UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________________ to ________________
Commission file number
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer |
| incorporation or organization) | Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including
area code: (
Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |
| Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
There were shares of the registrant’s common stock outstanding as of May 15, 2025.
TABLE OF CONTENTS
| Page |
| PART I – FINANCIAL INFORMATION | 3 | |
| Item 1. | Financial Statements (Unaudited) | 3 |
| Consolidated Balance Sheets | 3 | |
| Consolidated Statements of Operations | 4 | |
| Consolidated Statements of Stockholders’ Deficit | 5 | |
| Consolidated Statements of Cash Flows | 6 | |
| Notes to the Consolidated Financial Statements | 7 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 17 |
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 20 |
| Item 4. | Controls and Procedures | 20 |
| PART II – OTHER INFORMATION | 21 | |
| Item 1. | Legal Proceedings | 21 |
| Item 1A. | Risk Factors | 21 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 21 |
| Item 3. | Defaults Upon Senior Securities | 21 |
| Item 4. | Mine Safety Disclosures | 21 |
| Item 5. | Other Information | 21 |
| Item 6. | Exhibits | 21 |
| Signatures | 22 | |
| Exhibit Index | 23 | |
Unless the context otherwise indicates, when used in this report, the terms the “Company,” “Edgemode”, “we,” “us, “our” and similar terms refer to Edgemode, Inc. and our wholly owned subsidiary, Edgemode, a Wyoming corporation. Our corporate website is www.edgemode.io. There we make available copies of Edgemode documents, news releases and our filings with the U.S. Securities and Exchange Commission including financial statements.
Unless specifically set forth to the contrary, the information that appears on our website is not part of this report.
| 2 |
PART I – FINANCIAL INFORMATION
| ITEM 1. | FINANCIAL STATEMENTS |
Edgemode, Inc.
Consolidated Balance Sheets
(Unaudited)
| March 31, 2025 | December 31, 2024 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Intangible assets – cryptocurrencies | ||||||||
| Unsecured advances | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accrued payroll | ||||||||
| Convertible notes payable | ||||||||
| Notes payable | ||||||||
| Notes payable – related parties | ||||||||
| Customer deposit - current | ||||||||
| Share purchase liability | ||||||||
| Derivative liabilities | ||||||||
| – | ||||||||
| Total current liabilities | ||||||||
| Customer deposit | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ deficit: | ||||||||
| Preferred shares, $ par value, shares authorized March 31, 2025 and December 31, 2024; issued and outstanding | ||||||||
| Common shares, $ par value, shares authorized March 31, 2025 and December 31, 2024; shares issued and outstanding, March 31, 2025 and December 31, 2024 | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
See accompanying notes to the unaudited consolidated financial statements.
| 3 |
Edgemode, Inc.
Consolidated Statements of Operations
(unaudited)
| For the three months ended | ||||||||
| March 31, 2025 | March 31, 2024 | |||||||
| Operating expenses: | ||||||||
| General and administrative expenses | $ | $ | ||||||
| Loss on cryptocurrencies | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other expense: | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Change in fair value of derivatives | ( | ) | ||||||
| Total other expense, net | ( | ) | ||||||
| Loss before provision for income taxes | ( | ) | ( | ) | ||||
| Provision for income taxes | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Loss per common share - basic | $ | ( | ) | $ | ( | ) | ||
| Loss per common share - diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average shares outstanding - basic | ||||||||
| Weighted average shares outstanding - diluted | ||||||||
See accompanying notes to the unaudited consolidated financial statements.
| 4 |
Edgemode, Inc.
Consolidated Statements of Stockholders’ Deficit
For the three months ended March 31, 2025 and 2024
(Unaudited)
| Total | ||||||||||||||||||||
| Common | Additional | Stockholders' | ||||||||||||||||||
| Common | Stock | Paid-In | Accumulated | Equity/ | ||||||||||||||||
| Shares | Amount | Capital | Deficit | (deficit) | ||||||||||||||||
| Balance December 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Stock-based compensation | – | |||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||||||
| Balance March 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Balance December 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||||||
| Balance March 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
See accompanying notes to the unaudited consolidated financial statements.
| 5 |
Edgemode, Inc.
Consolidated Statements of Cash Flows
(unaudited)
| For the three months ended | ||||||||
| March 31, 2025 | March 31, 2024 | |||||||
| Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock-based compensation | ||||||||
| Change in fair value of cryptocurrencies | ||||||||
| Change in fair value of derivative liabilities | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Accounts payable and accrued expenses | ||||||||
| Accrued payroll | ||||||||
| Customer deposit | ||||||||
| Net cash provided by (used in) operating activities | ( | ) | ||||||
| Investing Activities: | ||||||||
| Advance of unsecured funds in connection with proposed business acquisition | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Financing Activities: | ||||||||
| Proceeds from sale of common shares not yet issued | ||||||||
| Repayment of related party advances | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Net change in cash | ( | ) | ||||||
| Cash - beginning of period | ||||||||
| Cash - end of period | $ | $ | ||||||
| Supplemental Disclosures: | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
See accompanying notes to the unaudited consolidated financial statements.
| 6 |
Edgemode, Inc.
