OTC: BSAI

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 Salt Lake City, 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.

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2023
Divestiture of the Clavo Rico Mine and Legacy Mining Matters

On
January 12, 2023, the Company entered into a non-binding Letter of Intent (the “LOI”) with Mother Lode Mining, Inc. (“MLM”
or “Mother Lode Mining”). 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 empower 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.

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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 has 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 potentially 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.

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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 strategic 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.

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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 support 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.

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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.

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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.

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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.
https://www.congress.gov/bill/118th-congress/senate-bill/933/text

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. https://energy.ec.europa.eu/topics/energy-efficiency/energy-efficiency-targets-directive-and-rules/energy-efficiency-directive_en

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Data
centers have a significant environmental footprint, and compliance with environmental regulations is critical, including with respect
to the following:

-
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 expenses related to research and development.

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 www.sec.gov. Further information about the Company may be found
at its website: www.bluskyaidatacenters.com. 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.