater processing power.

**Resource Allocation:**

Resource allocation charges are determined by the number of cores, GPUs, or accelerators allocated, as well as their respective performance levels. High-performance GPUs incur higher costs compared to entry-level models due to their enhanced capabilities.

**Memory Usage:**

Memory usage charges may be based on the amount of RAM used per hour or the specific memory tier utilized for training or inference workloads.

**Storage Costs:**

Storage costs include charges for high-speed storage used during compute processes, such as NVMe SSDs, as well as fees for long-term data storage.

**Type of Workload:**

The type of workload affects pricing, with training and inference being the primary factors. Training large models, such as deep learning networks, requires significantly more resources and is priced higher. In contrast, inference, which involves deploying models for predictions, is less resource-intensive and generally incurs lower costs.

**Reserved vs. On-Demand Pricing**

With On-Demand pricing, customers pay a premium for immediate access to resources without any long-term commitment. In contrast, Reserved or Subscription pricing provides discounts for reserving resources for a longer period or for bulk usage.

**Pricing tiers for specific hardware configurations:**

The Standard tier offers low-cost, general-purpose resources suitable for small-scale tasks. The High-Performance tier, on the other hand, comes with premium pricing for advanced GPUs or clusters, designed to handle complex AI workloads.

**Location and Energy Costs:**

Location and energy costs play a significant role in pricing. Regions with lower energy costs or tax incentives for renewable energy typically offer lower pricing. However, carbon-neutral or sustainable data centers may charge a premium for green computing initiatives.

**Additional Costs**

Additional costs may include networking fees for data transfer in and out of the data center or between regions, as well as charges for software licenses related to proprietary AI frameworks, tools, or libraries. Additionally, support services such as technical assistance, managed services, or custom optimization may incur extra fees.

**Colocation Data Centers:**

Colocation data centers typically charge flat fees for rack space, power, and cooling, with additional charges applied for compute usage.

**Emerging Trends**

Emerging trends in data center pricing and operations include several innovative approaches. Pay-As-You-Go pricing is ideal for startups or workloads with unpredictable demands, allowing customers to pay only for the resources they use. Spot Pricing offers discounts for utilizing idle resources during non-peak times, which can help reduce costs. Custom AI Accelerators, like Google's TPU, are increasingly being used in data centers, offering competitive pricing tailored for specific AI tasks.

BluSky AI's approach to building its modular data centers will rely on a complex, carefully managed supply chain and sourcing strategy. BluSky AI has already developed key vendor relationships and solution partners over the prior years of working in the hyperscale environment. The company will leverage existing on-site power infrastructures and renewable energy options, such as solar, hydrogen, or even alternative on-site grid systems. This helps to accelerate deployments and reduce the need for extensive new power installations, although securing reliable, sustainable power often involves long lead times for specialized components like hydrogen fuel cells or advanced renewable integration systems, and can be impacted by regional regulatory constraints.

BluSky AI plans to focus on sites in various U.S. jurisdictions, specifically targeting facilities with power capacities under 50MW. However, acquiring suitable land with the necessary zoning, infrastructure, and environmental clearances can be time-consuming and competitive, as prime locations are in high demand.

For equipment sourcing, BluSky AI will need to procure critical items such as transformers, switch gear, servers, CPUs, GPUs, LPUs, racks, and cooling solutions. These components are essential for ensuring efficient power distribution and supporting high-performance computing workloads. However, these items often come with long lead times due to their customizability, regulatory compliance requirements, and the current global supply chain constraints, such as semiconductor shortages. Specialized racks and advanced cooling systems, like rear-door heat exchangers and liquid cooling modules, are also vital for handling the substantial heat loads generated by modern AI deployments. These systems require extensive engineering and have lengthy procurement cycles.

By balancing these sourcing strategies and navigating industry constraints, BluSky AI is targeting to deliver scalable, efficient, and cost-effective data center solutions that meet the evolving needs of its diverse customer base, including revenue-generating activities from commercial and governmental clients.

BluSky AI's operational model is being built on leveraging open standards and modular, scalable solutions that do not hinge on proprietary intellectual property rights. In fact, the company does not currently hold patents, trademarks, licenses, franchises, or concessions that affect its core operations. This approach provides several advantages:

● **Flexibility and Agility:** By not being tied to a proprietary IP portfolio, BluSky AI can rapidly adapt to technological advances and market shifts without concerns about the expiration or enforcement of specific patents or licenses.

● **Open Standards & Collaboration:** The company embraces open-source frameworks and industry best practices—such as those embodied in the AT Protocol—allowing for interoperability and a more transparent development environment. This strategy reduces reliance on exclusive technologies and minimizes risks associated with the duration or changes in IP rights.

● **Cost Efficiency:** Avoiding significant investments in proprietary IP frees up resources that can be redirected toward R&D, scaling operations, and forming strategic partnerships. The operational model thus remains cost-effective and resilient in a competitive, fast-evolving market.

Overall, BluSky AI does not see an impact on its operations related to the duration or effect of patents, trademarks, licenses, franchises, or concessions, allowing it to focus on innovation and scalable deployment without being encumbered by restrictive intellectual property concerns.

BluSky AI faces several risks associated with its modular data center model, reliance on GPUs, and constraints in the U.S. energy grid, as well as potential exposure to government contract renegotiation or termination.

In summary, BluSky AI's planned operations are designed to meet constant, year-round needs. This non-seasonal nature is a significant strength, allowing the company to focus on scalable, long-term growth while mitigating risks associated with fluctuating market cycles. Grandview Research estimates a 35.9% annual CAGR in this market over the next 7 years.

BluSky AI plans to operate in a highly competitive data center market that is rapidly evolving alongside the surge in demand for AI computing, particularly GPU on demand services. Here are some key points regarding the competitive landscape and growth prospects:

● **Competitive Environment in Data Centers:** 

 BluSky AI faces competition from traditional hyperscale data center providers (like AWS, Google, and Microsoft) as well as specialized modular data center firms. Its focus on deploying pre-fabricated modular solutions that integrate with existing power infrastructure gives it a competitive edge that may offer faster deployment, lower capital costs, and scalability. However, the market is crowded, and large players benefit from economies of scale and long-established supply chains.

● **GPU on Demand and AI Workloads:** 

 The demand for GPUs has skyrocketed as AI workloads intensify. BluSky AI plans to target this growing segment with the intent to offer flexible, high-density computing solutions. Despite robust market growth, global semiconductor supply constraints and fierce competition from major GPU vendors such as NVIDIA and AMD present challenges. BluSky AI is investing in supply chain resilience and strategic partnerships with multiple vendors to secure a steady supply of GPUs to meet customer needs.

● **Growth Dynamics:** 

 With the increasing importance of AI across industries, the overall market for data centers and GPU-powered infrastructure is expected to continue growing. BluSky AI's pre-fabricated modular approach may allow it to capture a portion of this growth by meeting the rising demand for energy-efficient, rapidly deployable data centers that can scale as client requirements evolve. This growth is fueled by the need for continuous, non-seasonal computing capacity, particularly in sectors like government, finance, and healthcare.

● **Risks and Strategic Considerations:** 

 While BluSky AI is well-positioned, it must navigate industry challenges such as long lead times for critical components, energy grid constraints in certain regions, and potential disruptions in the semiconductor supply chain. Additionally, competitive pressures may force frequent innovations or strategic adjustments, particularly as larger players ramp up their AI and GPU offerings.

*Compliance with Government Regulation*

Since the Divestiture of CMCS and the Clavo Rico mine in January 2023, we are no longer subject to the mining regulations of Honduras.

The Company's policy is to conduct our business in a manner that safeguards public health and mitigates the environmental effects of our business activities. To comply with these laws and regulations, we have made, and in the future may be required to make, capital and operating expenditures.

In the U.S., federal guidelines like the Federal Data Center Enhancement Act focus on cybersecurity, resiliency, and energy efficiency. <u>https://www.congress.gov/bill/118th-congress/senate-bill/933/text</u>

In 2023, the European Union introduced the revised Energy Efficiency Directive (EED, EU/2023/1791) that requires data centers to report energy efficiency data to the European Commission. <u>https://energy.ec.europa.eu/topics/energy-efficiency/energy-efficiency-targets-directive-and-rules/energy-efficiency-directive_en</u>

Data centers have a significant environmental footprint, and compliance with environmental regulations is critical:

- Air Quality: Backup generators require air permits and adherence to emission standards.

- Water Management: Cooling systems often need permits for water usage and discharge.

- Hazardous Materials: Proper storage and disposal of materials like batteries and used oil are essential.

*Capital Equipment and Research & Development Expenditures*

During the year ended December 31, 2025, we did not incur any expense related to research and development. Additionally, we are not currently conducting any research and development activities other than those relating to the Company's new artificial intelligence-related operations.

*Employees*

As of the date of this filing, we currently employ 5 full-time employees and 4 part-time employees in the United States. We have contracts with various independent contractors and consultants to fulfill additional needs, including investor relations and other administrative functions, and may staff further with employees as we expand activities and bring new projects online. We are negotiating managed services contracts with top vendors to utilize their employees and expertise in data management to negate the need to initially expand a large BluSky AI's staff with growth.

*Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts*

We do not currently own any patents or trademarks. Also, we are not a party to any license or franchise agreements, concessions, or labor contracts arising from any patents. trademarks, or royalty agreements.

*Company Information*

The public may read and copy any materials that we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is <u>www.sec.gov</u>. Further information about the Company may be found at its website: <u>www.bluskyaidatacenters.com</u>. The Company makes available its filings to investors, free of charge, on this website.

**Reports to Security Holders**

You may read and copy any materials that we file with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may also find all the reports that we have filed electronically with the SEC at their Internet site www.sec.gov.

**Litigation**

<br> From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. Except as set forth below, we are currently not aware of any such pending or threatened legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.

On or about March 4, 2024, the Company filed a complaint against Mother Lode Mining, Inc., a Canadian company, and Robert Salna (the "Defendants"), seeking damages in an amount of not less than $2,237,800 (plus interest, additional costs and attorneys' fees) due from Defendants as a result of their breach of their obligations and duties arising from the sale of Compañía Minera Cerros Del Sur, S.A. de C.V. in 2023 (the "Sale"). The complaint was filed in the United States District Court for the District of Utah, Central Division (Case No. 2:24-cv-00171-TS-CMR, the "Case"). On February 4, 2026, the Company and the Defendants entered into a settlement agreement resolving all disputes in connection with the Sale. Under the settlement, the parties agreed to a mutual dismissal with prejudice of all claims, counterclaims, and causes of action asserted or that could have been asserted in the Case or in any other forum. As part of the settlement, the parties executed a mutual general release of all claims and potential claims against the other parties and their affiliates.

 

*See* "Risk Factors" for a summary of risks our Company may face in relation to litigation against our Company.

**THE COMPANY'S PROPERTY**

*<u>Corporate Headquarters</u>*

We currently maintain our corporate offices at 5330 South 900 East, Suite 280, Murray, Utah 84117. During the year ended December 31, 2025, we paid monthly rent of approximately $1,557 for use of the corporate office.

Other than the above, the Company neither owns nor holds any interest in any material properties requiring disclosure under this item.

**MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

**Forward Looking Statements**

Except for historical information, the following Management's Discussion and Analysis contains forward-looking statements based upon current expectations that involve certain risks and uncertainties. Such forward-looking statements include statements regarding, among other things, (a) discussions about mineral resources and mineralized material, (b) our projected sales and profitability, (c) our growth strategies, (d) anticipated trends in our industry, (e) our future financing plans, (f) our anticipated needs for working capital, (g) our lack of operational experience and (h) the benefits related to ownership of our common stock. Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend," or "project" or the negative of these words or other variations on these words or comparable terminology. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements may be found under "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Description of Business," as well as in this Report generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under "Risk Factors" and matters described in this Report generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this Report will in fact occur as projected.

**Overview**

BluSky AI Inc., is a pioneering company in AI-driven data center solutions, combining innovation with regulatory compliance and sustainability. The Company is a Neocloud with plans to offer rapidly scalable pre-fabricated modular data centers specializing in artificial intelligence/machine learning (AI/ML) providing high-performance computing infrastructure, strategic site selection, and operational risk management. The company is dedicated to delivering state-of-the-art infrastructure and solutions tailored to meet the demands of modern AI applications and computational workloads in an environment where computational demands are accelerating twofold every 9 months. The Company operates with a focus on innovation, scalability, and environmental sustainability.

Previously known as Inception Mining Inc., the company underwent a significant transformation and rebranding in March 2025 to align with its new strategic direction. This change reflects BluSky AI Inc.'s commitment to advancing technology and providing unparalleled services in the data center industry. The Company is headquartered in Murray, Utah.

Historically, we have operated within the mining industry, serving as a consultant to mining companies and as an operator of a mine engaged in the production of precious metals. On January 12, 2023, the Company entered into an agreement through which the Company divested its ownership interest in the Clavo Rico mine, resulting in the transfer of operations to Mother Lode Mining and full control of the Clavo Rico mine asset.

**Current Operations**

The Company is focused on artificial intelligence compute infrastructure and participating in the dynamic and expanding AI industry predicted to be $1.81 trillion by 2030 by Grandview Research. The Company has plans to grow its AI operations organically within the Company. BluSky AI was established by drawing on extensive industry expertise, insights from outside experts, and a careful evaluation of current conditions in the data center markets. The innovative concept is built around a pre-fabricated modular design that may leverage existing power infrastructure. BluSky AI plans to develop multiple data center sites across various U.S. jurisdictions, with artificial intelligence (AI) focus, specifically targeting facilities with the ability to develop power capacity or utilize existing power capacities. This strategy enables a faster time to market, scalable deployment, and a cost-effective approach that meets the evolving needs of AI and the high compute data center market.

BluSky AI plans to revolutionize the artificial intelligence compute landscape by addressing the immediate global supply shortage with a cutting-edge, turnkey solution called *SkyMods*. Our strategy centers on rapidly deployable, plug-and-play, pre-fabricated modular compute centers on powered land assets—sites that already possess permitted energy infrastructure. This approach not only accelerates time to market but also positions BluSky AI as a premier AI compute infrastructure provider dedicated to meeting the surging demand for advanced AI services.

**Results of Operations**

We had a net loss of $4,515,516 for the year ended December 31, 2025, which was $3,565,734 more than the net loss of $949,782 for the year ended December 31, 2024. This change in our results over the two periods is primarily the result of an increase in general and administrative expenses of $2,145,511, decrease in interest expense of $344,059 and an increase in loss on extinguishment of debt of $1,962,881. The following table summarizes key items of comparison and their related increase (decrease) for the years ended December 31, 2025 and 2024.