Notes to the Consolidated Financial Statements
(Unaudited)
NOTE 1 – Basis of Presentation
The accompanying unaudited interim financial statements of Edgemode, Inc. (“we”, “our”, “Edgemode” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for our interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate the disclosure contained in the audited financial statements for fiscal 2024, as reported in the Form 10-K for the fiscal year ended December 31, 2024 of the Company, have been omitted.
NOTE 2 – Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Actual results could materially differ from these estimates. It is reasonably possible that changes in estimates will occur in the near term.
Principals of consolidation
The accompanying consolidated financial statements include the accounts of Edgemode, Inc., the accounts of its 100% owned subsidiaries, Edgemode and Edgemode Mine Co UK Limited. All intercompany transactions and balances have been eliminated in consolidation.
Segments Reporting
The Company manages its operations as a single segment for the purpose of assessing performance and making operating decisions. The Company’s Chief Operating Decision Maker (“CODM”) is its executive management committee. The CODM allocates resources and evaluates the performance of the Company using information about net income from operations. All significant operating decisions are based upon an analysis of the Company as one operating segment, which is the same as its reporting segment. The Company will continue to evaluate for segments as it expands its operations.
Fair Value Measurements
Generally accepted accounting principles define fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price) and such principles also establish a fair value hierarchy that prioritizes the inputs used to measure fair value using the following definitions (from highest to lowest priority):
| · | Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. | |
| · | Level 2 – Observable inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data by correlation or other means. | |
| · | Level 3 – Prices or valuation techniques requiring inputs that are both significant to the fair value measurement and unobservable. |
| 7 |
The following fair value hierarchy tables present information about the Company’s liabilities measured at fair value on a recurring basis:
| Fair Value Measurements at March 31, 2025 | ||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||
| Liabilities: | ||||||||||||
| Derivative liabilities | $ | $ | $ | |||||||||
| Fair Value Measurements at December 31, 2024 | ||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||
| Liabilities: | ||||||||||||
| Derivative liabilities | $ | $ | $ | |||||||||
The Company had no assets valued using level 1, level 2, or level 3 inputs as of March 31, 2025 or December 31, 2024.
Derivative Financial Instruments
Derivatives are measured at their fair value on the balance sheet. In determining the appropriate fair value, the Company uses a binomial calculator model. Changes in fair value are recorded in the consolidated statements of operations.
Revenue Recognition
We recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers. This standard provides a single comprehensive model to be used in the accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific guidance. The standard’s stated core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, ASC 606 includes provisions within a five-step model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when, or as, an entity satisfies a performance obligation.
Our High Performance Computing (“HPC”) hosting operations will generate revenue by providing colocation, cloud, and connectivity services to customers in exchange for a fee. The HPC hosting operation provides colocation, facilities operations, security, and other services to third-party HPC customers to support workloads for machine learning and artificial intelligence. The Company has not yet generated any revenue as of March 31, 2025.
Stock-Based Compensation
The Company accounts for equity instruments issued to employees in accordance with the provisions of ASC 718 Stock Compensation (ASC 718) and Equity-Based Payments to Non-employees pursuant to ASC 2018-07 (ASC 2018-07). All transactions in which the consideration provided in exchange for the purchase of goods or services consists of the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date of the fair value of the equity instrument issued is the earlier of the date on which the counterparty’s performance is complete or the date at which a commitment for performance by the counterparty to earn the equity instruments is reached because of sufficiently large disincentives for nonperformance.
Reclassifications
Certain reclassifications have been made to our prior year’s consolidated financial statements to conform to our current year presentation. These reclassifications had no effect on our previously reported results of operations or accumulated deficit.
| 8 |
Recent Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”). This ASU is intended to improve the accounting for certain crypto assets by requiring an entity to measure those crypto assets at fair value each reporting period with changes in fair value recognized in net income. The amendments also improve the information provided to investors about an entity’s crypto asset holdings by requiring disclosure about significant holdings, contractual sale restrictions, and changes during the reporting period. ASU 2023-08 requires a cumulative-effect adjustment to the opening balance of retained earning as of the beginning of the annual reporting period in which the entity adopts the amendment and is effective for all reporting companies for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years, with early adoption permitted. The Company adopted the standard effective January 1, 2025. As a result of the de minimis balances of cryptocurrencies held as of December 31, 2024 and the current fair value as of March 31, 2025, the Company recorded all changes in fair value in the current period with no cumulative effect on the opening balance of retained earnings.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands the disclosures required for income taxes. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendment should be applied on a prospective basis while retrospective application is permitted. The Company adopted this standard effective January 1, 2025, which did not have a material impact on the Company’s condensed consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, and in January 2025, the FASB issued ASU 2025-01, Clarifying the Effective Date (“ASU 2025-01”). The amendments are intended to enhance disclosures regarding an entity’s costs and expenses by requiring additional disaggregated information disclosures about certain income statement expense line items. The amendments, as clarified by ASU 2025-01, are effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the effect of this pronouncement on its disclosures.
