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Item 2. Management’s Discussion and Analysis

2022-08-22 compared with 2022-05-23 · 117 added, 85 removed, 26 unchanged (89% of the section changed)

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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.”

of EdgeMode, a Wyoming corporation and our wholly owned subsidiary, filed with the SEC on Form 8-K.

The following discussion and analysis

compares our consolidated results of operations for the three months ended June 30, 2022 (the “2022 Quarter”) with those for

the three months ended June 30, 2021 (the “2021 Quarter”).

Additionally, the six months ending June 30, 2022 and six

months ending June 30, 2021 are referred to as the “2022 Period” and “2021 Period”) respectively.

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.

This report contains “forward-looking

statements”, as such term is used within the meaning of the Private Securities Litigation Reform Act of 1995.

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.

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 are an early-stage cryptocurrency mining Company.

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 in the second half of 2022.

Due to the imminent change of Ethereum (ETH) from Proof of Work (POW) to Proof of stake

(POS), the Company has terminated all rental agreements and future purchase orders related to Ethereum mining operations.

Critical Accounting Policies and Estimates

We discuss the material accounting

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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.

RESULTS OF OPERATIONS FOR THE THREE MONTHS

ENDED JUNE 30, 2022 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2021

Our revenues for the 2022

Quarter was $165,118 compared to $500,692 for the 2021 Quarter.

The reason for the decrease was the decline in the price of Ethereum during

the 2022 Quarter compared to prices during the 2021 Quarter.

Also the Company experienced power outages at our data center in Rouses Point.

As we have terminated our rental agreements as referenced above, we do not anticipate power outages in the future materially effecting

our operations.

Our cost of revenues for

the 2022 Quarter was $382,908 compared to $401,629 for the 2021 Quarter.

The reason for the decrease was a decrease in hosting fees incurred

as a result of the power outages and lower revenues.

Our operating expenses for

the 2022 Quarter was $2,874,473 compared to $218,942 for the 2021 Quarter.

In the 2022 Quarter, the Company incurred stock-based compensation

expense of $1,878,264 compared to $0 for the 2021 Quarter.

In addition, the company began initial operations in 2021 versus having full

operations during 2022.

Our other expenses for the

2022 Quarter was $109,363 compared to $148,065 for the 2021 Quarter.

The reason for the decrease was a decrease in interest expense from

additional loans as well as a decreased loss on cryptocurrencies due to decreased transactions and changes in market prices.

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED

JUNE 30, 2022 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2021

Our revenues for the 2022

Period was $436,237 compared to $569,068 for the 2021 Period.

The reason for the decrease was the decline in the price of Ethereum during

the 2022 Period compared to prices during the 2021 Period, in addition to the power outages at our data center in disclosed above.

Our cost of revenues for

the 2022 Period was $806,678 compared to $479,110 for the 2021 Period.

The primary reason for the increase was the Company began operations

in March of 2021 versus having a full six months of operations for the 2022 Year.

Our operating expenses for

the 2022 Period was $26,836,972 compared to $304,944 for the 2021 Period.

In the 2022 Period, the Company incurred stock-based compensation

expense of $24,264,181 compared to $6,750 for the 2021 Period.

In addition, the Company began operations in March of 2021 for initial

operations versus having a full six months of operations for the 2022 Period.

Our other expenses for the

2022 Period was $237,740 compared to $160,696 for the 2021 Period.

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

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.

As of August 22, 2022, the

Company had approximately $7,000 of cash.

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

investments from accredited investors.

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

We can provide no assurances that any such financings will be completed or successful, nor will they be on terms that we can

The Company has signed $66

million in hardware purchase orders.

Assuming we close on the $400 million debt facility, the debt facility will be used in order to make

payments on these purchase orders.

There are no assurances the purchase will be completed.

If we fail to raise sufficient

additional funds, we will be required to suspend or cease our operations.

The Company has terminated the agreements for approximately $2.2 million

of debt for equipment that the Company was using for mining and is negotiating the return of the equipment to the vendor to settle the

outstanding liabilities.

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.

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

June 30, 2022

June 30, 2021

Net cash (used) in operating activities

$ (1,109,924 )

Net cash (used) in investing activities

Net cash provided by (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

During the 2022 Period and

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

Operating Activities

During the 2022 Period, cash

used in operating activities of $1,824,306 primarily resulted from its net loss of $27,445,153, offset by stock-based compensation of

$24,264,181, impairment of equipment of $617,036 and loss on cryptocurrency transactions of $157,913.

During the 2021 Period, cash

used in operating activities of $394,376 primarily resulted from its net loss of $375,682 offset by stock-based compensation of $6,750

and loss on cryptocurrency transactions of $96,343.

Investing Activities

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

activities in the 2022 Period of $943,423 resulted from the $743,513 cash acquired from the reverse merger acquisition and the proceeds

of $510,886 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.

in the 2021 Period of $705,579 resulted from proceeds of $304,284 from the sale of cryptocurrency assets, offset by the purchase of equipment

of $1,009,863.

Financing Activities

In the 2022 Period, cash

provided by financing activities of $860,712 consisted of $688,864 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 $208,152.

In the 2021 Period, cash

provided by financing activities of $1,080,397 consisted of $1,311,163 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 $645,746.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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What changed 10-Q

Item 2. Management’s Discussion and Analysis