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| | | | |
|:---|:---|:---|:---|
|  | **Years Ended December,** | **Years Ended December,** | |
|  | **2025** | **2024** | **Increase/**<br> **(Decrease)** |
| General and Administrative | $2665889 | $520378 | $2145511 |
| Depreciation and Amortization Expenses | - | 727 | (727) |
| Total Operating Expenses | 2665889 | 521105 | 2144784 |
| Income (Loss) from Operations | (2665889) | (521105) | (2144784) |
| Other Income (expense) | 96 |  | 96 |
| Interest Income | 15590 |  | 15590 |
| Change in Derivative Liabilities | 182394 | 196321 | (13927) |
| Initial Derivative Expense |  | (193582) | 193582 |
| Loss on Disposal of Property, Plant and Equipment |  | (2531) | 2531 |
| Loss on Extinguishment of Debt | (1975924) | (13043) | (1962881) |
| Interest Expense | (71783) | (415842) | 344059 |
| Income (Loss) from Operations Before Taxes | (4515516) | (949782) | (3565734) |
| Provision for Income Taxes | - | - | - |
| Net Income (Loss) | $(4515516) | $(949782) | $(3565734) |

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 **Operating Expenses**

Operating expenses for the years ended December 31, 2025 and 2024 were $2,665,889 and $521,105, respectively. The increase in operating expenses for 2025 compared to 2024 were comprised primarily of an increase in consulting fees and investor relations expenses.

 **Other Income (Expenses)**

Other income (expenses) for the years ended December 31, 2025 and 2024 were ($1,849,627) and ($428,677), respectively. For the year ended December 31, 2025, other income (expenses) was comprised primarily of $182,394 for change in derivative liability, ($1,975,924) for loss on extinguishment of debt and ($71,783) for interest expense. For the year ended December 31, 2024, other income (expenses) was comprised primarily of $196,321 for change in derivative liability, ($193,582) in initial derivative expenses, ($13,043) for loss on extinguishment of debt and ($415,842) for interest expense.

 **Net Loss**

Net loss for the year ended December 31, 2025 was $4,515,516 while the net loss for the year ended December 31, 2024 was $949,782.

 **Liquidity and Capital Resources**

Our balance sheet as of December 31, 2025, reflects current assets of $1,122,661. As we had cash in the amount of $960,436 and a working capital deficit in the amount of $2,293,390 as of December 31, 2025, we do not have sufficient working capital to enable us to carry out our stated plan of operation for the next twelve months.

 **Working Capital**

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| | | |
|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2024** |
| Current assets | $1122661 | $- |
| Current liabilities | 3416051 | 3346850 |
| Working capital deficit | $(2293390) | $(3346850) |

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We anticipate generating losses and, therefore, may be unable to continue operations in the future. If we require additional capital, we will have to issue debt or equity or enter into a strategic arrangement with a third party.

 **Going Concern Consideration**

As reflected in the accompanying financial statements, the Company has an accumulated deficit of $34,378,880. In addition, there is a working capital deficiency of $2,293,390 and a stockholder's deficiency of $930,493 the Company to continue as a going concern is dependent on the Company's ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 **Cash Flows**

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| | | |
|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2025** | **2024** |
| Net Cash Provided by (Used in) Operating Activities | $(1156258) | $(127139) |
| Net Cash Provided by (Used in) Investing Activities |  |  |
| Net Cash Provided by (Used in) Financing Activities | 2116694 | 127137 |
| **Net Increase (Decrease) in Cash** | $960436 | $(2) |

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 <u>Operating Activities</u>

Net cash flow used in operating activities during the year ended December 31, 2025, was $1,156,258, an increase of $1,029,119 from the $127,139 net cash used in operating activities during the year ended December 31, 2024. This decrease is mostly due to the net loss in 2025 versus the net loss in 2024.

 <u>Investing Activities</u>

Cash used in investing activities during the year ended December 31, 2025, was $0, a change of $0 from the $0 net cash used during the year ended December 31, 2024. This change was due to no new investments.

 <u>Financing Activities</u>

Financing activities during the year ended December 31, 2025, provided $2,116,694, an increase of $1,989,557 from the $127,137 provided by financing activities during the year ended December 31, 2024. During the year ended December 31, 2025, the company received $362,906 in notes payable from related parties, $1,885,000 in convertible notes payable and made payments of $131,212 in cash on notes payable – related parties. During the year ended December 31, 2024, the company received $174,396 in notes payable from related parties, $150,000 in convertible notes payable, made payments of $98,475 in cash on notes payable – related parties, and payments of $98,784 in cash on convertible notes.

 <u>Critical Accounting Policies and Estimates</u>

 **Going Concern -** The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying consolidated financial statements during year ended December 31, 2025, the Company recorded a net loss of $4,515,516 and used $1,156,258 in cash from operating activities. The Company has an accumulated net loss since inception of $34,378,880. In addition, there is a working capital deficiency of $2,293,390 and a stockholder's deficiency of $930,493 as of December 31, 2025. These factors among others indicate that the Company may be unable to continue as a going concern for one year from the issuance of these financial statements.

The Company's existence is dependent upon management's ability to develop profitable operations and to obtain additional funding sources. There can be no assurance that the Company's financing efforts will result in profitable operations or the resolution of the Company's liquidity problems. The accompanying statements do not include any adjustments that might result should the Company be unable to continue as a going concern.

Management is currently working to make changes that will result in profitable operations and to obtain additional funding sources to meet the Company's need for cash during the next twelve months and beyond.

 **Basis of Presentation -** The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America.

 **Use of Estimates –** In preparing financial statements in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenditures during the reported periods. Actual results could differ materially from those estimates. Estimates may include those pertaining to allowances on notes receivable, deferred tax assets, derivative assets and liabilities, stock-based compensation and payments, and contingent liabilities.

 **Notes Receivable** – Notes receivable include amounts due to the Company pursuant to financial agreements stipulating interest rates, payment terms and maturity dates. The Company uses payment history, timeliness of payments, economic environment and potential disagreements with noteholder and debtor and other potential indicators to evaluate the collectability of the note receivable and to determine if an allowance for doubtful notes is required.

 **Fair Value Measurements -** The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the party's own credit risk.

Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3: Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.

The carrying value of the Company's cash, accounts payable, short-term borrowings (including convertible notes payable), and other current assets and liabilities approximate fair value because of their short-term maturity.

The Company recognizes its derivative liabilities as level 3 and values its derivatives using the methods discussed below. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values using the methods discussed below are that of volatility and market price of the underlying common stock of the Company.

 **Long-Lived Assets -** We review the carrying amount of our long-lived assets for impairment whenever there are negative indicators of impairment. An asset is considered impaired when estimated future cash flows are less than the carrying amount of the asset. In the event the carrying amount of such asset is not considered recoverable, the asset is adjusted to its fair value. Fair value is generally determined based on discounted future cash flows.

 **Properties, Plant and Equipment -** We record properties, plant and equipment at historical cost. We provide depreciation and amortization in amounts sufficient to match the cost of depreciable assets to operations over their estimated service lives or productive value. We capitalize expenditures for improvements that significantly extend the useful life of an asset. We charge expenditures for maintenance and repairs to operations when incurred. Depreciation is computed using the straight-line method over estimated useful lives as follows:

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| | |
|:---|:---|
| Building | 7 to 15 years |
| Vehicles and equipment | 3 to 7 years |
| Processing and laboratory | 5 to 15 years |
| Furniture and fixtures | 2 to 3 years |

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 **Derivative Liabilities -** Derivative liabilities are recorded at fair value when issued and the subsequent change in fair value each period is recorded in other income (expense) in the consolidated statements of operations. We do not hold or issue any derivative financial instruments for speculative trading purposes.

At December 31, 2025, the Company marked to market the fair value of the debt derivatives and determined a fair value of $14,516. The Company recorded a gain from change in fair value of debt derivatives of $182,394 for the year ended December 31, 2025. The fair value of the embedded derivatives was determined using the Monte Carlo Valuation Model. The Monte Carlo Valuation Model was based on the following assumptions: (1) expected volatility of 100.0%, (2) weighted average risk-free interest rate of 3.47% and (3) expected life of 0.80 – 1.00 years.

 **Income Taxes -** The Company's income tax expense and deferred tax assets and liabilities reflect management's best assessment of estimated future taxes to be paid. Significant judgments and estimates are required in determining the consolidated income tax expense.

Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense. In evaluating the Company's ability to recover its deferred tax assets, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, the Company develops assumptions including the amount of future state and federal pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates that the Company is using to manage the underlying businesses. The Company provides a valuation allowance for deferred tax assets for which the Company does not consider the realization of such deferred tax assets to be more likely than not.

Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. Management is not aware of any such changes that would have a material effect on the Company's results of operations, cash flows or financial position.

 **Operating Lease** – The Company leases its corporate headquarters and administrative offices in Salt Lake City, Utah. This lease expired in August 2024 and is now a month-to-month lease. The Company made cash payments of $18,006 and $22,484 for the years ended December 31, 2025 and 2024, respectively on this lease. The Company incurred rent expense of $18,006 and $22,484 for the years ended December 31, 2025 and 2024, respectively.

On July 11, 2025, the Company entered into a Ground Lease with an Option to Purchase (the "Lease") with Wild Mustang Ventures LLC, a Wyoming limited liability company (the "Landlord"), through which the Company leased 51.6 acres in Milford, Utah (the "Milford Land") for a two-year term. The base rent is $90,000 annually, which shall accrue until the earlier of the expiration of the lease or until the Company exercises its option to purchase the Milford Land. The Lease contains standard other provisions and includes a mutual indemnification clause which requires that the parties indemnify each other except in the case of gross negligence or willful misconduct. The Company made cash payments of $0 and $0 for the years ended December 31, 2025 and 2024, respectively for this lease. The Company incurred rent expense of $45,000 and $0 for the years ended December 31, 2025 and 2024, respectively.

 **Non-Controlling Interest Policy** – Non-controlling interest (NCI) is the portion of equity ownership in a subsidiary not attributable to the parent company, who has a controlling interest and consolidates the subsidiary's financial results with its own. The amount of equity relating to the non-controlling interest is separately identified in the equity section of the balance sheet and the amount of the net income (loss) relating to the non-controlling interest is separately identified on the statement of operations.

 <u>Recent Accounting Pronouncements</u>

For recent accounting pronouncements, please refer to the notes to the financial statements section of this Annual Report.

 <u>Off-Balance Sheet Arrangements</u>

We have no off-balance sheet arrangements.

**DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES**

**Identification of Directors and Executive Officers**

Our Bylaws state that our authorized number of directors shall be one or more and shall be set by resolution of our Board of Directors. We currently have two directors.

Our current directors and officers are as follows:

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| | | |
|:---|:---|:---|
| **Name and Business Address** | **Age** | **Position** |
| Trent D'Ambrosio | 60 | CEO, CFO and Director |
| Whit Cluff | 74 | Director |
| Dan Gay | 64 | COO and Director |

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Our directors will serve in that capacity until our next annual shareholder meeting or until a successor is elected and qualified. Officers hold their positions at the will of our Board of Directors. There are no arrangements, agreements or understandings between non-management security holders and management under which non-management security holders may directly or indirectly participate in or influence the management of our affairs.

**Trent D'Ambrosio, Chief Executive Officer, Chief Financial Officer, and Director**

Mr. D'Ambrosio has been a Director of the Company since February 28, 2013. From October 2011 through March 2013, Mr. D'Ambrosio held the positions of Interim Chief Executive Officer and Chief Financial Officer of Inception Holdings LLC, a resource exploration company, and was the responsible for the overall strategic direction for the organization. His professional record includes 25 years of management and financial services experience with companies ranging from Fortune 500 companies to start-ups. Mr. D'Ambrosio holds a B.S. in Business Management, an MBA and a Certificate of Mining Studies.

**Dan Gay, Chief Operating Officer and Director**

Mr. Gay, age 64, brings over 30 years of experience in data center innovation, enterprise IT strategy, and AI-driven technologies to the Board. Since 2023, Mr. Gay has served as the Fractional Chief Marketing and Sales Officer for Catapult Solutions. From 2018 to 2023, Mr. Gay served as the Chief Marketing and Sales Officer for BlockCerts Blockchain. He also served as the VP and Chief Marketing Officer for iThrive Health from 2010-2016. Other noteworthy roles include the Director of National Accounts and the Director of Small Business for MCI, as the Vice President of Sales for Qwest, and the Chief Marketing Officer of Montana Power. He received a Bachelor of Science degree in Marketing and Advertising from Arizona State University.

**Whit Cluff, Director**

Mr. Cluff has over 35 years of experience in the commercial real estate industry. Mr. Cluff has been involved in all disciplines of real estate land development, mixed-use development, retail tenant representation, developer representation, industrial property procurement and asset management. Mr. Cluff has an extensive background in public and private businesses giving him strong analytical, planning, and organization ability with effective negotiation skills. From 2003 through the present, Mr. Cluff has worked in commercial real estate. Mr. Cluff attended the University of Utah and served in the United States Army.

**Other Directorships**

Other than as set forth above, none of our directors hold any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940.

**Board of Directors and Director Nominees**

Since our Board of Directors does not include a majority of independent directors, the decisions of the Board regarding director nominees are made by persons who have an interest in the outcome of the determination. The Board will consider candidates for directors proposed by security holders, although no formal procedures for submitting candidates have been adopted. Unless otherwise determined, at any time not less than 90 days prior to the next annual Board meeting at which a slate of director nominees is adopted, the Board will accept written submissions from proposed nominees that include the name, address and telephone number of the proposed nominee; a brief statement of the nominee's qualifications to serve as a director; and a statement as to why the security holder submitting the proposed nominee believes that the nomination would be in the best interests of our security holders. If the proposed nominee is not the same person as the security holder submitting the name of the nominee, a letter from the nominee agreeing to the submission of his or her name for consideration should be provided at the time of submission. The letter should be accompanied by a résumé supporting the nominee's qualifications to serve on the Board, as well as a list of references.

The Board identifies director nominees through a combination of referrals from different people, including management, existing Board members and security holders. Once a candidate has been identified, the Board reviews the individual's experience and background and may discuss the proposed nominee with the source of the recommendation. If the Board believes it to be appropriate, Board members may meet with the proposed nominee before making a final determination whether to include the proposed nominee as a member of the slate of director nominees submitted to security holders for election to the Board.

Some of the factors, which the Board considers when evaluating proposed nominees, include their knowledge of and experience in business matters, finance, capital markets and mergers and acquisitions. The Board may request additional information from each candidate prior to reaching a determination, and it is under no obligation to formally respond to all recommendations, although as a matter of practice, it will endeavor to do so.

