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Item 2. Management’s Discussion and Analysis

2022-08-22 compared with 2021-05-14 · 111 added, 113 removed, 2 unchanged (99% of the section changed)

Management’s Discussion and Analysis of Financial Conditions 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 Statements

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.

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.

Given 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 we expect.

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.

In March 2020 the Director General of the World Health Organization declared COVID-19 a pandemic.

We are still assessing the impact COVID-19 may have on our business, but there can be no assurance that this analysis will enable us to avoid part or all of any impact from the spread of COVID-19 or its consequences, including downturns in business sentiment generally.

The extent to which the COVID-19 pandemic and global efforts to contain its spread will impact our operations will depend on future developments, which are highly uncertain and cannot be predicted at this time, and include the duration, severity and scope of the pandemic and the actions taken to contain or treat the COVID-19 pandemic.

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.

Residential Energy Efficiency and Renewable Energy Overview

Homes and buildings use energy for heating, cooling, hot water, and electrification.

A number of factors determine how much energy is required to deliver these services including the age of the structure, type of construction, heating, ventilation, and air conditioning (HVAC) equipment used and its condition, lighting, appliances, and electronics used.

Different types of energy are used for these end-uses, which is often based on regional energy production and availability, historical construction preferences, and local legislation.

Energy sources include, but are not limited to natural gas, heating oil, utility electricity, and on-site renewable energy generation.

Based on home conditions and energy sources, energy efficiency improvements are often the lowest way to reduce ongoing utility and maintenance costs.

Energy efficiency improvements often result in improved living comfort, for example enhanced heating, cooling, lighting, and air quality.

Energy efficiency upgrades have an up-front cost but are designed to reduce ongoing utility and maintenance costs.

Upgrades also often result in increased home values.

Homes and commercial buildings consume 40% of the energy used in the United States.

Most homeowners could save between 15-25% of their utility bills by addressing wasted energy from drafts, air leaks, and outdated heating and cooling systems.

Typical energy efficiency upgrades include sealing air leaks, adding insulation, installing more efficiency windows, doors, and skylights, installing and properly setting programmable thermostats, sealing ducts, tuning or upgrading heating and cooling systems, installing energy efficiency hot water heaters, upgrading household appliances and electronics, and installing energy efficient lighting.

Improvements in electric heat exchanger (also known as heat pump) technology have increased their usage across the country.

Different types of heat pump technologies exist.

Some transfer energy from water sources and others directly from the air.

Water source heat pumps are often connected to geothermal systems, also known as ground source heating and cooling.

Since geothermal technologies rely on transferring energy from the earth instead of creating energy, they are widely considered the most efficient heating and cooling system.

On-site renewable energy generation has been improving greatly for years with gains in performance and reductions in cost.

The most typical type of on-site generation is photovoltaics, also known as solar energy.

Panels are typically installed on a roof-mounted configuration or on an adjacent ground-mounted system.

Inverters capture the solar energy and transform it into electricity.

Most residential systems are tied to the existing electrical utility grid for back-up and resiliency when solar energy is not being generated.

There are many trade-offs when determining the most appropriate energy generation systems for residences.

Upfront cost, maintenance, replacement cost, environmental and health impacts much all be considered.

Environmental health and greenhouse gas emissions associated with the production of utility electricity is a regional consideration based on how energy is produced and distributed in different regions.

How utility-scale electricity is generated can make a large different in associated emissions.

On-site renewable energy has a significantly lower carbon footprint than most utility-scale generation, though many utilities are transitioning to cleaner sources such as solar and wind as they move away from coal-fired power plants.

Indoor air quality in a home can also be impacted by the type of HVAC system installed.

Unless fresh outdoor is brought into through an intake system before being distributed, air will be recirculated within a home, which can compromise air quality.

The use of natural gas for cooking and clothes dryers can also adversely impact indoor air quality.

Typically, electrified HVAC, cooking, and clothes dryers offer the highest quality indoor air quality, but there are many factors including air infiltration, sealing, and opening of windows and doors that will impact conditions.

