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Item 2. Management’s Discussion and Analysis

2022-05-23 compared with 2021-11-22 · 106 added, 169 removed, 5 unchanged (98% of the section changed)

Management’s Discussion and Analysis of Financial Conditions and Results of Operations

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion

and analysis by our management of our financial condition and results of operations should be read in conjunction with our unaudited condensed

interim financial statements and the accompanying related notes included in this quarterly report and our audited financial statements

and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual

Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission.

Cautionary Statement Regarding Forward-Looking

This report may contain forward-looking

statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act, and we intend that

such forward-looking statements be subject to the safe harbors created thereby.

These forward-looking statements are based on our management’s

beliefs and assumptions and on information currently available to our management.

Any such forward-looking statements would be contained

principally in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking

statements include information concerning our possible or assumed future results of operations, business strategies, financing plans,

competitive position, industry environment, potential growth opportunities and the effects of regulation.

Forward-looking statements include

all statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,”

“could,” “estimates,” “expects,” “hopes,” “intends,” “may,” “plans,”

“potential,” “predicts,” “projects,” “should,” “will,” “would”

or similar expressions.

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, 2021 and the annual financial statements

of Edgemode filed with the SEC on Form 8-K.

The following discussion and analysis compares our consolidated results of operations

for the three months ended March 31, 2022 (the “2022 Quarter”) with those for the three months ended March 31, 2021 (the “2021

Additionally, the twelve months ending December 31, 2022 are referred to as “Fiscal 2022.”

Cautionary Note Regarding Forward-Looking Statements

This report contains

“forward-looking statements”, as such term is used within the meaning of the Private Securities Litigation Reform Act of

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

involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be

materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

these uncertainties, you should not place undue reliance on these forward-looking statements.

Also, forward-looking statements represent

our management’s beliefs and assumptions only as of the date of this report.

You should read this report and the documents that

we reference in this report, completely and with the understanding that our actual future results may be materially different from what

Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons

actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available

in the future.

Unless otherwise indicated

or the context otherwise requires, all references in this Form 10-Q to “we,” “us,” “our,” “our

company,” “Fourth Wave” or the “Company” refer to Fourth Wave, Inc.

We were incorporated in Nevada

on January 21, 2011.

Since our incorporation, we have attempted to become involved in a number of business ventures, all of which were

unsuccessful and which we have abandoned.

Fourth Wave Energy/ Spin-Off

On March 16, 2020 we acquired

all of the outstanding shares of Fourth Wave Energy, Inc.

(“FWI”) for 6,200,000 restricted shares of our common stock.

FWI has designed an energy

system which is based on combining solar power and other energy efficient technologies into one fully integrated system (the "GSP

The GSP System is designed to significantly reduce energy consumption and associated carbon emissions in residences

and commercial buildings.

In connection with this acquisition,

we entered into consulting agreements with certain founders of FWI.

The consulting agreements required us to collectively pay $379,500

in consulting fees during the terms of the consulting agreements, all but one of which expired between May 31 and June 30, 2020.

consulting agreement was for a twelve month period and expired in March of 2021.

We no longer plan to pursue

the GSP System.

As a result, on March 10, 2021, we transferred all of the rights to the GSP System to GeoSolar Technologies, Inc.

in exchange for 10,000,000 shares of GST's common stock.

We plan to distribute ("Spin-Off") these shares to our shareholders

on the basis of one share of GST's common stock for each four shares held by each of our shareholders.

As a part of this transaction, the consultants

referred to above agreed to release the Company from any liability for any consulting fees owed to them by the Company and return a portion

of the common shares they held.

During the nine months ended September 30, 2021, 4,700,000 shares of the Company's common stock were returned

to the Company and cancelled.

The date for determining which

of our shareholders will receive shares of GST in the Spin-Off will be determined shortly.

Edgemode, Inc.

On August 20, 2021 the Company

entered into a non-binding Letter of Intent with EdgeMode, Inc.

Pursuant to the Letter of Intent, the Company will, at the closing, acquire

all of the issued and outstanding shares of EdgeMode for that number of shares of the Company's common stock which, at closing, will represent

80% of the Company's outstanding shares of common stock.

EdgeMode is a high performance

computing infrastructure management platform.

EdgeMode deploys Bitcoin mining data center containers fully-integrated into the locations

of its energy asset partners.

For more information regarding EdgeMode, go to www.edgemode.io.

The acquisition of EdgeMode

is subject to a number of conditions, including the execution of a definitive agreement between the parties.

Results of Operations for the three months

ended September 30, 2021, compared to three months ended September 30, 2020.