**Conflicts of Interest**

Our directors are not obligated to commit their full time and attention to our business and, accordingly, they may encounter a conflict of interest in allocating their time between our operations and those of other businesses. In the course of their other business activities, they may become aware of investment and business opportunities which may be appropriate for presentation to us as well as other entities to which they owe a fiduciary duty. As a result, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. They may also in the future become affiliated with entities that are engaged in business activities similar to those we intend to conduct.

In general, officers and directors of a corporation are required to present business opportunities to the corporation if:

● the corporation could financially undertake the opportunity;

● the opportunity is within the corporation's line of business; and

● it would be unfair to the corporation and its stockholders not to bring the opportunity to the attention of the corporation.

We plan to adopt a code of ethics that obligates our directors, officers and employees to disclose potential conflicts of interest and prohibits those persons from engaging in such transactions without our consent.

**Significant Employees**

Other than as described herein, we do not expect any other individuals to make a significant contribution to our business.

**Legal Proceedings**

None of our directors, executive officers or control persons has been involved in any of the following events during the past five years:

● any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

● any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

● being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

● being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, where the judgment has not been reversed, suspended, or vacated.

**No Audit Committee or Financial Expert**

The Company does not have an audit committee or a financial expert serving on the Board of Directors. The Company plans to form and implement an audit committee as soon as practicable.

**Family Relationships**

Lance D'Ambrosio, an advisor to the Company, is the brother of Trent D'Ambrosio, the CEO of the Company. Other than the D'Ambrosio brothers, there are no family relationships among our officers, directors, or persons nominated for such positions.

**Code of Ethics**

We have not yet adopted a code of ethics that applies to our principal executive officer and principal accounting officer, but intend to do so this year.

**COMPENSATION OF DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN SIGNIFICANT EMPLOYEES**

Our Board of Directors has not established a separate compensation committee. Instead, the Board of Directors reviews and approves executive compensation policies and practices, reviews salaries and bonuses for our officer(s), decides on benefit plans, and considers other matters as may, from time to time, be referred to it. We do not currently have a Compensation Committee Charter. Our Board continues to emphasize the important link between our performance, which ultimately benefits all shareholders, and the compensation of our executives. Therefore, the primary goal of our executive compensation policy is to closely align the interests of the shareholders with the interests of the executive officer(s). In order to achieve this goal, we attempt to (i) offer compensation opportunities that attract and retain executives whose abilities and skills are critical to our long-term success and reward them for their efforts in ensuring our success and (ii) encourage executives to manage from the perspective of owners with an equity stake in us.

**Compensation Table for Executives**

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Name and Principal Position** | **Year** | **Salary** |  | **Bonus** | **Stock Awards** |  | **Option Awards** | **Non-equity Incentive Plan Compensation** | **Non-qualified Deferred Compensation Earnings** | **All Other Compensation** | **Total** |
|  | **($)** | **($)** |  | **($)** | **($)** |  | **($)** | **($)** | **($)** | **($)** |  |
| Trent D'Ambrosio, Chief Executive Officer, Chief Financial Officer, | 2025 | 300000 | (1) |  | 200500 | (2) |  |  |  |  | 500500 |
| President, Secretary, and Director | 2024 | 300000 |  |  |  |  |  |  |  |  | 300000 |
| Whit Cluff, | 2025 |  |  |  | 40100 | (3) |  |  |  |  | 40100 |
| Director | 2024 |  |  |  |  |  |  |  |  |  |  |
| Dan Gay, | 2025 | 65000  |  |  | 102000 | (4) |  |  |  |  | 167000 |
| Chief Operating Officer and Director | 2024 |  |  |  |  |  |  |  |  |  | - |

---

(1) Mr.
 D'Ambrosio's employment agreement compensates him $300,000 per year. However,
 the Company did not pay him that full amount during fiscal years ended December 31, 2025
 and 2024. For the years ended December 31, 2025 and 2024, he was paid $0, and the Company
 recorded $300,000 as deferred salary payable in each fiscal year.

(2) Consists of 500,000 shares issued on or about June 10, 2025.

(3) Consists of 100,000 shares issued on or about June 10, 2025.

(4) Consists of 200,000 shares issued on or about April
 1, 2025.

**Employment Agreements**

The Company previously entered into multiple employment agreements with its Chief Executive Officer, Trent D'Ambrosio. In 2019, it entered into another employment agreement with Mr. D'Ambrosio that was effective as of April 1, 2019, and provided for compensation of $300,000 annually. The agreement was effective for 60 months. The agreement was renewed February 2023, and then again in December 2024, as described below. These employment agreements provide for Mr. D'Ambrosio to be receive benefits and an optional annual bonus to be determined by the Board of Directors of the Company.

On or about December 1, 2024, the Company entered into an Amended and Restated Employment Agreement, dated as of December 1, 2024, between the Company and Mr. D'Ambrosio. This agreement amended and restated in full the prior employment agreements entered into between the Company and Mr. D'Ambrosio in April 2019, and it superseded all other agreements between the parties, including a February 25, 2013 employment agreement that was later amended in part on August 1, 2015, and any other prior employment agreements.

On or about April 1, 2025, the Company entered into a consulting agreement with Dan Gay, the Company's Chief Operating Officer, pursuant to which Mr. Gay provided advisory, business development, and operational restructuring services to the Company, and was to be compensated $5,000 per month and be issued 200,000 shares of Company common stock. On or about September 1, 2025, the Company entered into a new consulting agreement with Mr. Gay, pursuant to which Mr. Gay's base compensation was increased to $10,000 per month.

**Outstanding Equity Awards at Fiscal Year-End**

None.

**Compensation of Directors**

We have no formal plan for compensating our directors for their services. We have no formal plan to compensating our directors in the future in their capacity as directors, although such directors are expected in the future to receive options to purchase shares of our common stock as awarded by our Board of Directors or by any compensation committee that may be established.

**Pension, Retirement or Similar Benefit Plans**

There are no arrangements or plans in which we provide pension, retirement or similar benefits to our directors or executive officers. We have no material bonus or profit-sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the Board of Directors or a committee thereof.

**Compensation Committee**

We do not currently have a compensation committee of the Board of Directors or a committee performing similar functions. All members of the Board of Directors participate in the consideration of executive officer and director compensation.

**SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS**

**Security Ownership of Certain Beneficial Owners**

The following tables list, as of March 31, 2026, the number of shares of common stock of our Company that are beneficially owned by (i) each person or entity known to our Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group. Information relating to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each person using beneficial ownership‚ concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.

The percentages below are calculated based on 24,992,505 shares of our common stock issued and outstanding as of March 31, 2026. Unless otherwise indicated, the address of each person listed is c/o BluSky AI, Inc., 5330 South 900 East, Suite 280, Murray, UT 84117.

---

| | | | | |
|:---|:---|:---|:---|:---|
| <br>**Name and Address of Beneficial Owner** | <br>**Title of** <br> **Class** | **Amount and**<br> **Nature of**<br> **Beneficial**<br> **Ownership (1)** |  |<br> **Percent of**<br> **Class (2)** |
| Trent D'Ambrosio | Common Stock | 20476799 | (3) | 81.9% |
| Trent D'Ambrosio | Series A Preferred Stock | 51 | (4) | 100% |
| Whit Cluff | Common Stock | 264730 | (5) | 1.1% |
| Dan Gay | Common Stock | 400000 | (6) | 1.6% |
| All Officers and Directors as a Group | Common Stock | 21141529 |  | 84.6% |
| All Officers and Directors as a Group | Series A Preferred Stock | 51 |  | 100% |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) Percentage of ownership is based on 24,992,505
 shares of common stock outstanding as of March 31, 2026. The number and percentage of shares beneficially owned is determined under
 the rules of the SEC and the ownership includes any shares as to which the individual has sole or shared voting power or investment
 power and also any shares, which the individual has the right to acquire within 60 days through the exercise of any stock option
 or other right. The persons named in the table have sole voting and investment power with respect to all shares of common stock shown
 as beneficially owned by them, subject to community property laws where applicable and the information contained in the footnotes
 to this table.

(2) SEC Rule 13d-3 generally provides that beneficial
 owners of securities include any person who, directly or indirectly, has or shares voting power and/or investment power with respect
 to such securities, and any person who has the right to acquire beneficial ownership of such security within 60 days. Any securities
 not outstanding which are subject to such options, warrants or conversion privileges exercisable within 60 days are treated as outstanding
 for the purpose of computing the percentage of outstanding securities owned by that person. Such securities are not treated as outstanding
 for the purpose of computing the percentage of the class owned by any other person. At the present time, there are no outstanding
 options or warrants.

(3) Consists of (i) 369,328 shares of common stock
 held directly in Trent D'Ambrosio's name, (ii) 32,609 shares held in the name of Debra D'Ambrosio, Trent D'Ambrosio's
 spouse, and (iii) 20,074,862 shares held in the name of Digital Asset Medium LLC, which is controlled by Trent D'Ambrosio.

(4) Consists of 51 shares of Series A Preferred
 Stock held directly in Trent D'Ambrosio's name.

(5) Consists of (i) 243,158 shares held directly
 by Whit Cluff, (ii) 16,429 shares held in the name of Fran Rich, Whit Cluff's spouse, and (iii) 5,143 shares held in the name
 of the Cluff-Rich 401K, which is controlled by Whit Cluff and his spouse.

(6) Consists of 400,000 shares held directly in
 Dan Gay's name.

SEC Rule 13d-3 generally provides that beneficial owners of securities include any person who, directly or indirectly, has or shares voting power and/or investment power with respect to such securities, and any person who has the right to acquire beneficial ownership of such security within 60 days. Any securities not outstanding which are subject to such options, warrants or conversion privileges exercisable within 60 days are treated as outstanding for the purpose of computing the percentage of outstanding securities owned by that person. Such securities are not treated as outstanding for the purpose of computing the percentage of the class owned by any other person. At the present time there are no outstanding options or warrants held by directors or officers of the Company.

**Securities Authorized for Issuance under Equity Compensation Plans**

As of December 31, 2025, we have one equity compensation plan: the 2013 Incentive Stock Plan.

**INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS**

SEC rules require us to disclose any transaction since the beginning of our last fiscal year and for the two fiscal years preceding our last fiscal year, or any currently proposed transaction in which we are a participant in which the amount involved exceeded or will exceed $120,000 and in which any related person has or will have a direct or indirect material interest. A related person is any executive officer, director, nominee for director, or holder of 5% or more of our Common Stock, or an immediate family member of any of those persons

 **Consulting Agreement** – In February 2014, the Company entered into a consulting agreement with stockholder/director Trent D'Ambrosio. The Company agreed to pay $18,000 per month for twelve months. This agreement was renegotiated in October 2017 and the Company agreed to pay the stockholder/director $25,000 per month starting in October 2017. This agreement was superseded by an Employment Agreement as of April 1, 2019 (see Employment Agreements below). As of December 31, 2025, there is $1,386,788 in deferred salaries in accounts payable and accrued liabilities.

Mr. Cluff currently serves as a director of the Company and has a separate agreement as a consultant of the Company effective as of October 2, 2015.

 **Employment Agreements** – The Company has an employment agreement with its chief executive officer, Trent D'Ambrosio. The employment agreement was effective as of April 1, 2019 and provides for compensation of $300,000 annually.

 **Notes Payable –**The Company took one short-term note payable from Debra D'Ambrosio, an immediate family member related party and one short-term note payable from Digital Asset Medium, LLC, an affiliate of a director, during the year ended December 31, 2025. The Company received $362,906 in cash from related parties, made payments of $131,978 in cash to related parties and $125,000 was paid directly to another lender to settle their outstanding notes (See Notes 8 and 9 for more details).

 **Accounts Payable –**Two officers/directors of the Company have been paying expenses for the Company on their personal credit cards. The Company has recorded these expenses and accrued the amounts in accounts payable to the individuals. As of December 31, 2025, there is $25,722 in accounts payable and accrued liabilities.

On June 10, 2025, the Company issued 500,000 restricted shares of Common Stock to Trent D'Ambrosio for services rendered at the market price of $0.401 per share for a total value of $200,500.

On June 10, 2025, the Company issued 100,000 restricted shares of Common Stock to Whit Cluff for services rendered at the market price of $0.401 per share for a total value of $40,100.

On July 7, 2025, BluSky AI Inc., entered into an Acquisition and Power Assignment Agreement with Digital Asset Medium, LLC ("DAM"), a Wyoming limited liability company, whose managing member, Trent D'Ambrosio, is also the Company's CEO. In exchange for the assignment of the power commitment in the Acquisition Agreement, the Company issued 20,000,000 shares of its restricted common stock to DAM. The Company used a large block stock valuation model to value this stock issuance, which resulted in a valuation of $9,800,000. The solar power asset, which was reviewed by a valuation specialist, was valued at $1,289,309. The difference of $8,510,691 has been treated as a deemed dividend by the Company. Normally, this dividend would be recorded in retained earnings. However, the Company has a negative retained earnings balance, so the difference was recorded against additional paid-in capital.

This disclosure covers the current fiscal year and satisfies the reporting obligations for any related party transactions occurring since the beginning of BluSky AI's last fiscal year and the two fiscal years preceding it. BluSky AI remains committed to transparency and compliance in all material dealings, particularly those involving strategic infrastructure and equity consideration. The company will continue to evaluate and disclose any future transactions involving related persons in accordance with SEC rules and ASC 850 guidance.

**SECURITIES BEING OFFERED AND DESCRIPTION OF SECURITIES**

**General**

We are offering up to 12,500,000 Shares and up to 2,500,000 Bonus Shares at an assumed public offering price of $5.00 per Share, which is the mid-point of the estimated offering price range between $4.00-$6.00 per Share.

We are authorized to issue 10,300,000,000 shares of common stock, par value $0.00001 per share, of which approximately 24,992,505 shares are issued and outstanding as of March 31, 2026. In addition, we are authorized to issue 12,500,000 shares of preferred stock, par value $0.00001 per share, of which approximately (i) 51 shares have been designated as Series A Preferred Stock and are issued and outstanding as of March 31, 2026.

The following is a brief description of shares of common stock ("common stock") of BluSky AI Inc. (the "Company," "we," "us," or "our"). The brief description is based upon our Articles of Incorporation, including the Certificate of Amendment to our Articles of Incorporation, (as amended, our "Articles of Incorporation"), our Bylaws (our "Bylaws"), and provisions of applicable Nevada law. This summary does not purport to be complete and is subject to, and qualified in its entirety by, the full text of our Articles of Incorporation and Bylaws, each of which is incorporated by reference as an exhibit to our Annual Report on Form 10-K.

**Market Information**

Our common stock is not traded on any exchange. Our common stock is quoted on the OTCID Basic Market tier of the OTC Link ATS (alternative trading system), the over-the-counter markets administered by OTC Markets Group, Inc., under the trading symbol "BSAI," but the Company's stock is not eligible for proprietary broker-dealer quotations. We cannot assure you that there will be a market in the future for our common stock.