The use of building materials, paints, and stains with high levels of volatile organic compounds can also contribute to degraded indoor air quality.

Homeowners must weight all factors when it comes to heating, cooling, and electrification of their homes.

Choosing systems that minimize the use of fossil fuels and maximize airflow will often lead to the best indoor air quality.

Fourth Wave Energy

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 FWI energy 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 expire between May 31 and June 30, 2020.

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

DeSol Power Tile

On August 18, 2020 we entered into a non-binding Letter of Intent to acquire DeSol Power Tiles, LLC for $900,000 in cash and shares of our common stock having a value of $100,000.

DeSol Power Tiles is based in Atlanta, Georgia and has developed solar panels which act as the actual roof of a building.

Although traditional solar panels provide financial benefits to their owners and solar systems help the environment, they are not aesthetically pleasing to look at.

Some communities and subdivisions even have rules against installing them.

The DeSol solar roof system integrates design and functionality.

The patented system uses roof tiles, not solar panels, so it won’t affect the aesthetic or architectural appeal of the roof.

With a simple, flat design, based on the classic Nordic style, DeSol roof tiles will complement the home with a beautiful, completely sealed, walkable surface that covers the entire roof.

The DeSol solar roof system captures sunlight and the inverter converts the sunlight into electric current that can be used in the home.

An electric panel in the home feeds the energy from the inverter to the home’s electric circuits.

The electric meter monitors energy usage, so excess power can be sent to the utility company, giving the homeowner energy credits.

A solar roof installation from DeSol Power Tiles is 100% passive.

Unlike wind energy systems or heat pumps, there are no moving parts that require technical service or maintenance, which is the main reason for the 30-year performance guarantee which is offered by DeSol Power Tiles.

For more information concerning DeSol Power Tile visit its website at https://www.desolpowertiles.com/ .

The acquisition of DeSol Power Tile is subject to a number of conditions, including the execution of a definitive agreement between the parties.

As of this filing, the Company had not entered into a definitive agreement to acquire DeSol Power Tile LLC.

We plan to concentrate on the sale of solar panel roofs and no longer plans to pursue the GSP System.

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

("GST") 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.

GST also assumed all liabilities of $379,850 associated with the consulting agreements previously signed by us.

The Spin-Off is subject to the effectiveness of a registration statement that GST will file with the Securities and Exchange Commission.

The date for determining which of our shareholders will receive shares of GST in the Spin-Off (the "Record Date") will be determined shortly before the effective date of GST's registration statement.

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, 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

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

Use of Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, and (ii) the reported amount of expenses recognized during the periods presented.

Adjustments made with respect to the use of estimates often relate to improved information not previously available.

Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements;

accordingly, actual results could differ from these estimates.

These estimates and assumptions also affect the reported amounts of costs and expenses during the reporting period.

Management evaluates these estimates and assumptions on a regular basis.

Actual results could differ from those estimates.

Results of Operations for the three months ended March 31, 2021, compared to three months ended March 31, 2020.

During the three months ended March 31, 2021 general and administrative expenses were $456,043 compared to $3,203,521 in 2020.

The $2,747,478 decrease is due to the decrease in stock based compensation during the three months ended March 31, 2021.

During the three months ended March 31, 2021 other expenses was $1,000,601 compared to $104,188 in 2020.

The $896,413 increase in other expenses are the result of amortization of discounts, derivative liability expense, interest and loss on conversion of debt.

Net loss for the three months ended March 31, 2021 and 2020, was $1,456,644 and $3,307,709, respectively.

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.

Our operating expenses for the 2022 Quarter was

$23,345,463 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 $22,385,917 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 three months ended March 31, 2021 and 2020 were:

Cash used in operations

Payments on notes payable

Payments on convertible notes payable

Proceeds from convertible notes payable

Proceeds from sale of common stock

Going Concern

The unaudited financial statements accompanying the report have been prepared on a going concern basis, which assumes that our company 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 March 31, 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

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

$ (1,109,921 )

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 $23,626,491, offset by stock-based compensation

of $22,385,917 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

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 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/A

Item 2. Management’s Discussion and Analysis