During the three months ended

September 30, 2021 general and administrative expenses were $190,303 compared to $212,689 in 2020.

The $22,386 decrease was the result

of reduced consulting, advertising and professional fees which were offset with increases in stock based compensation and travel expenses

during the three months ended September 30, 2021.

During the three months ended

September 30, 2021 other expenses were $206,662 compared to $413,258 in 2020.

The $206,596 decrease in other expenses are the result of

decreases in amortization of discounts and loss on change in fair value of derivative liability which were offset with an increase in

interest expense.

Net loss for the three months ended September 30,

2021 and 2020, was $396,965 and $625,947, respectively.

Results of Operations for the nine months ended

September 30, 2021, compared to nine months ended September 30, 2020.

During the nine months ended

September 30, 2021 general and administrative expenses were $855,899 compared to $3,750,383 in 2020.

The $2,894,484 decrease was mainly

due to the decrease in stock-based compensation during the nine months ended September 30, 2021.

During the nine months ended

September 30, 2021 other expenses were $1,306,490 compared to $634,228 in 2020.

The $672,262 increase in other expenses was the result

of increased amortization of discounts, interest expense and loss on conversion of debt which were offset by a decrease in loss on change

in fair value of derivative liability.

Net loss for the nine months ended September 30,

2021 and 2020, was $2,162,389 and $4,384,611, respectively.

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 the machines we have commitments to purchase and

those discussed under the caption "Risk Factors" in our Form 10-K for the year ended December 31, 2021 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

We are an early-stage cryptocurrency mining.

Although Edgemode, our

new wholly-owned subsidiary, has historically mined Ethereum, we are now focused on expanding the operations by mining Bitcoin which we

anticipate to begin mining Bitcoin in the second half of 2022.

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, 2021, 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.

Recent Accounting Pronouncements

For information on recent

accounting pronouncements and impacts, see Note 1 to the unaudited condensed consolidated financial statements.

RESULTS OF OPERATIONS FOR

THE THREE MONTHS ENDED MARCH 31, 2022 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2021

revenues for the 2022 Quarter was $271,119 compared to $68,376 for the 2021 Quarter.

The reason for the increase was the Company began

operations in March of 2021 for one month of initial operations versus having a full quarter of operations for the 2022 quarter.

cost of revenues for the 2022 Quarter was $423,770 compared to $77,481 for the 2021 Quarter.

The reason for the increase was the Company

began operations in March of 2021 for one month of initial operations versus having a full quarter of operations for the 2022 quarter.

operating expenses for the 2022 Quarter was $5,544,086 compared to $86,002 for the 2021 Quarter.

The reason for the increase was the company

began operations in March of 2021 for one month of initial operations versus having a full quarter of operations for the 2022 Quarter.

In the 2022 Quarter, the Company incurred stock-based compensation expense of $4,584,540 compared to $6,750 for the 2021 Quarter.

other expenses for the 2022 Quarter was $128,377 compared to $12,631 for the 2021 Quarter.

The reason for the increase was an increase

in interest expense from additional loans as well as an increased loss on cryptocurrencies due to increased transactions and changes in

market prices.

LIQUIDITY AND CAPITAL RESOURCES

Our sources and (uses) of

cash for the nine months ended September 30, 2021 and 2020 were:

Cash used in operating activities

As of May 16, 2022, the Company had approximately

$150,000 of cash.

Our liquidity is primarily derived from selling the crypto that we mine, and debt and equity investments from accredited

To grow the business and help fund operations for the next 12 months, the Company is seeking to raise $60 million in

equity capital through private placements.

The Company has signed a non-binding term sheet for a $400 million debt facility which it hopes

to complete by the end of the second quarter ending June 30, 2022.

We can provide no assurances that any such financings will be successful,

nor will they be on terms that we can agree on.

The Company has signed $300 million in hardware

purchase orders.

Completion on the $400 million debt facility is required in order to make payment on these purchase orders.

We can provide

no assurance to investors that we will have access to such a large amount of capital and if so that it will be available on terms that

we would accept.

In such event, the Company may incur significant and/or shareholders will suffer large dilution.

If we fail to raise sufficient additional funds

when needed or do not have sufficient cash flows from mining, we may be required to scale back our plan of operations.

The Company has approximately $2.3 million of

debt for equipment that the Company is currently mining of which approximately $1.4 million is due in 2022 and $850,000 is due in 2023.

Additionally, we have a significant amount funds committed to the purchase of new Bitcoin miners.