OTC securities are not listed and traded on the floor of an organized national or regional stock exchange. Instead, OTC securities transactions are conducted through a telephone and computer network connecting dealers. OTC issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a national or regional stock exchange.

**Classes of Stock**

We have two classes of stock: common stock and Series A Preferred Stock.

**Preferred Stock**

On August 30, 2016, the Board of Directors of the Company, pursuant to Article II of the Company's Articles of Incorporation, approved the designation of fifty-one (51) shares of its authorized capital stock as "Series A Preferred Stock". The Certificate of Designation for the Series A Preferred Stock was filed on August 31, 2016. These shares have preferential voting rights and no conversion rights.

**Common Stock**

Holders of common stock are entitled to one vote per share on all matters submitted to a vote of the stockholders. Our holders of common stock do not have cumulative voting rights. Holders of common stock will be entitled to receive ratably such dividends as may be declared by the Board out of funds legally available therefor, which may be paid in cash, property, or in shares of the Company's capital stock. Upon liquidation, dissolution or winding up of the Company, either voluntarily or involuntarily, the holders of common stock will be entitled to receive their ratable share of the net assets of the Company legally available for distribution after payment of all debts and other liabilities. There are no conversion, preemptive or other subscription rights and there are no sinking fund or redemption provisions applicable to the common stock.

**Holders**

As of March 31, 2026, there were approximately 1,505 holders of record of our common stock and one holder of record for our preferred stock.

**Dividends**

To date, we have not paid dividends on shares of our common stock and we do not expect to declare or pay dividends on shares of our common stock in the foreseeable future. The payment of any dividends will depend upon our future earnings, if any, our financial condition, and other factors deemed relevant by our Board of Directors.

**TRANSFER AGENT AND REGISTRAR**

The transfer agent and registrar for our common stock is Colonial Stock Transfer Company, Inc.

**ONGOING REPORTING AND SUPPLEMENTS TO THIS OFFFERING CIRCULAR**

We will be required to make annual and semi-annual filings with the SEC. We will make annual filings on Form 1-K, which will be due by the end of April each year and will include audited financial statements for the previous fiscal year. We will make semi-annual filings on Form 1-SA, which will be due by September 28 each year, which will include unaudited financial statements for the six months to June 30. We will also file a Form 1-U to announce important events such as the loss of a senior officer, a change in auditors or certain types of capital-raising.

At least every 12 months, we will file a post-qualification amendment to the Offering Circular of which this Offering Circular forms a part, to include the Company's recent financial statements.

We may supplement the information in this Offering Circular by filing a Supplement with the SEC.

All these filings will be available on the SEC's EDGAR filing system. You should read all the available information before investing.

**BLUSKY AI, INC.**

**(fka INCEPTION MINING, INC.)**

**CONTENTS**

---

| | |
|:---|:---|
| [REPORT OF REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM (PCAOB ID: 3627)](#TC_032) | F-2 |
| [BALANCE SHEETS AS OF DECEMBER 31, 2025 AND 2024](#TC_033) | F-4 |
| [STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024](#TC_034) | F-5 |
| [STATEMENT OF STOCKHOLDERS' DEFICIT](#TC_035) | F-6 |
| [STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024](#TC_036) | F-7 |
| [NOTES TO FINANCIAL STATEMENTS](#TC_037) | F-8 – F-22 |

---

**<u>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</u>**

To the Board of Directors and Shareholders of BluSky AI Inc., formerly known as Inception Mining, Inc.:

Opinion on the Financial Statements

We have audited the accompanying balance sheets of BluSky AI Inc., formerly known as Inception Mining, Inc. ("the Company") as of December 31, 2025 and 2024, the related statements of operations, stockholders' deficit, and cash flows for each of the years in the two-year period ended December 31, 2025, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph Regarding Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency and negative cash flows from operations that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) related to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgements. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of Solar Power Asset

*Description of the Matter*

As described in Note 6 to the financial statements, on July 7, 2025, the Company entered into an Acquisition and Power Assignment Agreement with Digital Asset Medium, LLC ("DAM"), a Wyoming limited liability company whose managing member is also the Company's Chief Executive Officer. Under the Agreement, DAM assigned to the Company its exclusive right to utilize 9.3 megawatts of solar and grid-interconnected power at a data center project in Beaver County, Utah, at DAM's existing cost of $0.068 per kilowatt-hour for the estimated 20-year life of the project. In exchange, the Company issued 20,000,000 shares of its restricted common stock to DAM.

Auditing the valuation of this intangible asset was especially challenging and required a high degree of subjective auditor judgment, given the common control nature of the transaction and the subjectiveness of the model used to value the asset, as well as the judgment required in determining the inputs to the discounted cash flow model and the fair value of the shares issued as consideration.

*How the Critical Audit Matter Was Addressed in the Audit*

Our audit procedures related to the valuation of the solar power intangible asset included, among others, evaluating the appropriateness of the Company's accounting framework, including its determination that the agreement represents a finite-lived intangible asset under ASC 350, that fair value measurement was appropriate given the absence of a historical cost basis at DAM, and that the excess consideration should be characterized as a deemed dividend. We assessed the related-party and common control aspects of the transaction and evaluated management's rationale for each significant accounting conclusion.

With respect to the fair value measurements, we assessed the professional qualifications and independence of the Company's valuation specialist, in evaluating the reasonableness of the valuation methodology, significant assumptions, and calculations underlying the fair value of the intangible asset and the restricted shares issued.

Our procedures in this area included, among others:

&nbsp;&nbsp;&nbsp;&nbsp;■ Evaluated
 the appropriateness of the income approach (discounted cash flow method) used to value the
 intangible asset and assessed whether the methodology was consistent with the fair value
 standard under U.S. GAAP and appropriate for the nature of the agreement.

■ Tested
 and/or confirmed sources for the significant assumptions used in the discounted cash flow
 model, including projected electricity market pricing, expected energy production volumes
 and degradation rates, the assumed data center operational start date, and the discount rate,
 by comparing them to available market data, industry information, and the terms of underlying
 agreements.

■ Assessed
 the reasonableness of the fair value concluded for the restricted shares, including evaluation
 of the base share price, assessment of a reasonable blockage discount, and assessment of
 a reasonable discount for lack of marketability, considering appropriate fair value methodologies,
 trading history, share restrictions under Rule 144, and relevant market data.

■ Evaluated
 the Company's qualitative impairment assessment as of December 31, 2025, and the reasonableness
 of management's conclusion that no impairment indicators existed during the period from acquisition
 through year-end.

■ Reviewed
 the financial statement disclosures related to the intangible asset, the related-party transaction,
 the deemed dividend, and the fair value measurement for completeness and consistency with
 applicable accounting standards.

 

Professionals with specialized skills and knowledge were utilized by the Firm to assist in the testing of the value of the intangible solar power asset, the restricted shares issued, and the resulting implied deemed dividend.

*/s/ Sadler, Gibb & Associates, LLC*

We have served as the Company's auditor since 2015.

Draper, UT

March 31, 2026

**Blusky AI, Inc.**

**(fka Inception Mining, Inc.)**

**Balance Sheets**

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| | | |
|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2024** |
| ASSETS |  |  |
| Current Assets |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $960436 | $- |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 117225 |  |
| &nbsp;&nbsp;&nbsp;Other current assets | 45000 | - |
| Total Current Assets | 1122661 |  |
| Solar power asset | 1289309 |  |
| Right of use operating lease asset | 255699 |  |
| Other assets | 531 | 531 |
| Total Assets | $2668200 | $531 |
| LIABILITIES AND STOCKHOLDERS' DEFICIT |  |  |
| Current Liabilities |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities | $1773808 | $1745787 |
| &nbsp;&nbsp;&nbsp;Accrued interest - related parties | 9512 | 30310 |
| &nbsp;&nbsp;&nbsp;Operating lease liability | 118057 |  |
| &nbsp;&nbsp;&nbsp;Note payable | 60000 | 125000 |
| &nbsp;&nbsp;&nbsp;Notes payable - related parties | 1349455 | 992761 |
| &nbsp;&nbsp;&nbsp;Convertible notes payable - net of discount | 90703 | 266450 |
| &nbsp;&nbsp;&nbsp;Derivative liabilities | 14516 | 186542 |
| Total Current Liabilities | 3416051 | 3346850 |
| &nbsp;&nbsp;&nbsp;Operating lease liability, net of current portion | 182642 | - |
| Total Liabilities | 3598693 | 3346850 |
| Commitments and Contingencies |  |  |
| Stockholders' Deficit |  |  |
| &nbsp;&nbsp;&nbsp;Preferred stock, $0.00001 par value; 10,000,000 shares authorized, 51 shares issued and outstanding | 1 | 1 |
| &nbsp;&nbsp;&nbsp;Common stock, $0.00001 par value; 10,300,000,000 shares authorized, 24,978,811 and 2,659,773 shares issued and outstanding at December 31, 2025 and 2024, respectively | 250 | 27 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 33448136 | 26517017 |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (34378880) | (29863364) |
| Total Stockholders' Deficit | (930493) | (3346319) |
| Total Liabilities and Stockholders' Deficit | $2668200 | $531 |

---

See accompanying notes to the financial statements.

**Blusky AI, Inc.**

**(fka Inception Mining, Inc.)**

**Statements of Operations**

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended** | **For the Years Ended** |
|  | **December 31, 2025** | **December 31, 2024** |
| Operating Expenses |  |  |
| &nbsp;&nbsp;&nbsp;General and administrative | $2665889 | $520378 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | - | 727 |
| Total Operating Expenses | 2665889 | 521105 |
| Loss from Operations | (2665889) | (521105) |
| Other Income/(Expenses) |  |  |
| &nbsp;&nbsp;&nbsp;Other income (expense) | 96 |  |
| &nbsp;&nbsp;&nbsp;Interest income | 15590 |  |
| &nbsp;&nbsp;&nbsp;Change in derivative liability | 182394 | 196321 |
| &nbsp;&nbsp;&nbsp;Gain (loss) on extinguishment of debt | (1975924) | (13043) |
| &nbsp;&nbsp;&nbsp;Initial derivative expense |  | (193582) |
| &nbsp;&nbsp;&nbsp;Loss on disposal of property, plant and equipment |  | (2531) |
| &nbsp;&nbsp;&nbsp;Interest expense | (71783) | (415842) |
| Total Other Income/(Expenses) | (1849627) | (428677) |
| Net Loss from Operations before Income Taxes | (4515516) | (949782) |
| Provision for Income Taxes | - | - |
| Net Loss | (4515516) | (949782) |
| Deemed Dividend | (8510691) | - |
| Net Loss attributable to Shareholders | $(13026207) | $(949782) |
| Net loss per share - Basic and Diluted | $(0.96) | $(0.36) |
| Weighted average number of shares outstanding during the period - Basic and Diluted | 13552871 | 2647513 |

---

See accompanying notes to the financial statements.

**Blusky AI, Inc.**

**(fka Inception Mining, Inc.)**

**Statement of Stockholders' Deficit**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Preferred stock** | **Preferred stock** | **Common stock** | **Common stock** | | | |
|  | **($0.00001Par)** | **($0.00001Par)** | **($0.00001Par)** | **($0.00001Par)** | | | |
|  | **Shares** | **Amount** | **Shares** | **Amount** | **Additional**<br>**Paid-in**<br>**Capital** |<br>**Accumulated**<br>**Deficit** | **Total**<br>**Stockholders'**<br>**Deficiency** |
| **Balance, December 31, 2023** | 51 | $1 | 2638903 | $26 | $26491974 | $(28913582) | $(2421581) |
| Shares issued with extinguishment of debt |  |  | 20870 | 1 | 25043 |  | 25044 |
| Net loss for the Year | - | - | - | - | - | (949782) | (949782) |
| **Balance, December 31, 2024** | 51 | 1 | 2659773 | 27 | 26517017 | (29863364) | (3346319) |
| Rounding shares issued with reverse split |  |  | 5432 |  |  |  |  |
| Shares issued for services |  |  | 1833000 | 18 | 1531882 |  | 1531900 |
| Shares issued for conversion of notes payable |  |  | 458191 | 4 | 3980603 |  | 3980607 |
| Shares issued for conversion of accrued liabilities |  |  | 22415 | 1 | 129525 |  | 129526 |
| Shares issued for power purchase agreement |  |  | 20000000 | 200 | 1289109 |  | 1289309 |
| Net loss for the Year | - | - | - | - | - | (4515516) | (4515516) |
| **Balance, December 31, 2025** | 51 | $1 | 24978811 | $250 | $33448136 | $(34378880) | $(930493) |

---

See accompanying notes to the financial statements.

**Blusky AI, Inc.**

**(fka Inception Mining, Inc.)**

**Statements of Cash Flows**

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended** | **For the Years Ended** |
|  | **December 31, 2025** | **December 31, 2024** |
| Cash Flows From Operating Activities: |  |  |
| Net Loss | $(4515516) | $(949782) |
| Adjustments to reconcile net loss to net cash used in operations |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization expense |  | 727 |
| &nbsp;&nbsp;&nbsp;Common stock issued for services | 1531900 |  |
| &nbsp;&nbsp;&nbsp;Loss on disposition of property, plant and equipment |  | 2531 |
| &nbsp;&nbsp;&nbsp;(Gain) loss on extinguishment of debt | 1975924 | 13043 |
| &nbsp;&nbsp;&nbsp;Change in derivative liability | (182394) | (196321) |
| &nbsp;&nbsp;&nbsp;Default penalty additions |  | 119734 |
| &nbsp;&nbsp;&nbsp;Expenses paid in behalf of the company by related party |  | 15327 |
| &nbsp;&nbsp;&nbsp;Amortization of right-of-use asset | 36528 | 9595 |
| &nbsp;&nbsp;&nbsp;Amortization of debt discount | 1071 | 219961 |
| &nbsp;&nbsp;&nbsp;Initial derivative expense |  | 193582 |
| Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | (7474) | 10000 |
| &nbsp;&nbsp;&nbsp;Other assets | (154750) |  |
| &nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities | 94609 | 404154 |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities | 8472 |  |
| &nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities - related parties | 55372 | 30310 |
| Net Cash Used In Operating Activities | (1156258) | (127139) |
| Cash Flows From Investing Activities: |  |  |
| Net Cash Provided By Investing Activities |  |  |
| Cash Flows From Financing Activities: |  |  |
| &nbsp;&nbsp;&nbsp;Repayment of notes payable-related parties | (131212) | (98475) |
| &nbsp;&nbsp;&nbsp;Repayment of convertible notes payable |  | (98784) |
| &nbsp;&nbsp;&nbsp;Proceeds from notes payable-related parties | 362906 | 174396 |
| &nbsp;&nbsp;&nbsp;Proceeds from convertible notes payable | 1885000 | 150000 |
| Net Cash Provided by Continuing Financing Activities | 2116694 | 127137 |
| Net Change in Cash | 960436 | (2) |
| Cash at Beginning of Period | - | 2 |
| Cash at End of Period | $960436 | $- |
| <u>Supplemental disclosure of cash flow information:</u> |  |  |
| Cash paid for interest | $- | $11074 |
| Cash paid for taxes | $- | $- |
| <u>Supplemental disclosure of non-cash investing and financing activities:</u> |  |  |
| Common stock issued for conversion of debt | $4110133 | $25043 |
| Common stock issued for power purchase agreement | $1289309 | $- |
| Origination of operating lease | $292227 | $- |
| Accounts payable issued for settlement of note payable | $10000 | $- |
| Recognition of debt discounts on convertible notes payable | $10368 | $179800 |
| Note payable issued to related party for settlement of convertible note payable | $125000 | $- |

---

See accompanying notes to the financial statements.

**Blusky AI, Inc.**

**(fka Inception Mining, Inc.)**

**Notes to Financial Statements**

**As of December 31, 2025 and 2024**

**1. Nature of Business**

BluSky AI Inc, (formerly know as Inception Mining, Inc.) (formerly known as Gold American Mining Corp.) was incorporated under the name of Golf Alliance Corporation and under the laws of the State of Nevada on July 2, 2007. Inception Mining, Inc. was a precious metal mineral acquisition, exploration and development company. Inception Development, Inc., its wholly owned subsidiary, was incorporated under the laws of the State of Idaho on January 28, 2013.

Golf Alliance Corporation pursued its original business plan to provide opportunities for golfers to play on private golf courses normally closed to them due to the membership requirements of the private clubs. During the year ended July 31, 2010, the Company decided to redirect its business focus toward precious metal mineral acquisition and exploration.

On March 5, 2010, the Company amended its articles of incorporation to (1) to change its name to Silver America, Inc. and (2) increased its authorized common stock from 100,000,000 to 500,000,000.

On June 23, 2010, the Company amended its articles of incorporation to change its name to Gold American Mining Corp.

On November 21, 2012, the Company implemented a 200 to 1 reverse stock split. Upon effectiveness of the stock split, each shareholder cancelled 200 shares of common stock for every share of common stock owned as of November 21, 2012. This reverse stock split was effective on February 13, 2013. All share and per share references have been retroactively adjusted to reflect this 200 to 1 reverse stock split in the financial statements and in the notes to financial statements for all periods presented, to reflect the stock split as if it occurred on the first day of the first period presented.

On February 25, 2013, Gold American Mining Corp. and its majority shareholder (the "Majority Shareholder"), and its wholly-owned subsidiary, Inception Development Inc. (the "Subsidiary"), entered into an Asset Purchase Agreement (the "Asset Purchase Agreement") with Inception Resources, LLC, a Utah corporation ("Inception Resources"), pursuant to which Inception purchased the U.P. and Burlington Gold Mine in consideration of 16,000,000 shares of common stock of Inception, the assumption of promissory notes in the amount of $950,000 and the assignment of a 3% net royalty. Inception Resources was an entity owned by and under the control of the majority shareholder. This transaction is deemed an asset purchase by entities under common control. The Asset Purchase Agreement closed on February 25, 2013 (the "Closing"). Inception was a "shell company" (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended) immediately prior to our acquisition of the gold mine pursuant to the terms of the Asset Purchase Agreement.

On May 17, 2013, the Company amended its articles of incorporation to change its name to Inception Mining, Inc. ("Inception" or the "Company").

On October 2, 2015, the Company consummated a merger with Clavo Rico Ltd. ("Clavo Rico"). Clavo Rico is a privately held Turks and Caicos company with principal operations in Honduras, Central America. Clavo Rico operates the Clavo Rico mining concession through its subsidiaries Compañía Minera Cerros del Sur, S.A de C.V. and Compañía Minera Clavo Rico, S.A. de C.V. and holds other mining concessions. Pursuant to the agreement, the Company issued of 240,225,901 shares of common stock of Inception and assumed promissory notes in the amount of $5,488,980 and accrued interest of $3,434,426. Under this merger agreement, there was a change in control and it has been treated for accounting purposes as a reverse recapitalization with Clavo Rico, Ltd. being the surviving entity. Its workings include several historical underground operations dating back to the early Mayan and Spanish occupation.

On January 11, 2016, the Company implemented a 5.5 to 1 reverse stock split. This reverse stock split was effective on May 26, 2016. All share and per share references have been retroactively adjusted to reflect this 5.5 to 1 reverse stock split in the financial statements and in the notes to financial statements for all periods presented, to reflect the stock split as if it occurred on the first day of the first period presented. Immediately before the Reverse Split, the Company had 266,669,980 shares of common stock outstanding. Immediately after the Reverse Split, the Company had 48,485,451 shares of common stock outstanding, pending fractional-share rounding-up calculations to adjust for the Reverse Split.

On January 12, 2023, the Company entered into a non-binding Letter of Intent (the "LOI") with Mother Lode Mining, Inc. ("MLM"). The LOI became binding on January 24, 2023.

Pursuant to the terms of the LOI, the Company agreed to sell all of the shares of its wholly-owned subsidiary, Compañía Minera Cerros Del Sur, S.A. de C.V. ("CMCS"), to MLM. CMCS is the Honduran-based company that owns the Clavo Rico mine.

Following the divestiture of the Clavo Rico mine, the Company operated as a consultant and advisor to the mining industry, including to MLM, the new owner of the Clavo Rico mine, through 2025.

The Company is currently focused on artificial intelligence compute infrastructure and participating in the dynamic and expanding AI industry. BluSky AI plans to develop multiple data center sites across various U.S. jurisdictions, with artificial intelligence (AI) focus, specifically targeting facilities with the ability to develop power capacity or utilize existing power capacities.

**2. Summary of Significant Accounting Policies**

**Going Concern –** The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying consolidated financial statements during year ended December 31, 2025, the Company has an accumulated deficit of $34,378,880, a working capital deficit of $2,293,390 and used $1,156,258 in cash for operating activities. These factors among others raise substantial doubt about the Company's ability to continue as a going concern for twelve months from the date these financial statements are issued.

The Company's existence is dependent upon management's ability to develop profitable operations and to obtain additional funding sources. There can be no assurance that the Company's financing efforts will result in profitable operations or the resolution of the Company's liquidity problems. The accompanying statements do not include any adjustments that might result should the Company be unable to continue as a going concern.

Management is currently working to make changes that will result in profitable operations and to obtain additional funding sources to meet the Company's need for cash during the next twelve months and beyond.

**Use of Estimates –** In preparing financial statements in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenditures during the reported periods. Actual results could differ materially from those estimates. Estimates may include those pertaining to valuation of the estimated useful lives and valuation of properties, plant and equipment, solar power asset, deferred tax assets, convertible preferred stock, derivative assets and liabilities, stock-based compensation and payments, and contingent liabilities.

**Basis of Presentation –** The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America.

**Cash and Cash Equivalents –** The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At December 31, 2025 and December 31, 2024, the Company had no cash equivalents. The aggregate cash balance on deposit in these accounts are insured by the Federal Deposit Insurance Corporation up to $250,000. As of December 31, 2025, the Company had $710,436 in excess of the insured amounts in its accounts. The Company has never experienced any losses in such accounts.

**Settlement of Contracts in Company's Equity–** In accordance with ASC 815-40-25, the Company must meet certain requirements in order to report contracts as equity versus liabilities. These requirements must be met by the Company or the contracts need to be reported as liabilities. The Company has adopted the sequencing approach as guidance on contracts that permit partial net share settlement. The Company evaluates the contracts based on the earliest issuance date. Currently, the Company doesn't have any items that are reported as equity instead of liabilities.

**Fair Value Measurements –** The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the party's own credit risk.

Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3: Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.

The carrying value of the Company's cash, accounts payable, short-term borrowings (including convertible notes payable), and other current assets and liabilities approximate fair value because of their short-term maturity.

The fair value of financial instruments on December 31, 2025 are summarized below:

Schedule of Fair Value of Financial Instruments

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
| Debt derivative liabilities | $- | $- | $14516 | $14516 |
| Total Liabilities | $- | $- | $14516 | $14516 |

---

The fair value of financial instruments on December 31, 2024 are summarized below:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
| Debt derivative liabilities | $- | $- | $186542 | $186542 |
| Total Liabilities | $- | $- | $186542 | $186542 |

---

The Company recognizes its derivative liabilities as level 3 and values its derivatives using the methods discussed below in Note 3. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values using the methods discussed below in Note 3 are that of volatility and market price of the underlying common stock of the Company.

**Notes Receivable** – Notes receivable include amounts due to the Company pursuant to financial agreements stipulating interest rates, payment terms and maturity dates. As of December 31, 2025 and 2024, notes receivable balances include amounts the Company believed were due from Mother Lode Mining, Inc. ("MLM") in the amounts of $2,219,442, net of reserves of $2,219,442 pursuant to an LOI (see Note 4 – Note Receivable). The Company filed suit to collect the note receivable amount in 2024, and on February 4, 2026, entered into a settlement agreement with MLM, which released MLM from any obligation to pay the Note Receivable amount.

**Long-Lived Assets –** We review the carrying amount of our long-lived assets for impairment whenever there are negative indicators of impairment. An asset is considered impaired when estimated future cash flows are less than the carrying amount of the asset. In the event the carrying amount of such asset is not considered recoverable, the asset is adjusted to its fair value. Fair value is generally determined based on discounted future cash flows.

**Properties, Plant and Equipment –** We record properties, plant and equipment at historical cost. We provide depreciation and amortization in amounts sufficient to match the cost of depreciable assets to operations over their estimated service lives or productive value. We capitalize expenditures for improvements that significantly extend the useful life of an asset. We charge expenditures for maintenance and repairs to operations when incurred. Depreciation is computed using the straight-line method over estimated useful lives as follows:

Schedule of Property and Equipment Useful Lives

---

| | |
|:---|:---|
| Building | 7 to 15 years |
| Vehicles and equipment | 3 to 7 years |
| Processing and laboratory | 5 to 15 years |
| Furniture and fixtures | 2 to 3 years |

---

**Stock Issued for Goods and Services –** Common and preferred shares issued for goods and services are valued based upon the fair market value of our common stock or the goods and services received.

**Stock-Based Compensation –** For stock-based transactions, compensation expense is recognized over the requisite service period, which is generally the vesting period, based on the estimated fair value on the grant date of the award.

**Income (Loss) per Common Share –** Basic net income (loss) per common share is computed by dividing net income (loss), less the preferred stock dividends, by the weighted average number of common shares outstanding. Dilutive income (loss) per share includes any additional dilution from common stock equivalents, such as stock options and warrants, and convertible instruments, if the impact is not anti-dilutive. 22,822 and 810,359 common share equivalents have been excluded from the diluted loss per share calculation for the years ended December 31, 2025 and 2024 because it would be anti-dilutive.

The following tables summaries the changes in the net earnings per common share for the years ended December 31, 2025 and 2024:

Schedule of Net Earnings Per Common Share

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended** | **For the Years Ended** |
| Numerator | **December 31, 2025** | **December 31, 2024** |
| Net Loss | $(4515516) | $(949782) |
| Gain on Extinguishment of Debt |  |  |
| Interest Expense |  |  |
| Loss on Conversion |  |  |
| Change in Derivative Liabilities |  |  |
| Deemed Dividend | (8510691) | - |
| Net Loss Attributable to Common Shareholders | $(13026207) | $(949782) |

---

---

| | | |
|:---|:---|:---|
| Denominator | **Shares** | **Shares** |
| Basic Weighted Average Number of Shares Outstanding during Period | 13552871 | 2647513 |
| Dilutive Shares | - | - |
| Diluted Weighted Average Number of Shares Outstanding during Period | 13552871 | 2647513 |
| Diluted Net Loss per Share | $(0.96) | $(0.36) |

---

**Derivative Liabilities –** Derivatives liabilities are recorded at fair value when issued and the subsequent change in fair value each period is recorded in other income (expense) in the consolidated statements of operations. We do not hold or issue any derivative financial instruments for speculative trading purposes.

**Income Taxes –** The Company's income tax expense and deferred tax assets and liabilities reflect management's best assessment of estimated future taxes to be paid. Significant judgments and estimates are required in determining the consolidated income tax expense.

Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense. In evaluating the Company's ability to recover its deferred tax assets, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, the Company develops assumptions including the amount of future state and federal pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income, and are consistent with the plans and estimates that the Company is using to manage the underlying businesses. The Company provides a valuation allowance for deferred tax assets for which the Company does not consider realization of such deferred tax assets to be more likely than not.

Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. Management is not aware of any such changes that would have a material effect on the Company's results of operations, cash flows or financial position.

**Business Segments** – The Company operates in one segment and therefore segment information is not presented.

**Operating Lease** – The Company leases its corporate headquarters and administrative offices in Salt Lake City, Utah. This lease expired in August 2024 and is now a month-to-month lease. The Company made cash payments of $18,006 and $22,484 for the years ended December 31, 2025 and 2024, respectively on this lease. The Company incurred rent expense of $18,006 and $22,484 for the years ended December 31, 2025 and 2024, respectively.

On July 11, 2025, the Company entered into a Ground Lease with an Option to Purchase (the "Lease") with Wild Mustang Ventures LLC, a Wyoming limited liability company (the "Landlord"), through which the Company leased 51.6 acres in Milford, Utah (the "Milford Land") for a two-year term. If the Company does not purchase the land before the two year lease period is over, then it will automatically renew for an additional two years. The base rent is $90,000 annually, which shall accrue until the earlier of the expiration of the lease or until the Company exercises its option to purchase the Milford Land. The Lease contains standard other provisions and includes a mutual indemnification clause which requires that the parties indemnify each other except in the case of gross negligence or willful misconduct.

The supplemental balance sheet information related to the operating lease for the periods is as follows:

Schedule of Balance Sheet Operating Lease

---

| | | |
|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2024** |
| <u>Operating leases</u> |  |  |
| Long-term right-of-use assets | $255699 | $- |
| Short-term operating lease liabilities | $118057 | $- |
| Long-term operating lease liabilities | 182642 | - |
| Total operating lease liabilities | $300699 | $- |

---

Maturities of the Company's undiscounted operating lease liabilities are as follows:

Schedule of Maturities Undiscounted Operating Lease Liabilities

---

| | |
|:---|:---|
| **Year Ending** | **Operating Leases** |
| 2026 | $135000 |
| 2027 | 90000 |
| 2028 | 90000 |
| 2029 | 45000 |
| Total lease payments | 360000 |
| Less: Imputed interest/present value discount | (59301) |
| Present value of lease liabilities | $300699 |

---

The Company made cash payments of $0 and $0 for the years ended December 31, 2025 and 2024, respectively for this lease. The Company incurred rent expense of $45,000 and $0 for the years ended December 31, 2025 and 2024, respectively.

**Recently Issued Accounting Pronouncements –** From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company's financial statements upon adoption.

The Company adopted ASU 2023-09 – "Income Tax Disclosures" required for periods beginning after December 31, 2024. The Company has provided additional disclosures in the income tax footnote (see Note 12) as required.

**3. Derivative Financial Instruments**

The Company adopted the provisions of ASC subtopic 825-10, *Financial Instruments* ("ASC 825-10") on January 1, 2008. ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of non-performance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The following table provides a summary of changes in fair value of the Company's Level 3 financial liabilities as of December 31, 2025:

Schedule of Changes in Fair Value of the Company's Level 3 Financial Liabilities

---

| | |
|:---|:---|
|  | **Debt Derivative<br> Liabilities** |
| Balance, December 31, 2024 | $186542 |
| Transfers in upon initial fair value of derivative liabilities | 10368 |
| Change in fair value of derivative liabilities and warrant liability | (182394) |
| Balance, December 31, 2025 | $14516 |

---

**Derivative Liabilities –** The Company issued convertible promissory notes which are convertible into common stock, at holders' option, at a discount to the market price of the Company's common stock. The Company has identified the embedded derivatives related to these notes relating to certain anti-dilutive (reset) provisions. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date of debenture and to fair value as of each subsequent reporting date.

At December 31, 2025, the Company marked to market the fair value of the debt derivatives and determined a fair value of $14,516. The Company recorded a gain from change in fair value of debt derivatives of $182,394 for the year ended December 31, 2025. The fair value of the embedded derivatives was determined using the Monte Carlo Valuation Model. The Monte Carlo Valuation Model was based on the following assumptions: (1) expected volatility of 100.0%, (2) weighted average risk-free interest rate of 3.47% and (3) expected life of 0.80 – 1.00 years.

Based upon ASC 815-40, the Company has adopted a sequencing approach regarding the application of ASC 815-40 to its outstanding convertible notes. Pursuant to the sequencing approach, the Company evaluates its contracts based upon earliest issuance date.

**4. Note Receivable**

On January 12, 2023, the Company entered into a non-binding Letter of Intent (the "LOI") with Mother Lode Mining, Inc. ("MLM"). The LOI became binding on January 24, 2023 when the final installment of initial payment set forth under the LOI was received by the Company. Pursuant to the terms of the LOI, the Company agreed to sell all of the shares of its wholly-owned subsidiary, Compañía Minera Cerros Del Sur, S.A. de C.V. ("CMCS"), to MLM. CMCS is the Honduran-based company that owns the Clavo Rico mine.

The purchase price for the sale of CMCS by the Company to MLM consisted of the following cash consideration (a) $204,200 was delivered by MLM to the Company on January 3, 2023 to pay outstanding debts owed by the Corporation; (b) $300,000 was delivered by MLM to the Company on January 5, 2023 to satisfy existing debts of the Company; (c) $100,000 was delivered by MLM to the Company on January 16, 2023; (d) $200,000 was delivered by MLM to the Company on January 17, 2023; (e) $1,200,000 was delivered by MLM to the Company on January 18, 2023, to pay a settlement amount for existing debt of the Company; (f) $500,000 was delivered by MLM to the Company on January 23, 2023, to satisfy existing debts of the Company; (g) $500,000 was delivered by MLM to the Corporation on January 24, 2023, to satisfy existing debts of the Corporation.

In addition to the amounts already delivered under the LOI, an additional amount of $2,700,000 was to be paid by MLM to the Company over a period of twenty-four (24) months (the "Monthly Payments"). The Monthly Payments were to be paid as follows: (i) $25,000 due March 1, 2023, (ii) $50,000 due on the first day of each of April, May and June 2023, and (iii) $100,000 due on the first day of each month for the following twenty months, until February 1, 2025, at which point all amounts due and payable under the LOI were to be paid in a final balloon payment. The Company received payments totaling $480,558, leaving an outstanding balance of $2,219,442 as of December 31, 2025. Outstanding balances and missed Monthly Payments were to be secured by a 10% net smelter royalty (NSR) on the Clavo Rico mine production until the Monthly Payments were delivered and the purchase price was paid in full. In addition to the Monthly Payments, the Company was to receive a carried forward net profits interest royalty ("NPI") of 5% on the Clavo Rico mine production until the total NPI paid to the Company is $1,000,000, subject to limited conditions. The Company filed suit against MLM in 2024 to recover the outstanding balance, with litigation continuing throughout 2025. As collectability of the receivable was doubtful as a result of the dispute between the parties, the Company elected to create an allowance for doubtful collection of the note receivable for the full outstanding balance of $2,219,442 as of December 31, 2025.

On February 4, 2026, the Company and MLM entered into a settlement agreement resolving all disputes in connection with the LOI. Under the settlement, the parties agreed to a mutual dismissal with prejudice of all claims, counterclaims, and causes of action asserted or that could have been asserted in United States District Court for the District of Utah, Central Division, Case No. 2:24-cv-00171-TS-CMR, or in any other forum. As part of the settlement, the parties executed a mutual general release of all claims and potential claims against the other parties and their affiliates. Following the settlement, no further amounts are expected to be collected under the LOI.

The following table summarizes the note receivable of the Company as of December 31, 2025 and 2024:

Schedule of Note Receivable

---

| | | |
|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2024** |
| Note Receivable from Mother Lode Mining, Inc. pursuant to a Letter of Intent dated effective January 12, 2023, in the original principal amount of $5,700,000, accruing no interest, with monthly payments beginning on March 31, 2023, maturing February 1, 2025. | $2219442 | $2219442 |
| Less: Payments received | - | - |
| Total Note Receivable outstanding | 2219442 | 2219442 |
| Less: Allowance for Doubtful Note Receivable | (2219442) | (2219442) |
| Total Note Receivable | $- | $- |

---

**5. Properties, Plant and Equipment, Net**

Properties, plant and equipment of continuing operations at December 31, 2025 and 2024 consisted of the following:

Schedule of Properties Plant and Equipment, Net

---

| | | |
|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2024** |
| Machinery and Equipment | $- | $25368 |
| Office Equipment and Furniture | - | 1627 |
|  |  | 26995 |
| Less Accumulated Depreciation |  | (24464) |
| Less Loss on Disposal of Property, Plant and Equipment | - | (2531) |
| Total Property, Plant and Equipment | $- | $- |

---

During the years ended December 31, 2025 and 2024, the Company recognized depreciation expense of $0 and $727, respectively. During the year ended December 31, 2024, the Company disposed of its remaining property, plant and equipment and recognized a loss of $2,531.

**6. Solar Power Asset**

On July 7, 2025, BluSky AI Inc., entered into an Acquisition and Power Assignment Agreement with Digital Asset Medium, LLC ("DAM"), a Wyoming limited liability company, whose managing member, Trent D'Ambrosio, is also the Company's CEO. DAM assigned to the Company its exclusive right to utilize solar and grid-interconnected power at a data center project located in the Milford area of Beaver County, Utah. In exchange for the assignment of the Power Commitment in the Acquisition Agreement, the Company issued 20,000,000 shares of its restricted common stock to DAM. The solar power asset was valued at $1,289,309 using a discounted cash flow model. This asset will not be placed into service until the Milford project has been built and is beginning to use power. Once this milestone has been achieved, the Company will begin amortizing the value of this asset over the remaining life of the agreement. Currently, there is no amortization expense or cash flows related to this asset.

**7. Accounts Payable and Accrued Liabilities**

Accounts Payable and accrued liabilities of continuing operations at December 31, 2025 and 2024 consisted of the following:

Schedule of Accounts Payable and Accrued Liabilities

---

| | | |
|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2024** |
| Accounts Payable | $243179 | $518930 |
| Accrued Interest Payable | 143841 |  |
| Accrued Salaries and Benefits | 1386788 | 1226857 |
| Total Accrued Liabilities | $1773808 | $1745787 |

---

**8. Notes Payable**

Notes payable were comprised of the following as of December 31, 2025 and 2024:

Schedule of Notes Payable

---

| | | |
|:---|:---|:---|
| **Notes Payable** | **December 31, 2025** | **December 31, 2024** |
| Phil Zobrist | $60000 | $60000 |
| Antczak Polich Law LLC | - | 65000 |
| Total Notes Payable | 60000 | 125000 |
| Less Short-Term Notes Payable | (60000) | (125000) |
| Total Long-Term Notes Payable | $- | $- |

---

**Phil Zobrist** – On January 11, 2013, the Company issued an unsecured Promissory Note to Phil Zobrist in the principal amount of $60,000 (the "Note") due on demand and bearing 0% per annum interest. The total net proceeds the Company received was $60,000. On October 2, 2015, the Company entered into a new convertible note with Phil Zobrist that matures on December 31, 2016 and bore interest at 18% per annum. The Company agreed to accrue interest from inception of these Notes in the amount of $29,412 which was recorded as interest expense during the year ended December 31, 2015. The Note was convertible, at holder's option, at a price of $0.99 (0.18 pre-split) or a 50% discount to the average of the three lowest VWAP of the common stock during the 20-trading day period prior to conversion. On October 2, 2016, the Company renegotiated the note payable. The convertible feature was removed, and the note was extended until December 31, 2024. The Company recognized a gain on the extinguishment of debt of $121,337 for the remaining derivative liability and of $11,842 for the remaining debt discount. The Note contains no default provisions. As of December 31, 2025, the gross balance of the note was $60,000 and accrued interest was $140,163. The Note is past its maturity date and is therefore in default.

**Antczak Polich Law, LLC** – On March 21, 2023, the Company issued an unsecured Promissory Note ("Note") to Antczak Polich Law, LLC ("Antczak"), in the principal amount of $75,000 (the "Note") and does not accrue interest. This note is due on December 31, 2023 and requires monthly payments of $10,000 starting July 2023 with any remaining balance paid in full by December 31, 2023. On September 30, 2025, the Company paid $10,000 towards the balance of this note and then Antczak elected to convert the remaining $55,000 into 11,000 shares of common stock valued at $65,780. The Company recognized a loss on extinguishment of debt of $10,780. As of December 31, 2025, the gross balance of the note was $0.

**9. Notes Payable – Related Parties**

Notes payable – related parties were comprised of the following as of December 31, 2025 and 2024:

Schedule of Related Parties Notes Payable

---

| | | | |
|:---|:---|:---|:---|
| **Notes Payable - Related Parties** | **Relationship** | **December 31, 2025** | **December 31, 2024** |
| Cluff-Rich PC 401K | Affiliate - Controlled by Director | $51000 | $51000 |
| Whit Cluff | Director | 837 | 15327 |
| Digital Asset Medium, LLC | Affiliate - Controlled by Director | 480000 |  |
| Debra D'ambrosio | Immediate Family Member | 422618 | 531434 |
| Francis E. Rich | Immediate Family Member | 100000 | 100000 |
| Pine Valley Investments | Affiliate - Controlled by Shareholder | 295000 | 295000 |
| Total Notes Payable - Related Parties |  | 1349455 | 992761 |
| Less Short-Term Notes Payable - Related Parties |  | (1349455) | (992761) |
| Total Long-Term Notes Payable - Related Parties |  | $- | $- |

---

**Cluff-Rich PC 401K (Affiliate – Director) –** On June 29, 2022, the Company issued an unsecured Short-Term Promissory Note to Cluff-Rich PC 401K in the principal amount of $60,000 (the "Note") due on December 31, 2022 and bears a 5.0% interest rate. On February 1, 2023, the Company re-negotiated this note which extended it to March 1, 2025 and made it non-interest bearing. There are no default provisions on this note. The Company issued 5,143 shares of common stock on February 1, 2023 as settlement for the accrued interest of $18,000. During the fiscal ended December 31, 2023, the Company made a payment of $9,000 towards the principal balance. On December 31, 2025, this Note was extended and matures on December 31, 2026. As of December 31, 2025, the gross balance of the notes was $51,000.

**Digital Asset Medium, LLC (Affiliate – Director) –** On January 9, 2025, the Company formalized an unsecured Short-Term Promissory Notes to Digital Asset Medium, LLC in principal amounts totaling $480,000 (the "Note"), which bears interest at 15.00% per annum and matures on January 31, 2026. This lender directly paid $125,000 to settle the notes held by 1800 Diagonal Lending, LLC (see Note 9). On September 30, 2025, the Company issued 13,007 shares of common stock valued at $77,782 for the conversion of $29,129 of accrued interest and $35,908 of accounts payable. The Company recognized a loss on extinguishment of debt of $12,745. Effective September 30, 2025, the assessment of additional interest on the Note was suspended. As of December 31, 2025, the gross balance of the note was $480,000 and accrued interest was $0.

**D. D'Ambrosio (Immediate Family Member of Director) –** On January 1, 2023, there were six notes outstanding with outstanding balance of the Notes of $446,210 and accrued interest of $81,204. During January 2023, the Company issued an unsecured Short-Term Promissory Notes to D. D'Ambrosio in principal amounts totaling $6,408 (the "Note") that bears a 3.00% interest rate. On February 1, 2023, the Company re-negotiated these notes into one note with a maturity date of March 1, 2025 and is non-interest bearing. There are no default provisions on this note. The Company issued 23,201 shares of common stock on February 1, 2023 as settlement for the accrued interest of $81,204. During the year ended December 31, 2023, the Company made a payment of $30,000 towards the principal balance. On December 31, 2025, this Note was extended and matures on December 31, 2026. As of December 31, 2025, the gross balance of the note was $422,618 and accrued interest was $0.

**D. D'Ambrosio (Immediate Family Member of Director) –**During June through September, 2024, the Company received funds in the amount of $50,395. On October 1, 2024, the Company formalized an unsecured Short-Term Promissory Notes to D. D'Ambrosio in principal amounts totaling $50,395 (the "Note"), which bears a 5.00% interest rate and matures on October 31, 2025. During the year ended December 31, 2024, the Company made payments of $4,430 towards the principal balance. On August 5, 2025, the Company paid-off the balance of this note of $45,965. As of December 31, 2025, the gross balance of the note was $0 and accrued interest was $0.