NOTE 3 – Going Concern
These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At March 31, 2025, the Company had not yet achieved profitable operations and expects to incur further losses as it has suspended its operations until such time, if any, that the Company receives adequate funding, all of which raise substantial doubt about the Company’s ability to continue as a going concern. See “Note 11. Subsequent Events.” The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern.
NOTE 4 – Related Party Transactions
During the three months ended March 31, 2025,
in satisfaction of $
| 9 |
As of March 31, 2025 and December 31, 2024
the Company owed the executive officers of the Company $
As of March 31, 2025 and December 31, 2024, the
Company owed the executive officers $
NOTE 5 – Unsecured advances
During the three months ended March 31,
2025, the Company advanced $
NOTE 6 – Equity
Preferred shares
We are authorized to issue shares of preferred stock. Shares of preferred stock may be issued from time to time in one or more series as may be determined by our Board. The voting powers and preferences, the relative rights of each such series and the qualifications, limitations and restrictions of each series will be established by the Board. Our directors may issue preferred stock with multiple votes per share and dividend rights which would have priority over any dividends paid with respect to the holders of our common stock. In connection with the Charter Amendment (as defined below), the only outstanding preferred stock was converted into common stock. As of the date of this report, there are no outstanding shares of preferred stock.
Series B
On July 19, 2022, the Company designated
shares of its original authorized shares of preferred stock as Series B Preferred Stock with a $ par value and a stated
value of $1.00 per share. The Series B Convertible Preferred Stock ranks senior to the common stock with respect to dividends and right
of liquidation and has no voting rights. The Series B Convertible Preferred Stock has an
Series C
On March 3, 2025, the Company filed with the Nevada Secretary of State a Certificate of Designation of Series C Preferred Stock (the “Certificate of Designation”). Pursuant to the Certificate of Designation, the Company’s Board of Directors designated a new series of the Company’s preferred stock, the Series C Preferred Stock, par value $ per share. The Certificate of Designation authorized the Company to issue one share of Series C Preferred Stock. The share was issued to the Company’s Chief Executive Officer. The Series C Preferred Stock is not convertible, and does not have any redemption, preferential dividend or liquidation rights. Holders of Series C Preferred Stock shall only be entitled to vote on the approval of an amendment to the Company’s Articles of Incorporation authorizing an increase in the Company’s authorized capital stock (the “Charter Amendment”) and shall be entitled to a voting power equal to one vote more than the total combined voting power of the Company’s common stock. The Series C Preferred Stock issued and outstanding on the record date to consent to the Charter Amendment was automatically surrendered and cancelled for no consideration following the Charter Amendment.
| 10 |
Common shares
As of March 31, 2025, the Company has authorized shares of common stock, par value of $, and, as of March 31, 2025, has issued shares of common stock. All of the common shares have the same voting rights and liquidation preferences. See “Note 11. Subsequent Events” for disclosure on the increase in authorized shares.
During the three months ended March 31, 2025,
the Company received $
Stock Options
As discussed in Note 4 above, the Company modified
options that were previously vesting upon certain milestones to remove the vesting conditions and become exercisable immediately.
As a result, the Company recognized $
As of March 31, 2025, the Company has $ of value remaining to be expensed based upon completions of milestones,
The following table summarizes the stock option activity for the three months ended March 31, 2025:
| Options | Weighted-Average Exercise Price Per Share | |||||||
| Outstanding, December 31, 2024 | $ | |||||||
| Granted | ||||||||
| Exercised | ||||||||
| Forfeited | ||||||||
| Expired | ||||||||
| Outstanding, March 31, 2025 | $ | |||||||
As of March 31, 2025, the Company had stock options that were exercisable and that were in dispute. The weighted average remaining life of all outstanding stock options was 2.5 years as of March 31, 2025. Aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option and the fair value of the Company’s common stock for stock options that were in-the-money at period end. As of March 31, 2025, the intrinsic value for the options vested and outstanding was $ and $, respectively.
Stock Warrants
The following table summarizes the stock warrant activity for the three months ended March 31, 2025:
| Warrants | Weighted-Average Exercise Price Per Share | |||||||
| Outstanding, December 31, 2024 | $ | |||||||
| Granted | ||||||||
| Exercised | ||||||||
| Forfeited | ||||||||
| Expired | ||||||||
| Outstanding, March 31, 2025 | $ | |||||||
The weighted average remaining life of all outstanding stock warrants was years as of March 31, 2025. Aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option and the fair value of the Company’s common stock for stock options that were in-the-money at period end. As of March 31, 2025, the intrinsic value for the warrants vested and outstanding was $.
