CalEthos Reports Significant Financial Developments, Net Loss, and Concerns Over Going Concern Status

CalEthos, Inc. reported significant financial developments in its 10-Q filing for the quarter ending September 30, 2024. The company continues to face challenges, with no revenue generated during the reported periods, maintaining a consistent revenue figure of $0 for both the three and nine months ended September 30, 2024, and 2023.

Total assets increased substantially to $5,041,000 as of September 30, 2024, compared to $2,580,000 at the end of 2023. However, cash and cash equivalents decreased to $156,000 from $308,000, reflecting a decline in liquidity. Current liabilities included convertible debentures of $428,000, a new liability not present at the end of 2023. Total stockholders’ equity rose to $3,706,000, up from $1,558,000, indicating a strengthening balance sheet despite ongoing losses.

Operating expenses surged to $562,000 for the three months ended September 30, 2024, compared to $92,000 in the same period of 2023. For the nine months, operating expenses totaled $1,179,000, a 243.7% increase from $343,000 in 2023. This rise was attributed to higher payroll and related expenses, equity-based compensation, and costs associated with the company's data center development efforts. Notably, financing costs also escalated to $817,000 for the three months ended September 30, 2024, compared to $20,000 in the prior year, primarily due to amortization of debt discounts.

The net loss for the three months ended September 30, 2024, was $(1,378,000), a significant increase from $(98,000) in the same quarter of 2023. For the nine months, the net loss reached $(9,329,000), compared to $(514,000) in the previous year. The loss per share for the nine months was $(0.37), up from $(0.04) in 2023.

Strategically, CalEthos is in the early stages of developing clean-energy-powered data centers, having completed Phase I of its development plan and currently engaged in Phase II. The company has entered into an option agreement to acquire a 315-acre parcel of land for $5 million, which is expected to enhance its operational capabilities. The previous option for an 80-acre site was terminated in favor of this larger parcel, which offers better connectivity and lower flood risk.

Management has expressed concerns regarding the company's ability to continue as a going concern, citing the need for additional financing to support ongoing operations and development. The company plans to raise funds through equity and debt securities to address its financial needs.