**D. D'Ambrosio (Immediate Family Member of Director) –**During October through December, 2024, the Company received funds in the amount of $62,851. On November 1, 2024, the Company formalized an unsecured Short-Term Promissory Notes to D. D'Ambrosio in principal amounts totaling $62,851 (the "Note"), which bears a 15.00% interest rate and matures on November 30, 2025. During the year ended December 31, 2025, the Company paid $62,851 towards the balance of this note. As of December 31, 2025, the gross balance of the note was $0 and accrued interest was $0.

**D. D'Ambrosio (Immediate Family Member of Director) –**On January 1, 2025, the Company formalized an unsecured Short-Term Promissory Notes to D. D'Ambrosio in principal amounts totaling $406 (the "Note"), which bears a 15.00% interest rate and matures on December 31, 2025. On September 1, 2025, the Company paid-off the balance of this note of $406. As of December 31, 2025, the gross balance of the note was $0 and accrued interest was $0.

On September 24, 2025, the Company issued 9,408 shares of common stock to D. D'Ambrosio valued at $51,744 for the accrued interest on all of the D. D'Ambrosio notes of $47,042 and recognized a loss on extinguishment of debt of $4,702.

**Francis E. Rich (Immediate Family Member of Director) –** On January 1, 2023, there were two notes outstanding with outstanding balance of the Notes of $100,000 and accrued interest of $47,500. On February 1, 2023, the Company re-negotiated these notes into one note with a maturity date of March 1, 2025 and is non-interest bearing and the Company issued 16,429 shares of common stock as settlement for the accrued interest of $57,500. There are no default provisions on this note. On December 31, 2025, this Note was extended and matures on December 31, 2026. As of December 31, 2025, the gross balance of the notes was $100,000.

**Pine Valley Investments, LLC (Affiliate – Shareholder) –** On January 1, 2023, there were three Notes outstanding with outstanding balance of the Notes of $295,000 and accrued interest of $115,250. On February 1, 2023, the Company re-negotiated these notes into one note with a maturity date of March 1, 2025 and is non-interest bearing and the Company issued 32,929 shares of common stock as settlement for the outstanding accrued interest of $115,250. There are no default provisions on this note. On December 31, 2025, this Note was extended and matures on December 31, 2026. As of December 31, 2025, the gross balance of the notes was $295,000.

**Whit Cluff (Affiliate – Director)** – On March 28, 2024, the Company issued an unsecured Short-Term Promissory Note to Cluff-Rich PC 401K in the principal amount of $15,327 (the "Note") due on April 30, 2025 and bears a 5.0% interest rate. There are no default provisions on this note. On July 16, 2025, the Company made a payment of $5,000 towards the balance of the note. On August 5, 2025, the Company made a payment of $10,256 towards the balance of the note and accrued interest of $766. On December 31, 2025, this Note was extended and matures on December 31, 2026. As of December 31, 2025, the gross balance of the note was $837 and accrued interest was $0.

**10. Convertible Notes Payable**

Convertible notes payable were comprised of the following as of December 31, 2025 and 2024:

Schedule of Convertible Notes Payable

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| | | |
|:---|:---|:---|
| **Convertible Notes Payable** | **December 31, 2025** | **December 31, 2024** |
| 1800 Diagonal Lending | $- | $266450 |
| Lowell Fuller | 50000 |  |
| Robert Knoop | 50000 | - |
| Total Convertible Notes Payable | 100000 | 266450 |
| Less Unamortized Discount | (9297) | - |
| Total Convertible Notes Payable, Net of Unamortized Debt Discount | 90703 | 266450 |
| Less Short-Term Convertible Notes Payable | (90703) | (266450) |
| Total Long-Term Convertible Notes Payable, Net of Unamortized Debt Discount | $- | $- |

---

**1800 Diagonal Lending LLC**– On January 23, 2024, the Company issued an unsecured Convertible Promissory Note ("Note") to 1800 Diagonal Lending, LLC ("1800"), in the principal amount of $63,250 (the "Note") due on October 30, 2024 and bears 12% per annum interest, due at maturity. The total net proceeds the Company received was $50,000 (less an original issue discount ("OID") of $13,250). The Note is convertible into common stock, at holder's option, at a 25% discount of the average of the three lowest trading price of the common stock during the 10 trading day period prior to conversion. During the nine months ended September 30, 2024, the Company paid $23,613 towards the principal balance of 21,083 and $2,530 in accrued interest. For the year ended December 31, 2024, the Company amortized $63,250 of debt discount to current period operations as interest expense. On June 4, 2024, the Company was notified by the lender that the note was in default. The Company recognized default penalties for principal and interest of $40,480. On January 9, 2025, the Company negotiated a settlement on this note and the second note with the lender noted below and paid the note in full. As of December 31, 2025, the gross balance of the note was $0 and accrued interest was $0.

**1800 Diagonal Lending LLC**– On May 3, 2024, the Company issued an unsecured Convertible Promissory Note ("Note") to 1800 Diagonal Lending, LLC ("1800"), in the principal amount of $116,550 (the "Note") due on February 15, 2025 and bears 12% per annum interest, due at maturity. The total net proceeds the Company received was $100,000 (less an original issue discount ("OID") of $16,550). The Note is convertible into common stock, at holder's option, at a 35% discount of the lowest trading price of the common stock during the 10 trading day period prior to conversion. For the year ended December 31, 2024, the Company amortized $116,550 of debt discount to current period operations as interest expense. On June 4, 2024, the Company was notified by the lender that the note was in default. The Company recognized default penalties for principal and interest of $79,254. On January 9, 2025, the Company negotiated a settlement on this note and the note with the lender noted above and paid the note in full. As of December 31, 2025, the gross balance of the note was $0 and accrued interest was $0.

On January 9, 2025, the Company negotiated the settlement of both notes with the lender and agreed to pay $125,000 to settle both notes in full. The Company took a note from a related party (see Note 8) to pay the $125,000 to the lender. The Company recognized a gain on forgiveness of debt of $338,673. This gain is made of $152,131 of default principal and interest and $186,542 in change in derivative liability.

In August and September 2025, the Company raised $1,735,000 through a Reg D campaign from 13 lenders. These notes had a 15.0% interest rate and matured in 12 months. These notes had a mandatory conversion feature if the Company's common stock traded above $8.00. In mid-August 2025, the Company's common stock traded above the mandatory conversion price, so all notes were automatically converted into 433,750 shares of common stock at $4.00 per share. The Company recognized a loss on extinguishment of debt of $2,103,750 on these conversions.

From October through December 2025, the Company raised $150,000 through the Reg D campaign from 3 lenders. These notes had a 15.0% interest rate and matured in 12 months. These notes have a mandatory conversion feature if the Company's common stock traded above $8.00. The number of shares of Common Stock to be issued upon each conversion of these Notes shall be determined by dividing the Conversion Amount by the Conversion Price, which is defined as equal to eighty percent (80%) multiplied by the average closing price of the Company's Common Stock during the five (5) consecutive Trading Day period (the "Average Closing Price") immediately preceding the Trading Day that the Company receives a Notice of Conversion. On December 12, 2025, one of these lenders elected to convert their note, and the Company issued 13,441 shares of common stock and valued at $76,077. The Company recognized a loss on extinguishment of debt of $26,077 on this conversion. As of December 31, 2025, the gross balance of the notes was $100,000 and accrued interest was $2,322.

**11. Stockholders' Deficit**

**Common Stock**

On August 2, 2024 upon the conversion of $12,000 in existing debt owed to the shareholder that has been accrued, the Company issued 20,870 restricted shares of Common Stock to 1800 Diagonal Lending LLC.

On April 1, 2025, the Company issued 200,000 restricted shares of Common Stock to Dan Gay, a related party, for services rendered at the market price of $0.51 per share for a total value of $102,000.

On June 10, 2025, the Company issued 1,100,000 restricted shares of Common Stock to five individuals for services rendered at the market price of $0.401 per share for a total value of $441,100. With 600,000 shares issued to related parties.

On June 24, 2025, the Company issued 500,000 restricted shares of Common Stock to Wild Mustang Ventures, LLC, a related party, for services rendered at the market price of $1.60 per share for a total value of $800,000.

On July 7, 2025, BluSky AI Inc., entered into an Acquisition and Power Assignment Agreement with Digital Asset Medium, LLC ("DAM"), a Wyoming limited liability company, whose managing member, Trent D'Ambrosio, is also the Company's CEO (see Note 5). In exchange for the assignment of the Power Commitment in the Acquisition Agreement, the Company issued 20,000,000 shares of its restricted common stock to DAM. The Company used a large block stock valuation model to value this stock issuance, which resulted in a valuation of $9,800,000. The solar power asset, which was reviewed by a valuation specialist, was valued at $1,289,309. The difference of $8,510,691 has been treated as a deemed dividend by the Company. Normally, this dividend would be recorded in retained earnings. However, the Company has a negative retained earnings balance, so the difference was recorded against additional paid-in capital.

In August and September 2025, the Company raised $1,735,000 through a Reg D campaign from 13 lenders. These notes had a 15.0% interest rate and matured in 12 months. These notes had a mandatory conversion feature if the Company's common stock traded above $8.00. In mid-August 2025, the Company's common stock traded above the mandatory conversion price, so all notes were automatically converted into 433,750 shares of common stock at $4.00 per share. The Company recognized a loss on extinguishment of debt of $2,103,750 on these conversions.

On September 4, 2025, the Company issued 25,500 shares of common stock to five consultants per consulting agreements. These shares were valued at $6.00 per share and the Company recognized consulting fees of $153,000.

On September 24, 2025, the Company issued 9,408 shares of common stock to D. D'Ambrosio, a related party, for the conversion of accrued interest of $47,042. These shares were valued at $5.50 per share for a total value of $51,744 and the Company recognized a loss on extinguishment of debt of $4,702.

On September 30, 2025, the Company issued 13,007 shares of common stock to Digital Asset Medium, LLC ("DAM"), a related entity, for the conversion of accrued interest of $29,129 and accounts payable of $35,908. These shares were valued at $5.98 per share for a total value of $77,782 and the Company recognized a loss on extinguishment of debt of $12,745.

On September 30, 2025, the Company issued 11,000 shares of common stock to a lender for the conversion of a note payable with a balance of $55,000. These shares were valued at $5.98 per share for a total value of $65,780 and the Company recognized a loss on extinguishment of debt of $10,780.

On October 31, 2025, the Company issued 5,000 restricted shares of Common Stock to an individual for services rendered at the market price of $4.06 per share for a total value of $20,300.

On December 12, 2025, the Company issued 13,441 shares of Common Stock to a lender on a Reg D convertible note payable. These shares were valued at $5.66 per share for a total of $76,077. The Company recognized a loss on extinguishment of debt of $26,077 on this conversion.

On December 15, 2025, the Company issued 2,500 restricted shares of Common Stock to an individual for services rendered at the market price of $6.20 per share for a total value of $15,500.

**12. Income Taxes**

The Company accounts for U.S. income taxes under FASB Codification Topic 740-10-25 ("ASC 740-10-25"). Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The provision for income tax expense (recovery) is comprised the following amounts:

Schedule of Provision for Income Tax Expense Recovery

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2025** | **December 31, 2024** | **December 31, 2024** |
| Federal tax benefit at the statutory rate | $(948258) | 21.00% | $(199454) | 21.0% |
| State tax benefit, net of federal income tax benefit | (225776) | 5.00% | (47489) | 5.0% |
| Unallowed deductions | 796 | -0.02% | 63 | -0.01% |
| Change in derivative liability | (47422) | 1.05% | (51043) | 5.37% |
| Gain (loss) on settlement of debt | 513740 | -11.38% | 3391 | -0.36% |
| Accrued interest expense | 15384 | -0.34% | 18186 | -1.91% |
| Amortization of debt discount | 279 | -0.01% | 57190 | -6.02% |
| Change in valuation allowance | 691257 | -15.31% | 219156 | -23.07% |
| Total | $- |  | $- |  |

---

The components of deferred income tax in the accompanying balance sheets are as follows:

Schedule of Components of Deferred Income Tax

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| | | |
|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2024** |
| Deferred tax assets: |  |  |
| Net operating loss carryforward | $4507308 | $3816051 |
| Accrued interest expense | (15384) | (18186) |
| Total gross deferred tax assets | 4491924 | 3797865 |
| Less: Deferred tax asset valuation allowance | (4491924) | (3797865) |
| Total net deferred taxes | $- | $- |

---

As of December 31, 2025 and 2024, the Company had net operating loss carry-forwards for U.S. federal income tax purposes of approximately $17,335,800 and $14,677,118, respectively. A portion of the federal amount, $1,710,000, is subject to an annual limitation of approximately $17,000 as a result of a change in the Company's ownership through February 2013, as defined by Federal Internal Revenue Code Section 382 and the related income tax regulations. As a result of the 20-year federal carry-forward period and the limitation, approximately, $1,400,000 of the net operating loss will expire unutilized. These net operating loss carry-forwards will expire through the year ending 2045.

The valuation allowance was established to reduce the deferred tax asset to the amount that will more likely than not be realized. This is necessary due to the Company's continued operating losses and the uncertainty of the Company's ability to utilize all of the net operating loss carry-forwards before they will expire through the year 2045.

The Company is subject to income tax in the U.S. federal jurisdiction. The Company has not been audited by the U.S. Internal Revenue Service in connection with income taxes. The Company's tax years beginning with the year ended June 30, 2012 through December 31, 2025 generally remain open to examination by the Internal Revenue Service until its net operating loss carry-forwards are utilized and the applicable statutes of limitation have expired.

**13. Related Party Transactions**

**Consulting Agreement** – In February 2014, the Company entered into a consulting agreement with stockholder/director Trent D'Ambrosio. The Company agreed to pay $18,000 per month for twelve months. This agreement was renegotiated in October 2017 and the Company agreed to pay the stockholder/director $25,000 per month starting in October 2017. This agreement was superseded by an Employment Agreement as of April 1, 2019 (see Employment Agreements below). As of December 31, 2025, there is $1,386,788 in deferred salaries in accounts payable and accrued liabilities.

Mr. Cluff currently serves as a director of the Company and has a separate agreement as a consultant of the Company effective as of October 2, 2015.

**Employment Agreements** – The Company has an employment agreement with its chief executive officer, Trent D'Ambrosio. The employment agreement was effective as of April 1, 2019 and provides for compensation of $300,000 annually.

**Notes Payable –**The Company took one short-term note payable from Debra D'Ambrosio, an immediate family member related party and one short-term note payable from Digital Asset Medium, LLC, an affiliate of a director, during the year ended December 31, 2025. The Company received $362,906 in cash from related parties, made payments of $131,212 in cash to related parties and $125,000 was paid directly to another lender to settle their outstanding notes (See Notes 8 and 9 for more details).

**Accounts Payable –**Two officers/directors of the Company have been paying expenses for the Company on their personal credit cards. The Company has recorded these expenses and accrued the amounts in accounts payable to the individuals. As of December 31, 2025, there is $25,722 in accounts payable and accrued liabilities.