| 11 |
NOTE 7 – Notes Payable and Convertible Notes Payable
Notes Payable
The Company has outstanding notes payables in the
amount of $
Convertible notes payable
1800 Diagonal Lending Notes
On April 11, 2023, the Company entered into
a Securities Purchase Agreement effective April 20, 2023 with 1800 Diagonal Lending LLC (“1800 Diagonal”), an accredited investor,
pursuant to which the Company sold the investor an unsecured promissory note in the principal amount of $
In addition, on April 11, 2023, the Company
entered into an additional Securities Purchase Agreement effective April 20, 2023 with 1800 Diagonal, pursuant to which the Company
sold the investor an unsecured promissory note in the principal amount of $
On August 4, 2023, the Company entered into a
Securities Purchase Agreement with 1800 Diagonal, pursuant to which the Company sold the investor
an unsecured original issuance discount promissory note in the principal amount of $
| 12 |
Other Convertible Promissory Notes
On April 25, 2023, the Company entered into
a Securities Purchase Agreement with an accredited investor, pursuant to which the Company sold the investor an unsecured promissory
note in the principal amount of $
In addition, on April 26, 2023, the Company
entered into a Promissory Note Purchase Agreement with another investor, pursuant to which the Company sold the investor an
unsecured convertible promissory note in the principal amount of $
The investors may in their option, at any time following the 180-day anniversary from the issuance date, as defined in the Promissory Notes, convert all or any part of the outstanding and unpaid amount of the Promissory Notes into fully paid and non-assessable shares of Common Stock. If the Promissory Notes are not repaid on or prior to the maturity date, the conversion price will be $0.20 or 50% of the preceding five-day VWAP on the six-month anniversary, whichever is lower, subject to a floor conversion price of $0.01 per share. Furthermore, the Promissory Notes contain a “most favored nation” provision that allows each investor to claim any preferable terms from any future securities, excluding certain exempt issuances.
NOTE 8 – Derivative Liabilities
The fair values of the conversion option of outstanding convertible notes payable and common stock warrants were determined to be derivative liabilities under ASC 815 due to the default on convertible notes payable disclosed above, which resulted in a variable conversion price on the outstanding convertible note payable. The fair value of the derivative liabilities was estimated using a binomial model with the following assumptions:
| As of March 31, 2025 | ||||||||
| Conversion Option | Warrants | |||||||
| Volatility | ||||||||
| Dividend Yield | ||||||||
| Risk-free rate | ||||||||
| Expected term | ||||||||
| Stock price | $ | $ | ||||||
| Exercise price | $ | $ | ||||||
| Derivative liability fair value | $ | $ | ||||||
| Number of shares issued upon conversion, exercise, or satisfaction of required conditions as of March 31, 2025 | ||||||||
| 13 |
| As of December 31, 2024 | ||||||||
| Conversion Option | Warrants | |||||||
| Volatility | ||||||||
| Dividend Yield | ||||||||
| Risk-free rate | ||||||||
| Expected term | ||||||||
| Stock price | $ | $ | ||||||
| Exercise price | $ | $ | ||||||
| Derivative liability fair value | $ | $ | ||||||
| Number of shares issued upon conversion, exercise, or satisfaction of required conditions as of December 31, 2024 | ||||||||
All fair value measurements related to the derivative liabilities are considered significant unobservable inputs (Level 3) under the fair value hierarchy of ASC 820.
The table below presents the change in the fair value of the derivative liability during the three months ended March 31, 2025:
| Fair value as of December 31, 2024 | $ | |||
| Fair value on the date of issuance related to principal default | ||||
| Fair value on the date of issuance related to warrants issued | ||||
| Change in fair value of derivatives | ( | ) | ||
| Fair value as of March 31, 2025 | $ | |||
The total impact of derivative liabilities recognized
in the Company’s consolidated statements of operations includes the change in fair value of derivatives, with the Company recognizing
a total gain of $
NOTE 9 – Customer Deposits
| 14 |
NOTE 10 – Commitments and Contingencies
Legal Contingencies
On February 8, 2022, the Company was notified
of a potential lawsuit related to the termination of our Advisory Panel Membership agreement with Taylor Black Wealth, Ltd. (“Taylor”).
The Company engaged Taylor for assistance with capital raises and was to be partially compensated with stock options, subject to vesting.
Taylor claims that the Company terminated the agreement unlawfully and therefore is still entitled to the remaining unvested options which
the Company believes to be cancelled. The total number of stock options being contested is
NOTE 11 – Subsequent Events
Under the terms of the respective employment agreements of Charles Faulkner and Simon Wajcenberg, as of February 1, 2025, Mr. Faulkner and Mr. Wajcenberg had accrued salaries of $906,229 and $819,989, respectively. On February 20, 2025, in full satisfaction of $769,989 of the accrued salary for each of Mr. Faulkner and Mr. Wajcenberg, the Company (1) issued to each of Charles Faulkner and Simon Wajcenberg 256,660,163 shares of restricted common stock at a conversion price of $0.003 per share. Also on February 20, 2025, to eliminate the options’ vesting requirements, the Company amended the options held by each of Mr. Faulkner and Mr. Wajcenberg to (i) purchase up to 76,619,603 shares of the Company’s common stock at an exercise price of $0.10 per share, as amended on March 3, 2023, which vest upon the closing of the purchase of at least $15 million of crypto mining equipment (the “2022 Options”) and (ii) purchase up to 77,000,000 shares of the Company’s common stock at an exercise price of $0.04 per share, which shall vest upon the Company closing on the purchase of at least $15 million of crypto mining equipment (the “2023 Options”). The 2022 Options and 2023 Options are fully vested as of February 1, 2025. The 256,660,163 shares for the settlement of accrued salary were issued on April 7, 2025.
