Edgemode, Inc. 10-K

Item 9A. 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, required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure as a result of material weaknesses in our internal control over financial reporting. Management’s Report on Internal Control over Financial Reporting . Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that: ● pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; ● provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and ● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2021. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013). Management’s assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of these controls. Based on this assessment our management has concluded that as of December 31, 2021, our internal control over financial reporting was not effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles as a result of material weaknesses. These material weaknesses in our internal control over financial reporting result from limited segregation of duties and limited multiple levels of review in the financial close process. 27 The existence of the continuing material weaknesses in our internal control over financial reporting increases the risk that a future restatement of our financials is possible. In order to remediate these material weaknesses, we will need to expand our accounting resources. We will continue to monitor and evaluate the effectiveness of our disclosure controls and procedures and our internal control over financial reporting on an ongoing basis, however, we do not expect that the deficiencies in our disclosure controls will be remediated until such time as we have remediated the material weaknesses in our internal control over financial reporting. In order to do so, we will need to hire employees and put the requisite controls in place. Changes in Internal Control over Financial Reporting. There have been no changes in our internal control over financial reporting during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not Applicable. 28 PART III Item 10. Directors, Executive Officers and Corporate Governance. The following table provides information on our current executive officers and directors: Name Age Positions Charlie Faulkner 36 Chief Executive Officer, President and Director Simon Wajcenberg 53 Chief Financial Officer, Treasurer, Secretary and Director (Chairman) Each director serves until our next annual meeting of the stockholders or unless they resign earlier. The Board of Directors (“Board”) elects officers and their terms of office are at the discretion of the Board. Background of Officers and Directors The following is a brief account of the education and business experience during at least the past five years of our officers and directors, indicating the person’s principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out. Charlie Faulkner has served as our Chief Executive Officer, President and as a director of our Board since the Merger. Mr. Faulkner has served as the Chief Executive Officer of EdgeMode since its inception in 2020. Since December 2016, he has served as an advisor at North Block Capital Ltd (“NB Capital”), an. investment group that provides asset management, corporate advisory services, and technology solutions, which he co-founded in 2016. Simon Wajcenberg has served as our Chief Financial Officer, Treasurer and as a director of our Board since the Merger. Mr. Wajcenberg has served as the Executive Chairman of, and in other executive positions at, EdgeMode since its inception in 2020. Since December 2016, he has served as an advisor at NB Capital, which he co-founded in 2016. There are no family relationships between any of the executive officers and directors. Director Independence Our common stock is quoted on the OTCQB, which does not have director independence requirements. Using the definition of independence set forth in the rules of the NASDAQ Stock Market, neither of our directors would be considered an independent director. Board Leadership Structure and Board’s Role in Risk Oversight Our Board does not have a policy as to whether the roles of Chairman of the Board and Chief Executive Officer should be separate or combined. However, we have chosen to separate the Chief Executive Officer and Board Chairman positions. Currently, our Chairman is Simon Wajcenberg. Our Board has determined that its current structure, with a separate Chairman and Chief Executive Officer, both of which are co-founders of EdgeMode, is in the best interests of the Company and its shareholders at this time. We believe that this Board leadership structure is the most appropriate for the Company. In the near future, we anticipate appointing independent directors. At such time, we will appoint an independent director as the Lead Director who will have broad responsibilities and authority. At such time, we will re-evaluate the composition of the Board and its leadership structure. Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including credit risk, interest rate risk, liquidity risk, operational risk, strategic risk and reputation risk. Management is responsible for the day-to-day management of the risks we face and have responsibility for the oversight of risk management in their dual roles as directors. 29 Committees of the Board Due to our size, we have not formally designated a nominating committee, an audit committee, a compensation committee, or committees performing similar functions. The Board currently acts as our audit committee. Since we are still a developing company, the Board is still in the process of finding an “audit committee financial expert” as defined in Regulation S-K. Stockholder Nominations. We do not have a policy regarding the consideration of any director candidates which may be recommended by our stockholders, including the minimum qualifications for director candidates, nor has our board of directors established a process for identifying and evaluating director nominees, nor do we have a policy regarding director diversity. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Given the early stage of our business, we do not anticipate that any of our stockholders will make such a recommendation in the near future. While there have been no nominations of additional directors proposed, in the event such a proposal is made, all members of our Board will participate in the consideration of director nominees. In considering a director nominee, it is likely that our Board will consider the professional and/or educational background of any nominee with a view towards how this person might bring a different viewpoint or experience to our Board. Code of Ethics and Conduct We have not yet adopted a code of ethics that applies to our principal executive officers, principal financial officer, principal accounting officer or controller, or persons performing similar functions, since we have been focusing our efforts on growing our business and obtaining financing for our Company. We expect to adopt a code as we further develop our business. Director Compensation In fiscal 2021, we did not pay any compensation to our director. Delinquent Section 16(a) Reports Section 16(a) of the Exchange Act requires our directors, executive officers, and persons who own more than 10% of our common stock to file initial reports of ownership and changes in ownership of our common stock and other equity securities with the SEC. These individuals are required by the regulations of the SEC to furnish us with copies of all Section 16(a) forms they file. Based solely on a review of the copies of the forms furnished to us, and written representations from reporting persons that no Forms 5 were required to report delinquent filings, we believe that all filing requirements applicable to our officers, directors and 10% beneficial owners were complied with during 2021. Item 11. Executive Compensation. Set forth below is the information regarding the compensation paid, distributed or accrued by EdgeMode for the fiscal year ended December 31, 2021 to the Company’s Chief Executive Officer (principal executive officer) serving during the last fiscal year and the other two most highly compensated executive officers serving at the end of the last fiscal year whose compensation exceeded $100,000 (the “Named Executive Officers”). Summary Compensation Table for 2021 Name and Principal Positions Fiscal Year Salary $ Bonus $ All Other Compensation $ Total $ Joe Isaacs (1) 2021 138,000 - 90,000 (2) 228,000 Former Chief Executive Officer 2020 138,000 - - 138,000 _________________ (1) Resigned on January 31, 2022 in connection with the Transaction with Edgemode. (2) Represents fees paid to a company controlled by the Named Executive Officer. See “Item 13. Certain Relationships and Related Transactions, and Director Independence” for a description of the service fees. The above table does not include: (i) the $250,000 cash bonus paid to Mr. Isaacs and (ii) the 19,987,095 stock options granted to Mr. Isaacs, both subsequent to December 31, 2021. 30 Compensation Agreements with our Current Executive Officers EdgeMode employed Charlie Faulkner and Simon Wajcenberg pursuant to oral employment agreements with monthly salaries which began at $10,000 per month in early 2021 and were increased to $30,000 per month in October 2021. In connection with the Transaction, we entered into formal Employment Agreements with Charlie Faulkner and Simon Wajcenberg which provided for annual base salaries of $600,000 each and the grant to each of 31,979,352 five-year vested stock options with an exercise price of $0.40 per share. Termination Provisions Messrs. Faulkner and Wajcenberg are entitled to certain benefits in connection with a termination of their employment upon death, disability, dismissal without cause, or constructive termination. In any such termination, the executive will receive 12 months base salary and any performance bonus that he