Edgemode, Inc. 10-K

Item 8. Financial Statements and Supplementary Data. F-1 Report of Independent Registered Public Accounting Firm (PCAOB ID 2738 ) F-2 Consolidated Balance Sheets as of December 31, 2022 and 2021; F-3 Consolidated Statements of Operations for the years ended December 31, 2022 and 2021; F-4 Consolidated Statements of Stockholders’ Deficit for the years ended December 31, 2022 and 2021; F-5 Consolidated Statements of Cash Flows for years ended December 31, 2022 and 2021; F-6 Notes to Consolidated Financial Statements 29 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Edgemode, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of EdgeMode, Inc. (the Company) as of December 31, 2022 and 2021, and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for the year ended and the related notes to the consolidated financial statements. In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year ended in conformity with accounting principles generally accepted in the United States of America. Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in the notes to the consolidated financial statements, the Company began operations in 2020, has incurred net losses from operations since inception, and has an accumulated deficiency, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are discussed in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. Revenue Recognition As discussed in the notes to the consolidated financial statements, the Company provides computing power in cryptocurrency transaction validation services to certain mining pool operators. The transaction consideration received by the Company, if any, is a non-cash consideration, which the Company measures at fair value on the date received. The principal consideration for our determination that performing procedures related to revenue recognition is a critical audit matter is due to the complexities involved in auditing the completeness and occurrence of the revenue recognized by the Company. To form our overall opinion on the consolidated financial statements, we performed substantive analytical procedures to determine the existence, occurrence, and valuation of the digital assets awarded to the Company as consideration for their services rendered to the pool operators. Additionally, auditing management’s evaluation of the accounting for mining revenues recognized involved significant judgement and subjectivity due to lack of formal GAAP guidance in the United States. /s/ M&K CPAS, PLLC Houston, TX April 17, 2023 F- 1 Edgemode, Inc. (Formerly Fourth Wave Energy, Inc.) Consolidated Balance Sheets December 31, 2022 December 31, 2021 ASSETS Current assets: Cash $ 70 $ 23,942 Subscription receivable – 158,850 Prepaid expenses and other current assets 27,638 22,373 Prepaid hosting services 894,355 1,586,297 Deferred offering costs 264,706 – Total current assets 1,186,769 1,791,462 Intangible assets - cryptocurrencies 2,630 303,199 Equipment, net – 3,520,443 Total assets $ 1,189,399 $ 5,615,104 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 869,524 $ 145,855 Accrued payroll 487,159 – Accrued dividends 6,190 42,843 Equipment notes payable 1,179,972 932,273 Notes payable 35,000 1,657,580 Series B preferred shares liability, net 205,226 – Total current liabilities 2,783,071 2,778,551 Equipment notes payable, net of current – 359,925 Total liabilities 2,783,071 3,138,476 Commitments and contingencies – – Preferred shares of EdgeMode – 341,730 Stockholders' equity (deficit): Preferred shares, $ 0.001 par value, 4,999,000 shares authorized December 31, 2022 and 2021; zero 0 issued and outstanding December 31, 2022 and 2021 – – Common shares, 950,000,000 and 500,000,000 shares authorized, December 31, 2022 and December 31, 2021; Par value $ 0.001 ; 390,437,459 and 292,179,345 shares issued and outstanding, December 31, 2022 and 2021, respectively 390,437 292,179 Additional paid-in capital 33,896,019 5,476,850 Accumulated deficit ( 35,880,128 ) ( 3,634,131 ) Stockholders' equity (deficit) ( 1,593,672 ) 2,134,898 Total liabilities and stockholders' equity (deficit) $ 1,189,399 $ 5,615,104 The accompanying notes are an integral part of these consolidated financial statements. F- 2 Edgemode, Inc. (Formerly Fourth Wave Energy, Inc.) Consolidated Statements of