Under the terms of the respective employment agreements of the Company’s executive officers, Charles Faulkner and Simon Wajcenberg, as of April 2, 2025, Mr. Faulkner and Mr. Wajcenberg had accrued salaries of approximately $173,110 and $130,010, respectively. On April 2, 2025, in satisfaction of $50,000 of the accrued salary for each of Mr. Faulkner and Mr. Wajcenberg, the Company amended each of Mr. Faulkner and Mr. Wajcenberg options to purchase up to: (1) 31,979,352 shares of the Company’s common stock dated January 31, 2022, exercisable at $0.06 per share (the “January 2022 Grants”); (2) 76,619,303 shares of the Company’s common stock dated September 12, 2022, as amended, exercisable at $0.10 per share (the “September 2022 Grants”) and (3) 77,000,000 shares of the Company’s common stock dated March 1, 2023, exercisable at $0.04 per share (the “2023 Grants”; the January 2022 Grants, September 2022 Grants, and the March 2023 Grants; collectively the “Option Grants”), to reduce the exercise price of the Option Grants to $0.005 per share.
On February 27, 2025, the board of directors of the Company adopted a resolution to amend the Company’s Articles of Incorporation to increase the number of authorized shares of common stock to 7 billion. On March 3, 2025, shareholder approval was obtained through the written consent of the holder of the Series C Preferred Stock. The Charter Amendment was effective on April 7, 2025.
Effective April 7, 2025 (the “Effective Time” or “Closing Date”), Edgemode, SAPL, an England and Wales private limited company, and Adler Capital Limited, a company registered in Hong Kong, and the sole shareholder of SAPL, (“ACL”) closed on a Share Exchange Agreement dated April 7, 2025 (the “Share Exchange” or “Transaction”). In accordance with the Share Exchange, SAPL agreed to transfer 100% of SAPL’s outstanding capital stock to Edgemode in exchange for 1,260,246,354 shares of Edgemode common stock, par value $0.001 per share, which represented approximately 55% of the Company’s outstanding common stock at the Effective Time.
Following the closing of the Share Exchange, Edgemode, through SAPL, its wholly owned subsidiary, is now designing, building, and operating digital infrastructure for HPC with the goal of becoming a leading provider of digital colocation services. SAPL is an entity organized in 2022 under the laws of England and Wales. SAPL will change its name to Edgemode Europe Limited.
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Pursuant to the terms of the Share Exchange the Edgemode board of directors increased the number of seats on the board to three members and Niclas Adler, the chief executive officer of SAPL, was appointed to fill the vacancy. The Board further approved Edgemode to enter into an employment agreement with Dr. Adler and appoint Dr. Adler as Chief Technology Officer of Edgemode (the “Adler Employment Agreement”). Pursuant to the terms of the Adler Employment Agreement, Dr. Adler will be paid an annual base salary of $400,000 and has been issued a five-year non-qualified stock option to purchase up to 385,789,700 shares of Edgemode common stock at an exercise price of $0.005. Additionally, based on Dr. Adler’s time devoted to Edgemode, he will be entitled to receive a quarterly bonus of $150,000. These terms are based on full-time engagement and it has been agreed that Dr. Adler will have a 50% engagement for the first three months of his employment.
The Adler Employment Agreement may be terminated with cause at any time and, if terminated with cause, Dr. Adler would be entitled to compensation only for the period ending with the date of such termination. The Adler Employment Agreement may also be terminated by Edgemode without cause upon providing Dr. Adler with 30 days’ prior written notice. In the event of termination without cause, Edgemode would continue to pay Dr. Adler his annual base salary and any benefits for the lesser of: (i) the balance of the term of the Adler Employment Agreement or (ii) 12 months from the date of termination, together with any performance bonuses (as defined in the Adler Employment) which may have been earned as of the date of termination.
Furthermore, the Company entered into a consultancy agreement with AI Capital Mineco Limited, an affiliate of Adler, and agreed to pay the consultant a fee of $300,000, subject to the Company receiving financing in excess of $2,000,000.
Charlie Faulkner and Simon Wajcenberg, the current executive officers of Edgemode, remain as directors and executive officers of Edgemode.
Pursuant to the Share Exchange, Mr. Faulkner and Mr. Wajcenberg entered into amendments to their Executive Employment Agreements, to increase their base salary to $400,000 per annum and a quarterly bonus of up to $150,000 at the discretion of the Board. Additionally, the Board approved the following stock option grants to Mr. Faulkner, Mr. Wajcenberg, and Dmitry Strukov, a consultant to the Company:
| · | Faulkner an option to purchase 257,193,133 shares of common stock of the Company at an exercise price of $0.005 per share; | |
| · | Wajcenberg an option to purchase 257,193,133 shares of common stock of the Company at an exercise price of $0.005 per share; and | |
| · | Strukov an option to purchase 128,596,567 shares of common stock of the Company at an exercise price of $0.005. |
On April 11, 2025, the holders of two promissory notes issued by the Company on April 25, 2023 for $63,000 and April 26, 2023 for $60,377.10, converted the notes for 31,500,000 shares of common stock and 30,188,550 shares of common stock, respectively.
On April 19, 2025, the Company issued 38,510,911 shares of restricted common stock to an accredited investor in consideration of gross proceeds of $300,000 received in March 2025.
On April 28, 2025, the Company issued 7,500,000 shares of restricted common stock for services to be provided over three months. On the date of issuance, the shares are fully earned and non-forfeitable.
On May 7, 2025, the Company issued 5,633,803 shares of common stock to 1800 Diagonal pursuant to partial conversion of $10,000 of the April Promissory Note.
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| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements, and the notes thereto, and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. The following discussion and analysis compares our consolidated results of operations for the three months ended March 31, 2025 (the “2025 Quarter”) with those for the three months ended March 31, 2024 (the “2024 Quarter”).
Cautionary Note Regarding Forward-Looking Statements
This report contains “forward-looking statements.” These statements include, among other things, statements regarding expanding our business and our liquidity as well as other statements regarding our future operations, financial condition and prospects, and business strategies. Forward-looking statements generally can be identified by words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “will be,” “will continue,” “will likely result,” and similar expressions. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially and adversely from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, our ability to raise capital to buy crypto mining machines we have commitments to purchase, regulatory issues which affect our business model, and those discussed under the caption "Risk Factors" in our Form 10-K for the year ended December 31, 2024 and those discussed in other documents we file with the SEC. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
Business Overview
Edgemode was incorporated under the laws of the State of Nevada in 2011. Our subsidiary, Edgemode Wyoming, was incorporated in the State of Wyoming in March 2020. Between 2021 and 2023, we attempted to become a key figure in Bitcoin mining but lacked the necessary funding to finance the purchase of Bitcoin mining hardware and hosting contracts. As a result, since late 2023 and throughout 2024, our business activities primarily consisted of identifying and evaluating suitable acquisition transaction candidates, which led to transition from cryptocurrency mining to digital infrastructure colocation services and HPC hosting.
Effective April 7, 2025, Edgemode, SAPL, and ACL closed on the Share Exchange dated April 7, 2025. In accordance with the Share Exchange, SAPL agreed to transfer 100% of SAPL’s outstanding capital stock to Edgemode in exchange for 1,260,246,354 shares of Edgemode common stock, par value $0.001 per share, which represented approximately 55% of the Company’s outstanding common stock at the Effective Time. The Company accounted for the acquisition as an asset acquisition under ASC 805 as SAPL did not meet the definition of a business as it did not contain a full set of integrated inputs and outputs at the time of closing.
Following the closing of the Share Exchange, Edgemode, through SAPL, its wholly owned subsidiary, is now designing, building, and operating digital infrastructure for HPC with the goal of becoming a leading provider of digital colocation services. SAPL is an entity organized in 2022 under the laws of England and Wales. SAPL will change its name to EdgeMode Europe Limited.
The acquisition of SAPL has positioned us to enter the rapidly evolving HPC hosting market in an efficient and effective manner. The acquisition has enabled us to plan to leverage SAPL’s existing infrastructure and expertise to meet the growing demand for data center facilities for third-party customers focused on cloud computing as well as machine learning and artificial intelligence.
The acquisition of SAPL will enable us to become a premier provider and operator of dedicated, purpose-built data center facilities for our third-party customers. We believe that opportunities for growth exist in various applications of our data centers, which is another factor as to why we decided to begin offering digital infrastructure colocation services to third parties engaged in HPC.
Our goal is to utilize the assets we have acquired via the purchase of SAPL for HPC hosting operations, which will provide consistent dollar-based revenue and which represent substantially less risk than our historical digital asset self-mining operations. Our intent is to focus our business on development and marketing efforts to build data centers and expand our foundational HPC hosting customer base.
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Business Strategy
Our business strategy is to generate revenue and achieve profitability by building large-scale data center infrastructure configured for specialized computers performing specific, high-value applications such as cloud computing, machine learning, and artificial intelligence and maximizing the use of assets acquired in the SAPL acquisition. We intend to strategically develop and to work to make operational the infrastructure necessary to support our contractual commitments to our HPC customers and to support expected customer growth and additional demand by leveraging our data center expertise and capabilities. We intend to seek additional opportunities and to engage additional customers in the HPC hosting market to expand our business using our knowledge, expertise, and existing and future infrastructure where favorable market opportunities exist.