would have been due at the time of termination. In certain circumstances, the termination provision is subject to a cure period. Cause is generally defined as (i) committing or participating in an injurious act of fraud, gross neglect, misrepresentation, embezzlement or dishonesty against the Company; (ii) participating in any injurious act or acting recklessly or in a manner which was grossly negligent against the Company; engaging in a criminal enterprise involving moral turpitude, financial or securities fraud; (iii) felony conviction; and (iv) material failure to follow the directives of the Board. Outstanding Equity Awards at Fiscal Year End As of December 31, 2021, there were no unexercised options, stock that has not vested or equity incentive plan awards for any executive officer. On January 31, 2022, in connection with their employment agreements, each of Messrs. Charles Faulkner and Simon Wajcenberg were issued 31,979,352 five-year vested stock options with an exercise price of $0.40 per share. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The following table sets forth certain information regarding beneficial ownership of the Company’s common stock as of March 30, 2022, by (i) each person who is known by the Company to own beneficially more than 5% of any classes of outstanding common stock, (ii) each director of the Company, (iii) each of the Named Executive Officers, and (iv) all directors and executive officers of the Company as a group. Based on 383,808,340 shares of common stock outstanding as of March 30, 2022. Beneficial ownership is determined in accordance with Rule 13d-3 and 13d-5 under the Exchange Act, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under SEC rules, a person is considered a “beneficial owner” of a security if that person has or shares power to vote or direct the voting of such security or the power to dispose or direct the disposition of such security. A person is also considered to be a beneficial owner of any securities of which the person has a right to acquire beneficial ownership within 60 days. We believe that each individual or entity named has sole investment and voting power with respect to the securities indicated as beneficially owned by them, subject to community property laws, where applicable, except where otherwise noted in the footnotes to this table. Unless otherwise specified in the notes to this table, the address for each person is: c/o Fourth Wave Energy, Inc., 350 North Orleans Street, Suite 9000N, Chicago, Il 60654, Attention: Corporate Secretary. Title of Class Name of Beneficial Holder Amount of Beneficial Ownership Percentage Beneficially Owned 5% Shareholders: Common Stock Christina and Roger Dixon (1) 54,354,375 15.2% Directors and Named Executive Officers Common Stock Charlie Faulkner (2) 87,045,385 20.9% Common Stock Simon Wajcenberg (3) 100,231,784 24.1% Common Stock Joe Isaacs (4) 25,686,095 6.4% All directors and officers as a group (3 persons) 187,277,169 41.8% (1) Dixon. Roger Dixon was a Co-Founder of EdgeMode, the Company’s wholly-owned subsidiary. Address is 3858 County Road 308, Ellington, MO. (2) Faulkner . Mr. Faulkner is an executive officer and director of the Company. Includes 31,979,352 vested stock options. His ownership is included under “All directors and officers as a group”. (3) Wajcenberg. Mr. Wajcenberg is an executive officer and director of the Company. Includes 31,979,352 vested stock options. Includes shares beneficially owned by his wife. (4) Isaacs. Mr. Isaacs was the Company’s Chief Executive Officer until the closing of the Edgemode Merger. Includes 19,987,095 stock options which may vest within 60 days of the filing date of this report. Mr. Isaacs ownership is not included in the “All directors and officers as a group” ownership disclosure. 31 Changes in Control We do not currently have any arrangements which if consummated may result in a change of control of our Company. Securities Authorized for Issuance under Equity Compensation Plans As of December 31, 2021, the Company had no equity compensation plan. Item 13. Certain Relationships and Related Transactions, and Director Independence. Effective April 30, 2019, the Company agreed to increase compensation to Joe Isaacs, the Company’s former President and sole director, to $11,500 per month (from $6,000) for management services under a verbal agreement. In 2020, Mr. Isaacs converted $20,000 of accrued management fees for 2,000,000 shares of common stock. In 2021 and 2020, the Company paid the former President $138,000 of management fees (not including the $20,000 which was converted into shares of the Company’s common stock). Additionally, in 2020, the Company paid $2,625 for consulting services to a relative of Mr. Isaacs. On April 1, 2021, the Company entered into a services agreement with Axiom Group, a company owned by Mr. Isaacs. The services agreement includes investor relation services for a term of eighteen months for compensation of $90,000. During