On June 10, 2025, the Company issued 500,000 restricted shares of Common Stock to Trent D'Ambrosio for services rendered at the market price of $0.401 per share for a total value of $200,500.

On June 10, 2025, the Company issued 100,000 restricted shares of Common Stock to Whit Cluff for services rendered at the market price of $0.401 per share for a total value of $40,100.

On July 7, 2025, BluSky AI Inc., entered into an Acquisition and Power Assignment Agreement with Digital Asset Medium, LLC ("DAM"), a Wyoming limited liability company, whose managing member, Trent D'Ambrosio, is also the Company's CEO (see Note 5). In exchange for the assignment of the Power Commitment in the Acquisition Agreement, the Company issued 20,000,000 shares of its restricted common stock to DAM. The Company used a large block stock valuation model to value this stock issuance, which resulted in a valuation of $9,800,000. The solar power asset, which was reviewed by a valuation specialist, was valued at $1,289,309. The difference of $8,510,691 has been treated as a deemed dividend by the Company. Normally, this dividend would be recorded in retained earnings. However, the Company has a negative retained earnings balance, so the difference was recorded against additional paid-in capital.

**14. Commitments and Contingencies**

**Litigation**

The Company at times is subject to other legal proceedings that arise in the ordinary course of business. The following is a summary of pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of operations of the Company.

On or about March 4, 2024, the Company filed a complaint against Mother Lode Mining, Inc., a Canadian company, and Robert Salna (the "Defendants"), seeking damages in an amount of not less than $2,237,800 (plus interest, additional costs and attorneys' fees) due from Defendants as a result of their breach of their obligations and duties arising from the sale of Compañía Minera Cerros Del Sur, S.A. de C.V. in 2023 (the "Sale"). The complaint was filed in the United States District Court for the District of Utah, Central Division (Case No. 2:24-cv-00171-TS-CMR, the "Case"). On February 4, 2026, the Company and the Defendants entered into a settlement agreement resolving all disputes in connection with the Sale. Under the settlement, the parties agreed to a mutual dismissal with prejudice of all claims, counterclaims, and causes of action asserted or that could have been asserted in the Case or in any other forum. As part of the settlement, the parties executed a mutual general release of all claims and potential claims against the other parties and their affiliates.

**15. Subsequent Events**

Management has evaluated subsequent events, in accordance with FASB ASC Topic 855, "Subsequent Events," through the date which the consolidated financial statements were available to be issued and there are no material subsequent events, except as noted below.

On January 10, 2026, the Company issued 13,694 shares of Common Stock to a lender on a Reg D convertible note payable.

On February 4, 2026, the Company and Mother Lode Mining entered into a settlement agreement resolving all disputes in connection with the LOI and the Clavo Rico mine. Under the settlement, the parties agreed to a mutual dismissal with prejudice of all claims, counterclaims, and causes of action asserted or that could have been asserted in United States District Court for the District of Utah, Central Division, Case No. 2:24-cv-00171-TS-CMR, or in any other forum. As part of the settlement, the parties executed a mutual general release of all claims and potential claims against the other parties and their affiliates. Following the settlement, no further amounts are expected to be collected under the LOI.

**PART III**

**INDEX TO EXHIBITS**

---

| | |
|:---|:---|
| 1.1 | [Agreement with DealMaker Securities, LLC (7)](https://www.sec.gov/Archives/edgar/data/1416090/000149315226006252/ex1-1.htm) |
| 3.1 | [Articles of Incorporation (1)](https://www.sec.gov/Archives/edgar/data/1416090/000121390007001436/fsb21007ex3i_golfalliance.htm) |
| 3.2 | [Certificate of Amendment, effective March 5, 2010 (2)](https://www.sec.gov/Archives/edgar/data/1416090/000121390010000843/f8k030510ex3i_silveramerca.htm) |
| 3.3 | [Certificate of Amendment, effective June 23, 2010 (3)](https://www.sec.gov/Archives/edgar/data/1416090/000121390010002645/f8k062310ex3i_silveramerica.htm) |
| 3.4 | [Articles of Merger, effective May 17, 2013 (4)](https://www.sec.gov/Archives/edgar/data/1416090/000135448813003012/immi_ex31.htm) |
| 3.5 | [Bylaws (1)](https://www.sec.gov/Archives/edgar/data/1416090/000121390007001436/fsb21007ex3ii_golfalliance.htm) |
| 4.1 | [Description of Securities (7)](https://www.sec.gov/Archives/edgar/data/1416090/000149315226006252/ex4-1.htm) |
| 4.2 | [Form of Subscription Agreement (7)](https://www.sec.gov/Archives/edgar/data/1416090/000149315226006252/ex4-2.htm) |
| 10.1 | [Employment Agreement with Trent D'Ambrosio (4)](https://www.sec.gov/Archives/edgar/data/1416090/000149315219008560/ex10-14.htm) |
| 10.2 | [Note Purchase Agreement (4)](https://www.sec.gov/Archives/edgar/data/1416090/000149315219008560/ex10-15.htm) |
| 10.3 | [Senior Secured Redeemable Convertible Note (4)](https://www.sec.gov/Archives/edgar/data/1416090/000149315219008560/ex10-16.htm) |
| 10.4 | [Warrant (4)](https://www.sec.gov/Archives/edgar/data/1416090/000149315219008560/ex10-17.htm) |
| 10.5 | [Settlement Agreement with Antilles Family Office, LLC dated January 18, 2023 (5)](https://www.sec.gov/Archives/edgar/data/1416090/000149315223002470/ex10-1.htm) |
| 10.6 | [Letter of Intent with Mother Lode Mining, Inc. effective as of January 24, 2023 (6)](https://www.sec.gov/Archives/edgar/data/1416090/000149315223003973/ex10-1.htm) |
| 10.7 | [Acquisition and Power Assignment Agreement (the "Acquisition Agreement") with Digital Asset Medium, LLC (7)](https://www.sec.gov/Archives/edgar/data/1416090/000149315226006252/ex10-7.htm) |
| 10.8 | [Consulting Agreement with Dan Gay dated April 1, 2025 (7)](https://www.sec.gov/Archives/edgar/data/1416090/000149315226006252/ex10-8.htm) |
| 10.9 | [Consulting Agreement with Dan Gay dated September 1, 2025 (7)](https://www.sec.gov/Archives/edgar/data/1416090/000149315226006252/ex10-9.htm) |
| 11\* | [Consent of Sadler, Gibb & Associates, LLC](ex11.htm) |
| 12 | [Opinion of Brunson Chandler & Jones, PLLC (7)](https://www.sec.gov/Archives/edgar/data/1416090/000149315226006252/ex12.htm) |

---

\* Filed herewith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Incorporated by reference from Form SB-2 filed with the SEC on October 31, 2007.

(2) Incorporated by reference from Form 8-K filed with the SEC on March 10, 2010.

(3) Incorporated by reference from Form 8-K filed with the SEC on June 28, 2010.

(4) Incorporated by reference from the Form S-1 filed with the SEC on June
 2, 2019.

(5) Incorporated by reference from the Form 8-K filed with the SEC on January
 25, 2023.

(6) Incorporated by reference from the Form 8-K filed with the SEC on February 8, 2023.

(7) Incorporated by reference to the Offering Statement on Form 1-A filed with the SEC on February 11,
 2026.

**SIGNATURES**

Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this Offering Circular to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Murray, State of Utah, on April 20, 2026.

---

| | |
|:---|:---|
| BluSky AI, Inc. | BluSky AI, Inc. |
| By: | */s/ Trent D'Ambrosio* |
|  | Trent D'Ambrosio |
|  | Chief Executive Officer, President |

---

The following persons in the capacities and on the dates indicated have signed this Offering Circular.

---

| |
|:---|
| */s/ Whit Cluff* |
| Whit Cluff |
| Director |

---

The following persons in the capacities and on the dates indicated have signed this Offering Circular.

---

| |
|:---|
| */s/ Dan Gay* |
| Dan Gay |
| Director |

---

## Add

**Exhibit 11**

**<u>CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</u>**

As independent registered public accountants, we hereby consent to the use of our report dated March 31, 2026, with respect to the financial statements of BluSky AI, Inc. (formerly known as Inception Mining, Inc.) for the years ended December 31, 2025 and 2024, in its Offering Statement on Form 1-A, Amendment No. 1.

*/s/ Sadler, Gibb & Associates, LLC*

Draper, UT

April 20, 2026

### UNITED STATES SECURITIES AND EXCHANGE COMMISSION
**Washington, D.C. 20549**

## FORM 1-A

### REGULATION A OFFERING STATEMENT
### UNDER THE SECURITIES ACT OF 1933

### Item 1. Issuer Information

**Exact name of issuer:** BluSky AI Inc.

**Jurisdiction of Incorporation/Organization:** NV

**Year of Incorporation:** 2007

**CIK:** 0001416090

**I.R.S. Employer Identification Number:** 35-2302128

**Primary Standard Industrial Classification Code:** 7374

**Total number of full-time employees:** 5

**Total number of part-time employees:** 4

**Address of Principal Executive Offices:** 5330 South 900 East, Suite 280, Murray, UT 84117

**Company Phone:** 801-810-8790

**Person to contact:** Lance Brunson

### Financial Statements

**Balance Sheet Information**

| Metric                                   | Amount      |
|:---|:---|
| Cash and Cash Equivalents                | $960436.00  |
| Investment Securities                    | $0.00       |
| Accounts and Notes Receivable            | $0.00       |
| Property, Plant and Equipment (PP&E)     | $0.00       |
| Total Assets                             | $2668200.00 |
| Accounts Payable and Accrued Liabilities | $1773808.00 |
| Long-Term Debt                           | $1500158.00 |
| Total Liabilities                        | $3598693.00 |
| Total Stockholders' Equity               | $-930493.00 |
| Total Liabilities and Equity             | $2668200.00 |

**Statement of Comprehensive Income Information**

| Metric                                    | Amount       |
|:---|:---|
| Total Revenues                            | $0.00        |
| Costs and Expenses Applicable to Revenues | $0.00        |
| Depreciation and Amortization             | $0.00        |
| Net Income                                | $-4515516.00 |
| Earnings Per Share - Basic                | -0.96        |
| Earnings Per Share - Diluted              | -0.96        |

**Auditor Information**

| Metric          | Amount                         |
|:---|:---|
| Name of Auditor | Sadler, Gibb & Associates, LLC |

### Outstanding Securities

| Class           |   Outstanding | CUSIP     | Publicly Traded            |
|:---|---:|:---|:---|
| Common Equity   |      24992505 | 45327U302 | OTC ID Tier - OTC Link ATS |
| Preferred Stock |            51 | 000000000 | N/A                        |
| NONE            |             0 | 000000000 | N/A                        |

### Item 2. Issuer Eligibility
- [x] The issuer certifies that all of the statements in this part are true.

### Item 3. Application of Rule 262
- [x] The issuer certifies that it is not disqualified and has not been involved in any disqualifying event.

### Item 4. Summary Information Regarding the Offering

**Tier:** Tier2

**Financial Statement Status:** Audited

**Type of Securities Offered:** Equity (common or preferred stock)

**Is this a delayed or continuous offering?** No

**Was or is the offering to take place within one year after qualification?** No

**Was or is the offering to commence within two days after qualification?** No

**Is this a best efforts offering?** Yes

**Was there any solicitation of interest?** No

**Are there any resale securities by affiliates of the issuer?** No

**Offering Amounts**

| Description                                                     | Amount       |
|:---|:---|
| Number of securities offered                                    | 15000000     |
| Number of securities outstanding                                | 24992505     |
| Price per security                                              | $5.00        |
| Issuer's aggregate offering price                               | $62500000.00 |
| Aggregate offering price of securities held by security holders | $0.00        |
| Aggregate price of securities offered concurrently              | $0.00        |
| Total aggregate offering price                                  | $62500000.00 |

**Anticipated Fees**

| Service Provider   | Name                           | Fees      |
|:---|:---|:---|
| Auditor            | Sadler, Gibb & Associates, LLC | $10000.00 |
| Legal              | Brunson Chandler & Jones, PLLC | $21000.00 |
| Promoters          | None                           | $0.00     |

**Estimated Net Proceeds to the Issuer:** $57941500.00

### Item 5. Jurisdictions in Which Securities are to be Offered

AL, AK, AZ, AR, CA, CO, CT, DE, FL, GA, HI, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MS, MO, MT, NE, NV, NH, NJ, NM, NY, NC, ND, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VT, VA, WA, WV, WI, WY, DC, PR

### Item 6. Unregistered Securities Issued or Sold Within One Year

**Name of Such Issuer:** BluSky AI Inc.

**Title of Securities Issued:** Common Stock

**Total Amount of Securities Issued:** 24992505

**Amount of such securities sold by principal security holders:** 0

**Aggregate consideration:** On April 1, 2025, the Company issued 200,000 restricted shares of Common Stock for services valued $0.51 per share for a total value of $102,000. On June 10, 2025, the Company issued 1,100,000 restricted shares of Common Stock to five individuals for services rendered valued at $0.401 per share for a total value of $441,100. On June 24, 2025, the Company issued 500,000 restricted shares for services valued at $1.60 per share for a total value of $800,000. On July 7, 2025, the Company issued 20,000,000 shares to Digital Asset Medium, LLC pursuant to an agreement dated July 7, 2025. On September 2, 2025, the Company issued 25,500 shares of common stock to consultants for services rendered to the Company. On September 23, 2025, the Company issued 433,750 shares of common stock for the conversion of debt to certain investors in the Company with a conversion rate of $4.00 per share. On September 30, 2025, the Company issued 33,415 shares of common stock valued at $5.00 per share. 20,408 of these shares were issued as part of a conversion for outstanding debt and 13,007 were issued for conversion of existing debt and unreimbursed expenses. On October 31, 2025, the Company issued 5,000 shares of common stock to an individual for services valued at $4.06 per share for a total value of $20,300. On December 12, 2025, the Company issued 13,441 shares of common stock to a lender on a convertible note payable, with the shares valued at $5.66 per share for a total of $76,077. On December 15, 2025, the Company issued 2,500 shares of common stock to an individual for services rendered valued at $6.20 per share for a total value of $15,500. On January 10, 2026, the Company issued 13,694 shares of common stock to a lender on a convertible note payable, with the shares valued at $5.325 per share for a total of $72,921.

**Basis for aggregate consideration:** —

**Securities Act Exemption:** We claimed exemption from registration under the Securities Act for the sales and issuances of securities in the transactions under Section 4(a)(2) and Section 3(a)(9) of the Securities Act and/or Regulation D promulgated thereunder.