Our strategy is focused on hyperscale cloud-based providers and enterprises, including potential customers that we believe have significant data center infrastructure needs that have not yet been outsourced or will require additional data center space and power to support their growth and their increasing reliance on technology infrastructure in their operations. We believe our capabilities for serving the needs of large hyperscale providers and enterprises will continue to enable us to capitalize on the growing demand for outsourced data center facilities in our markets and in new markets where our customers are located or plan to be located in the future. Our business strategy requires immediate funding of approximately $2,000,000 to enable us to commence our new operations and repay debt, as well as additional significant financing to develop and expand our new operations. There are no assurances that we will raise sufficient capital to execute our business plan or satisfy our liabilities. See the “Risk Factors” in our Form 10-K for the fiscal year ended December 31, 2024 and Form 8-K Current Report dated April 8, 2025.
Products and Services
High-Performance Computing Hosting
HPC is a technology that uses clusters of powerful processors that work in parallel to process massive data sets and solve complex problems at extremely high speeds. The proliferation of data, as well as data-intensive and AI enabled applications and use cases, is driving demand for the computing power of HPC. Traditionally, HPC has involved an on-premises infrastructure, investing in supercomputers or computer clusters.
Our HPC hosting revenue will be generated by licensing colocation data center space and related services to a licensee at our Marviken data center. These licensing agreements and orders include lease components, non-lease components (such as power delivery, physical security, maintenance and other billable expenses), as well as non-component elements such as taxes. Under these contracts, customers pay fixed payments (based on electric capacity) and variable payments on a recurring basis. HPC colocation leases may include all or portions of a data center, where customers may also lease office space to support their colocation operations where revenue is primarily based on power usage as well as square footage.
On January 21, 2025, the Company entered into the Master Services Agreement with Cudo, a cloud computing company. Under this agreement, the Company will provide Tier 3 data center hosting infrastructure and colocation services to Cudo. The Master Services Agreement supports a 1 MW capacity during a 5 year term at our Marviken data center and is accompanied by a strict service level agreement to ensure 99% up time which can be terminated early by either party if certain conditions are met. The colocation space is designated for SingularityNet’s 1st modular datacenter container from Ecoblox. The Company will also provide optional smart hands engineering support at an hourly rate of $130 per hour, with a 50% premium for evening and weekend services. In consideration of the services, the Company shall receive electricity fees passed through at a variable base cost multiplied be estimated usage plus an admin charge capped at 5%. The minimum fee increase of 3% is waived for the first 3 years and the annual CPI increase is capped at 2% for the first three years and 5% for the final two years. The monthly rental payable is $75,887. On February 18, 2025, an initial payment of $303,549 was made to the Company consisting of a $227,661 deposit, which is refundable at the end of the term of the Master Services Agreement, and the first month’s rental payment of $75,887. The initial payment was primarily used to buildout the data center, including installing electrical and other infrastructure in order to support Cudo’s hardware through the advance of $183,000 to SAPL. The Master Services Agreement term commenced on April 8, 2025 when Cudo’s hardware was delivered to our data center.
Critical Accounting Policies and Estimates
We discuss the material accounting policies that are critical in making the estimates and judgments in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, under the caption “Management’s Discussion and Analysis—Critical Accounting Policies and Estimates.” There has been no material change in critical accounting policies or estimates during the period covered by this report.
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Recent Accounting Pronouncements
For information on recent accounting pronouncements and impacts, see Note 1 to the unaudited condensed consolidated financial statements.
Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024
Results of operations
Our operating expenses for the three months ended March 31, 2025 (the “2025 Quarter”) was $22,115,041 compared to $336,599, for the three months ended March 31, 2024 (the “2024 Quarter”), an increase of 6,470%. In the 2025 Quarter, the Company incurred stock-based compensation expense of $21,679,711 compared to $0 for the 2024 Quarter. The stock-based compensation for the 2025 Quarter was related to the amendment of options to the officers of the Company.
Our other income for the 2025 Quarter was $1,243,060 compared to other expense of $114,605 for the 2024 Quarter. Other income in the 2025 quarter was comprised of $11,187 in interest expense and $1,254,247 for the gain on the change in fair value of derivative liabilities. Other expense for the 2024 quarter was comprised of $24,420 in interest expense and $90,185 for the loss on the change in fair value of derivative liabilities.
Liquidity and Capital Resources
As of May 15, 2025, the Company had approximately $35,000 of cash on hand. Historically, our liquidity was primarily derived from debt and equity investments from accredited investors. During the three months ended March 31, 2025, we received an initial payment of approximately $303,000 for colocation services to be provided by the Company. In addition, in April 2025 we sold 38,510,911 shares of restricted common stock to an accredited investor in consideration of $300,000. On April 7, 2025, we executed the Share Exchange with SAPL and, now, we are seeking to raise at least $2,000,000 to commence our HPC hosting operations and generate revenue. We require significant funding to develop our HPC operations. Subject to receiving funding, we expect that our operating expenses will increase as we attempt to develop our new HPC operations and we will devote additional resources toward new business opportunities. However, as set forth elsewhere in this report, our ability to develop our business and achieve our operational goals is dependent upon our ability to raise significant additional working capital. As the availability of this capital is unlikely, at this time, we are unable to quantify the expected increases in operating expenses in future periods.
Summary of cash flows
| March 31, 2025 | March 31, 2024 | |||||||
| Net cash provided by (used in) operating activities | $ | 74,858 | $ | (298 | ) | |||
| Net cash used in investing activities | $ | (183,000 | ) | $ | – | |||
| Net cash provided by (used in) financing activities | $ | 290,100 | $ | – | ||||
During the 2025 Quarter and the 2024 Quarter, our sources and uses of cash were as follows:
Operating Activities
During the 2025 Quarter, cash provided by operating activities of $74,858 primarily resulted from the Prepaid AI hosting services (customer deposits), offset by the net loss of $20,872,081 and stock-based compensation of $21,679,711, and change in the fair value of derivative liabilities of $1,254,247.
During the 2024 Quarter, cash used in operating activities of $298 primarily resulted from the net loss of $451,204 offset by change in fair value of derivative liabilities of $90,185, increases in accounts payable and accrued expenses of $60,221, and increases in accrued payroll of $300,500.
Investing Activities
During the 2025 Quarter, the Company advanced $183,000 of cash for working capital needs in connection with the business acquisition of SAPL for purposes of financing the construction of the HPC facility.
The Company had no investing activities during the 2024 Quarter.
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Financing Activities
During the 2025 Quarter, the Company received $300,000 in cash proceeds in connection with the sale of shares of common stock of the Company, offset by repayments of related party advances of $9,900.
The Company had no financing activities during the 2024 Quarter.
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Not applicable.
| ITEM 4. | CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures. We are required to maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”). Based on their evaluation as of the end of the period covered by this report, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were not effective to ensure that the information relating to our company and required to be disclosed in our SEC reports is (i) recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures as a result of material weaknesses in our internal control over financial reporting resulting from limited segregation of duties and limited multiple levels of review in the financial close process, along with a lack of well-established policies and procedures to identify, approve, and report related party transactions.
We will continue to monitor our internal control over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow. We do not, however, expect that the material weaknesses in our disclosure controls will be remediated until such time as we have added additional personnel, including additional accounting and administrative staff, allowing improved internal control over financial reporting.
Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
| ITEM 1. | LEGAL PROCEEDINGS |
From time to time, the Company may become a party to legal actions or proceedings in the ordinary course of its business. At March 31, 2025, there were no such actions or proceedings, either individually or in the aggregate, that, if decided adversely to the Company’s interests, the Company believes would be material to its operation or cash flow.
| ITEM 1A. | RISK FACTORS |
While we attempt to identify, manage, and mitigate risks and uncertainties associated with our business to the extent practical under the circumstances, some level of risk and uncertainty will always be present. Our “Risk Factors” in the Form 10-K for the fiscal year ended December 31, 2024 and Form 8-K Current Report dated April 8, 2025 describe some of the risks and uncertainties associated with our business, which we strongly encourage you to review. These risks and uncertainties have the potential to materially affect our business, financial condition, results of operations, cash flows, projected results, and future prospects. There have been no material changes in our risk factors from those disclosed in the Form 10-K for the fiscal year ended December 31, 2024.
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
Except as otherwise previously disclosed or provided below, there were no unregistered sales of the Company’s equity securities during the three months ended March 31, 2025.
During the three months ended March 31, 2025, the Company received $300,000 in cash proceeds for the sale of 38,510,911 shares of common stock to an accredited investor. As of March 31, 2025, the shares have not been issued as the Company did not have sufficient authorized shares and as such has recorded this as a share purchase liability in the accompanying balance sheet. The shares were issued on April 19, 2025. The shares are restricted. The Company did not pay any commissions.
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
None.
| ITEM 4. | MINE SAFETY DISCLOSURES |
Not Applicable.
| ITEM 5. | OTHER INFORMATION |
None.
| ITEM 6. | EXHIBITS |
The exhibits listed in the accompanying “Index to Exhibits” are filed or incorporated by reference as part of this Form 10-Q.
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
Dated: May 15, 2025
| EDGEMODE, INC. | |
|
By: /s/ Charlie Faulkner Charlie Faulkner Chief Executive Officer (Principal Executive Officer)
By: /s/Simon Wajcenberg Simon Wajcenberg Chief Financial Officer (Principal Financial and Accounting Officer) |
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EXHIBIT INDEX
+ Exhibits and/or Schedules have been omitted. The Company hereby agrees to furnish to the Staff of the Securities and Exchange Commission upon request any omitted information. Copies of this filing (including the financial statements) and any of the exhibits referred to above will be furnished at no cost to our shareholders who make a written request to Edgemode, Inc., 110 E. Broward Blvd., Suite 1700, Ft. Lauderdale, FL 33301; Attention: Corporate Secretary.
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