We can provide no assurance that we

will have the ability to meet these payment requirements or that we will be successful raising capital to meet our working capital requirements.

Summary of cash flows

March 31, 2022

March 31, 2021

Net cash (used) in operating activities

$ (1,109,924 )

Net cash (used) in investing activities

Net cash provided by financing activities

During the 2022 Quarter and

2021 Quarter, our sources and uses of cash were as follows:

During the 2022 Quarter,

cash used in operating activities of $1,109,921 primarily resulted from its net loss of $5,797,205, offset by stock-based compensation

of $4,584,540 and loss on cryptocurrency transactions of $124,529.

During the 2021 Quarter,

cash used in operating activities of $58,787 primarily resulted from its net loss of $107,738 offset by stock-based compensation of $6,750

and loss on cryptocurrency transactions of $20,708.

Cash provided by investing

activities in the 2022 Quarter of $399,140 resulted from the $743,513 cash acquired from the reverse merger acquisition and the proceeds

of $26,603 from sale of cryptocurrency assets, offset by the purchase of equipment of $370,976.

Cash used in investing activities

Payments on notes payable

Payments on convertible notes payable

Proceeds from convertible notes payable

Proceeds from sale of common stock

Proceeds from notes payable

Going Concern

The unaudited financial statements

accompanying the report have been prepared on a going concern basis, which assumes that we will be able to meet our obligations and continue

our operations for our next fiscal year.

Realization values may be substantially different from carrying values as shown and the financial

statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities

should we be unable to continue as a going concern.

At September 30, 2021, we have had no revenue and have not yet achieved profitable

operations and expect to incur further losses in the development of our business, all of which raise substantial doubt about our ability

to continue as a going concern.

Our ability to continue as a going concern is dependent upon our ability to generate future profitable

operations and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations

when they come due.

Management has no formal plan in place to address this concern but considers that we will be able to obtain additional

funds by equity financing and/or related party advances, however there is no assurance of additional funding being available.

There is no assurance that

we will be able to obtain further funds required for our continued operations.

We are pursuing various financing alternatives to meet

our immediate and long-term financial requirements.

There can be no assurance that additional financing will be available to us when needed

or, if available, that it can be obtained on commercially reasonable terms.

If we are not able to obtain the additional financing on a

timely basis, we will be forced to scale down or perhaps even cease the operation of our business

Critical Accounting Policies and Estimates

Use of Estimates

In preparing financial statements in conformity with accounting principles

generally accepted in the United States of America, management is required to make estimates and assumptions that affect the amounts reported

in the financial statements and accompanying notes.

Actual results could differ from those estimates.

Fair Value of Financial Instruments

The carrying value of short-term instruments, including cash, accounts

payable and accrued expenses, and short-term notes approximate fair value due to the relatively short period to maturity for these instruments.

Fair value is defined as the exchange price that would be received

for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in

an orderly transaction between market participants on the measurement date.

Valuation techniques used to measure fair value maximize the

use of observable inputs.

The Company utilizes a three-level valuation hierarchy for disclosures of fair value measurements, defined as

inputs to the valuation methodology are quoted

prices (unadjusted) for identical assets or liabilities in active markets

inputs to the valuation

methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the

assets or liabilities, either directly or indirectly, for substantially the full term of the financial instruments.

inputs to the valuation methodology

are unobservable and significant to the fair value

Derivative Financial Instruments

Fair value accounting requires bifurcation of embedded derivative instruments

such as conversion features in convertible debt or equity instruments and measurement of their fair value for accounting purposes.

assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible

debt and further if there is a beneficial conversion feature requiring measurement.

If the instrument is not considered conventional convertible

debt under ASC 470, the Company will continue its evaluation process of these instruments as derivative financial instruments under ASC

The Company applies the guidance in ASC 815-40-35-12 to determine the order in which each convertible instrument would be evaluated

for derivative classification.

Once determined, derivative

liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded

in results of operations as an adjustment to fair value of derivatives.

in the 2021 Quarter of $286,136 resulted from proceeds of $26,603 from the sale of cryptocurrency assets, offset by the purchase of equipment

In the 2022 Quarter, cash used in financing activities of $822,865 consisted

of $663,864 in net proceeds from the issuance of common shares, $380,000 in proceeds from the issuance of notes payable, offset by payments

on equipment notes payable of $220,999.

In the 2021 Quarter, cash

used in financing activities of $601,475 consisted of $266,495 in net proceeds from the sale of common shares, $334,980 in net proceeds

from the sale of preferred shares, offset by payments on equipment notes payable of $214,361.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required.

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis