CalEthos Plunges into Deficit Amidst Abandoned Data Center Project

TL;DR

**GEDC is a speculative bet on a new AI infrastructure play after abandoning its primary project, but its cash burn and lack of revenue make it a high-risk gamble.**

AI Summary

CalEthos, Inc. (GEDC) reported a significant net loss of $5,086,000 for the six months ended June 30, 2025, a decrease from the $7,951,000 net loss in the same period of 2024. This substantial loss was primarily driven by $4,581,000 in abandoned project costs related to the Lithium Valley Specific Plan data center campus, which faced significant delays and led the company to not renew its purchase option on a 315-acre land parcel. Total assets plummeted from $6,145,000 at December 31, 2024, to $78,000 by June 30, 2025, largely due to the write-off of data center campus costs. Cash and cash equivalents decreased sharply from $286,000 to $60,000 in the same period. The company's accumulated deficit grew to $36,956,000, and it reported a total stockholders' deficit of $2,332,000 as of June 30, 2025, down from a $4,317,000 equity position at year-end 2024. Strategic changes include the formation of TerraVolt Infrastructure Inc. in May 2025, a wholly-owned subsidiary focused on sustainable, baseload, clean energy solutions for AI infrastructure and large-scale data centers, aiming to provide an Infrastructure-as-a-Service (IaaS) Platform. The company continues to have no recurring revenue from operations and faces substantial doubt about its ability to continue as a going concern.

Why It Matters

CalEthos's pivot from its original Lithium Valley data center plan, marked by a $4,581,000 write-off, signals significant operational and strategic uncertainty for investors. The formation of TerraVolt Infrastructure Inc. represents a new direction into the competitive AI infrastructure market, but without a clear path to revenue, the company's going concern risk is paramount. This shift could impact potential partners and customers who were anticipating the original data center campus, while employees face an uncertain future given the company's lack of profitability and reliance on external financing. The broader market will watch to see if this new IaaS platform can gain traction against established players in the rapidly expanding AI and data center sectors.

Risk Assessment

Risk Level: high — CalEthos, Inc. faces a high risk level due to its accumulated deficit of $36,956,000 as of June 30, 2025, and a net loss of $5,086,000 for the six months ended June 30, 2025. The company explicitly states "These conditions raise substantial doubt about the Company's ability to continue as a going concern for one year from the issuance of these consolidated financial statements," further evidenced by cash and cash equivalents dropping from $286,000 to $60,000.

Analyst Insight

Investors should exercise extreme caution and consider avoiding GEDC given the substantial going concern risk and lack of revenue. Those with existing positions should re-evaluate their investment thesis in light of the abandoned data center project and the highly speculative nature of the new TerraVolt venture, potentially considering an exit.

Financial Highlights

debt To Equity

N/A

revenue

$0

operating Margin

N/A

total Assets

$78,000

total Debt

$0

net Income

-$5,086,000

eps

-$0.20

gross Margin

N/A

cash Position

$60,000

revenue Growth

N/A

Key Numbers

• $5,086,000 — Net Loss (for the six months ended June 30, 2025, indicating significant unprofitability)
• $4,581,000 — Abandoned Project Costs (incurred for the Lithium Valley data center project, a major expense in Q2 2025)
• $36,956,000 — Accumulated Deficit (as of June 30, 2025, highlighting historical losses)
• $2,332,000 — Total Stockholders' Deficit (as of June 30, 2025, a negative equity position)
• $60,000 — Cash and Cash Equivalents (as of June 30, 2025, a sharp decline from $286,000 at year-end 2024)
• $78,000 — Total Assets (as of June 30, 2025, a significant reduction from $6,145,000 at year-end 2024)
• 25,730,540 — Outstanding Common Shares (as of August 14, 2025)
• $0.19 — Net Loss Per Share (for the three months ended June 30, 2025)
• $0.20 — Net Loss Per Share (for the six months ended June 30, 2025)
• 315-acres — Land Parcel (option not renewed for the data center campus)

Key Players & Entities

• CalEthos, Inc. (company) — registrant
• TerraVolt Infrastructure Inc. (company) — wholly owned subsidiary formed in May 2025
• Lithium Valley Specific Plan (other) — abandoned data center project location
• Imperial County, California (other) — location of the Lithium Valley Specific Plan
• AIQ System Inc. (company) — dissolved Korean subsidiary
• SEC (regulator) — Securities and Exchange Commission
• Nevada (other) — state of incorporation for CalEthos, Inc.
• June 30, 2025 (date) — end of the reported quarterly period
• December 31, 2024 (date) — previous fiscal year-end
• May 2025 (date) — month when TerraVolt Infrastructure Inc. was formed