the year ended December 31, 2021, the Company prepaid the $90,000. Effective January 31, 2022, pursuant to the Transaction, the Company entered into a Consulting Agreement with Mr. Isaacs whereby he will provide services to the Company in a consultancy capacity at a fee of $11,500 per month. Additionally, he was issued 19,987,095 stock options, vesting in 90 days, at an exercise price of $0.40 per share. The consulting agreement may be terminated by the Company without cause after three months. Item 14. Principal Accountant Fees and Services. The following table sets forth the aggregate fees paid for or accrued by the Company for audit and other services provided by M&K CPAS, PLLC, our principal auditor for fiscal 2021 and MaloneBailey, LLP, our principal auditor for fiscal 2020. 2021 ($) 2020 ($) Audit Fees – M&K CPAS, PLLC (1) 16,000 – Audit Related Fees – M&K CPAS, PLLC – – Audit Fees – MaloneBailey, LLP (1) 30,000 28,800 Audit Related Fees – MaloneBailey, LLP 3,000 – Tax Fees – – All Other Fees – – Total 49,000 28,800 Audit Fees — This category includes the audit of our annual financial statements, review of financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by the independent registered public accounting firm in connection with engagements for those fiscal years. Our Board has adopted a procedure for pre-approval of all fees charged by our independent registered public accounting firm. Under the procedure, the Board approves the engagement letter with respect to audit, tax and review services. Other fees are subject to pre-approval by the Board, or, in the period between meetings, by a designated member of the Board. Any such approval by the designated member is disclosed to the entire Board at the next meeting. The audit and tax fees paid to the auditors with respect to 2021 were pre-approved by the entire Board. 32 PART IV Item 15. Exhibits, Financial Statement Schedules. (1) Financial Statements. See Index to Consolidated Financial Statements, which appears on page F-1 hereof. The financial statements listed in the accompanying Index to Consolidated Financial Statements are filed herewith in response to this Item. (2) Financial Statements Schedules. All schedules are omitted because they are not applicable or because the required information is contained in the Consolidated Financial Statements or notes included herein. (3) Exhibits. 33 EXHIBIT INDEX Incorporated by Reference Filed or Furnished Exhibit # Exhibit Description Form Date Number Herewith 2.1 Agreement and Plan of Merger and Reorganization (1) 8-K 12/8/2021 2.1 3.1 Certificate of Incorporation, As Amended and Restated Filed 3.2 Bylaws 8-K 2/7/2022 3.2 4.1 Description of Securities Filed 10.1 Form of Executive Employment Agreement (2) 8-K 2/7/2022 10.1 10.2 Consulting Agreement - Isaacs 8-K 2/7/2022 10.2 10.3 Form of Option Agreement 8-K 2/7/2022 10.3 10.4 Form of Note Conversion 8-K 2/7/2022 10.4 10.5 Compute North Master Agreement 8-K 2/7/2022 10.5 10.6 Trinity Mining Technologies 8-K 2/7/2022 10.6 10.7 2CRSI Agreements 8-K 2/7/2022 10.7 21.1 List of Subsidiaries Filed 31.1 Certification of Principal Executive Officer (Section 302) Filed 31.2 Certification of Principal Financial Officer (Section 302) Filed 32.1 Certification of Principal Executive Officer (Section 906) (3) Furnished 32.2 Certification of Principal Financial Officer (Section 906) (3) Furnished 101.INS Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) Filed 101.SCH Inline XBRL Taxonomy Extension Schema Document Filed 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document Filed 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document Filed 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document Filed 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document Filed 104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). ______________________ (1) 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. (2) Management contract or compensatory agreement plan or arrangement. (3) This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K. Copies of this report (including the financial statements) and any of the exhibits referred to above will be furnished at no cost to our stockholders who make a written request to Fourth Wave Energy, Inc., 350 North Orleans Street, Suite 9000N, Chicago, Il 60654, Attention: Corporate Secretary. Item 16. Form 10-K Summary. None. 34 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on April 12, 2022. FOURTH WAVE ENERGY, INC. Date: April 12, 2022 /s/ Charlie Faulkner Charlie Faulkner Chief Executive Officer (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of BTCS Inc. and in the capacities and on the dates indicated. Signature Title Date /s/ Charlie Faulkner Chief Executive Officer April 12, 2022 Charlie Faulkner (Principal Executive Officer) and Director /s/ Simon Wajcenberg Chief Financial Officer April 12, 2022 Simon Wajcenberg (Principal Financial Officer)(Principal Accounting Officer) and Director 35