FAQ

Risk Factors

• Project Abandonment and Delays [high — operational]: The company incurred $4,581,000 in abandoned project costs related to the Lithium Valley data center campus due to significant delays and the decision not to renew a land purchase option. This directly impacted asset values and profitability.
• Going Concern Uncertainty [high — financial]: CalEthos faces substantial doubt about its ability to continue as a going concern, evidenced by a net loss of $5,086,000 for the six months ended June 30, 2025, and a sharp decline in cash and cash equivalents to $60,000.
• Deteriorating Equity Position [high — financial]: The company reported a total stockholders' deficit of $2,332,000 as of June 30, 2025, a significant decrease from a positive equity of $4,317,000 at year-end 2024, driven by accumulated losses.
• Lack of Recurring Revenue [high — operational]: CalEthos continues to have no recurring revenue from operations, indicating a lack of established business models or income streams to support ongoing activities.
• Dependence on New Ventures [medium — market]: The formation of TerraVolt Infrastructure Inc. represents a strategic pivot to sustainable energy solutions for AI infrastructure. Success is contingent on the market adoption and profitability of this new venture, with no current revenue to validate the strategy.

Industry Context

The data center and AI infrastructure sectors are experiencing rapid growth, driven by increasing demand for computing power and data storage. However, this also intensifies competition and requires significant capital investment for development and energy sourcing. Companies are increasingly focusing on sustainable and clean energy solutions to power these energy-intensive operations.

Regulatory Implications

While no specific regulatory issues are detailed, the company's pivot to energy solutions for AI infrastructure may expose it to evolving environmental regulations, energy market policies, and data center operational standards. Compliance with these could impact project timelines and costs.

What Investors Should Do

1. Monitor TerraVolt's progress closely.
2. Assess cash burn rate and future funding needs.
3. Evaluate the competitive landscape for TerraVolt's IaaS offering.
4. Review any disclosures regarding going concern mitigation strategies.

Key Dates

• 2025-06-30: End of Six-Month Period — Reported a net loss of $5,086,000 and a significant reduction in total assets to $78,000, with cash at $60,000.
• 2025-05-01: Formation of TerraVolt Infrastructure Inc. — Established a new wholly-owned subsidiary focused on sustainable energy solutions for AI infrastructure, representing a strategic shift.
• 2024-12-31: Year-End 2024 — Total assets were $6,145,000 and cash and cash equivalents were $286,000, with a positive stockholders' equity of $4,317,000.

Glossary

Accumulated Deficit

The total cumulative net losses of a company that have not been offset by net income or other gains. (CalEthos has an accumulated deficit of $36,956,000 as of June 30, 2025, indicating a history of unprofitability.)

Stockholders' Deficit

Occurs when a company's liabilities exceed its assets, resulting in negative equity for shareholders. (CalEthos reported a stockholders' deficit of $2,332,000 as of June 30, 2025, highlighting its negative net worth.)

Going Concern

The assumption that a business will continue to operate for the foreseeable future without the threat of liquidation. (The company faces substantial doubt about its ability to continue as a going concern, a critical warning for investors.)

Abandoned Project Costs

Expenses incurred for a project that is subsequently terminated or abandoned before completion. (CalEthos recorded $4,581,000 in abandoned project costs for the Lithium Valley data center, significantly impacting its financial results.)

Infrastructure-as-a-Service (IaaS)

A cloud computing model that provides virtualized computing resources over the internet. (TerraVolt Infrastructure Inc. aims to offer an IaaS platform for AI infrastructure and data centers, indicating the company's new strategic direction.)

Year-Over-Year Comparison

Compared to the prior year's six-month period, CalEthos has seen a significant deterioration in its financial performance. While the prior period also reported a net loss ($7,951,000), the current period's loss of $5,086,000 is accompanied by a drastic reduction in total assets from $6,145,000 to $78,000, largely due to project write-offs. Cash reserves have also dwindled from $286,000 to $60,000. The company has moved from a positive stockholders' equity to a deficit, underscoring its precarious financial position.

Filing Documents

• form10-q.htm (10-Q) — 786KB
• ex31-1.htm (EX-31.1) — 12KB
• ex31-2.htm (EX-31.2) — 12KB
• ex32-1.htm (EX-32.1) — 6KB
• ex32-2.htm (EX-32.2) — 7KB
• 0001641172-25-023834.txt ( ) — 4443KB
• gedc-20250630.xsd (EX-101.SCH) — 49KB
• gedc-20250630_cal.xml (EX-101.CAL) — 34KB
• gedc-20250630_def.xml (EX-101.DEF) — 138KB
• gedc-20250630_lab.xml (EX-101.LAB) — 368KB
• gedc-20250630_pre.xml (EX-101.PRE) — 246KB
• form10-q_htm.xml (XML) — 590KB

Financial Statements (unaudited)

Financial Statements (unaudited) 1 Condensed Consolidated Balance Sheets as of June 30, 2025 (unaudited) and December 31, 2024 1 Condensed Consolidated Statements of Operations for the three-month and six-month periods ended June 30, 2025 and 2024 (unaudited) 2 Condensed Consolidated Statements of Changes in Stockholders' Equity for the three-month and six-month periods ended June 30, 2025 and 2024 (unaudited). 3 Condensed Consolidated Statements of Cash Flows for the six-month period ended June 30, 2025 and 2024 (unaudited) 4 Notes to the Condensed Consolidated Financial Statements (Unaudited) 5 Item 2.

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

Management's Discussion and Analysis of Financial Condition and Results of Operations 17 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 22 Item 4.

Controls and Procedures

Controls and Procedures 22 PART II OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 23 Item 1A.

Risk Factors

Risk Factors 23 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 23 Item 3. Default Upon Senior Securities 23 Item 4. Mine Safety Disclosures 23 Item 5. Other Information 23 Item 6. Exhibits 23

Signatures

Signatures 24 i CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain information set forth in this Quarterly Report on Form 10-Q, including in Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere herein, with respect to our financial condition, results of operations and business that are not historical facts are "forward-looking statements". Forward-looking statements can be identified by the use of forward-looking terminology, such as "anticipate", "believe", "expect", "plan", "intend", "seek", "estimate", "project", "could", "may" or the negative thereof or other variations thereon, or by discussions of strategy that involve risks and uncertainties. Management wishes to caution the reader of the forward-looking statements that any such statements that are contained in this report reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties and other factors, including, but not limited to, economic, competitive, regulatory, technological, key employees, and general business factors affecting our operations, markets, growth, services, products and other factors, some of which are described in this report and some of which are discussed in our other filings with the Securities and Exchange Commission. These forward-looking statements are only estimates or predictions. No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of risks facing our company, and actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events. Important factors to consider in evaluating any forward-looking statements include: our ability to finance and complete the design and construction of our proposed data center operations; our ability to implement our business plan; our ability to attract key personnel; our ability to operate profitably

forward-looking statements may not apply to us at certain times

forward-looking statements may not apply to us at certain times. Throughout this report, unless otherwise designated, the terms "we," "us," "our," "the Company" and "our company" refer to CalEthos, Inc., a Nevada corporation. All amounts are in U.S. Dollars, unless otherwise indicated. ii PART I - FINANCIAL INFORMATION Item 1: Financial Statements CalEthos, Inc. Condensed Consolidated Balance Sheets As of June 30, 2025 December 31, 2024 (Unaudited) Assets Current assets Cash and cash equivalents $ 60,000 $ 286,000 Prepaid and other current expenses 18,000 10,000 Total current assets 78,000 296,000 Data center campus costs - 5,849,000 Total assets $ 78,000 $ 6,145,000 Liabilities and stockholders' (deficit) equity Current liabilities Accounts payable and accrued expenses $ 659,000 $ 504,000 Notes payable – related parties 197,000 11,000 Total current liabilities 856,000 515,000 Convertible debentures, net 1,554,000 1,313,000 Total liabilities 2,410,000 1,828,000 Stockholders' (deficit) equity Common stock par value $ 0.001 : 100,000,000 shares authorized; 25,730,540 and 25,730,540 shares issued and outstanding 26,000 26,000 Additional paid-in capital 34,590,000 36,153,000 Other comprehensive income 9,000 9,000 Stock subscription receivable ( 1,000 ) ( 1,000 ) Accumulated deficit ( 36,956,000 ) ( 31,870,000 ) Total stockholders'(deficit) equity ( 2,332,000 ) 4,317,000 Total liabilities and stockholders' (deficit) equity $ 78,000 $ 6,145,000 See the accompanying notes to these unaudited condensed consolidated financial statements. 1 CalEthos, Inc. Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss 2025 2024 2025 2024 For the three months ended June 30, For the six months ended June 30, 2025 2024 2025 2024 Revenues $ - $ - $ - $ - Operating Expenses Professional fees 81,000 113,000 177,000 256,000 Equity-ba

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