Operations For the Year Ended December 31, 2022 December 31, 2021 Revenue $ 438,042 $ 1,572,906 Cost of revenue 812,882 1,347,337 Gross margin ( 374,840 ) 225,569 Operating expenses: General and administrative expenses 27,784,864 3,495,161 Loss on sale of equipment and impairment 3,075,748 – Loss on cryptocurrencies 154,252 36,485 Total operating expenses 31,014,864 3,531,646 Loss from operations ( 31,389,704 ) ( 3,306,077 ) Other expense: Interest expense ( 148,119 ) ( 217,467 ) Other expense ( 708,174 ) ( 35,211 ) Total other expense ( 856,293 ) ( 252,678 ) Loss before provision for income taxes ( 32,245,997 ) ( 3,558,755 ) Provision for income taxes – – Net loss ( 32,245,997 ) ( 3,558,755 ) Preferred Dividends – ( 42,843 ) Net loss to common shareholders $ ( 32,245,997 ) $ ( 3,601,598 ) Loss per common share - basic and diluted $ ( 0.09 ) $ ( 0.02 ) Weighted average shares outstanding - basic and diluted 377,574,305 230,528,243 The accompanying notes are an integral part of these consolidated financial statements. F- 3 Edgemode, Inc. (Formerly Fourth Wave Energy, Inc.) Consolidated Statements of Changes in Stockholders’ Equity (Deficit) For the years ended December 31, 2022 and 2021 Mezzanine Equity Total Preferred Common Additional Stockholders’ Preferred Stock Common Stock Paid-In Accumulated Equity Shares Amount Shares Amount Capital Deficit (Deficit) Balance December 31, 2020 – $ – 190,734,649 $ 190,735 $ 245,576 $ ( 75,376 ) $ 360,935 Common shares issued in exchange for cash – – 46,674,281 46,674 2,447,133 – 2,493,807 Preferred shares issued in exchange for cash 125,001 334,980 – – – – – Common shares issued in exchange for cryptocurrency – – 1,888,787 1,889 160,530 – 162,419 Common shares issued for exercise of options – – 8,883,496 8,883 146,550 – 155,433 Common shares issued for exercise of options - cashless – – 43,733,770 43,734 ( 43,734 ) – – Common shares issued for exercise of options - cryptocurrency – – 264,362 264 3,423 – 3,687 Stock-based compensation 2,206 6,750 – – 2,530,668 – 2,530,668 Contribution of Cryptocurrency from related party – – – – 29,547 – 29,547 Preferred dividends – – – – ( 42,843 ) – ( 42,843 ) Net loss – – – – – ( 3,558,755 ) ( 3,558,755 ) Balance December 31, 2021 127,207 341,730 292,179,345 292,179 5,476,850 ( 3,634,131 ) 2,134,898 Conversion of preferred shares into common ( 127,207 ) ( 341,730 ) 20,796,933 20,797 363,776 – 384,573 Recapitalization of reverse merger – – 69,257,668 69,258 2,600,694 – 2,669,952 Common shares issued in exchange for cash – – 1,617,756 1,617 564,398 – 566,015 Common shares issued in exchange for cryptocurrency – – 78,638 79 49,921 – 50,000 Common shares issued in exchange for compensation – – 4,000,000 4,000 314,000 – 318,000 Common shares issued in exchange for deferred financing costs – – 2,521,008 2,521 262,185 – 264,706 Common shares cancelled pursuant to SEC Legal case – – ( 13,889 ) ( 14 ) 14 – – Stock-based compensation – – – – 24,264,181 – 24,264,181 Net loss – – – – – ( 32,245,997 ) ( 32,245,997 ) Balance December 31, 2022 – $ – 390,437,459 $ 390,437 $ 33,896,019 $ ( 35,880,128 ) $ ( 1,593,672 ) The accompanying notes are an integral part of these consolidated financial statements. F- 4 Edgemode, Inc. (Formerly Fourth Wave Energy, Inc.) Consolidated Statements of Cash Flows For the Year Ended December 31, 2022 December 31, 2021 Operating Activities: Net loss $ ( 32,245,997 ) $ ( 3,558,755 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 630,670 836,174 Amortization 3,976 – Interest expense on principal default 95,926 – Loss on sale of equipment and impairment 3,075,748 34,933 Stock-based compensation 24,582,181 2,537,418 Cryptocurrency used for compensation 144,423 – Loss on cryptocurrency transactions 154,252 36,485 Loss on prepaid hosting termination 691,942 – Changes in operating assets and liabilities: Prepaid expenses and other current assets 144,315 ( 1,608,670 ) Cryptocurrencies - mining ( 438,042 ) ( 1,572,906 ) Accounts payable and accrued expenses 504,139 125,855 Accrued payroll 487,159 – Lease liabilities – 44,329 Net cash used in operating activities ( 2,169,308 ) ( 3,125,137 ) Investing Activities: Cash acquired in acquisition 743,513 – Purchase of equipment ( 245,976 ) ( 1,339,000 ) Proceeds from sale of equipment 60,000 8,000 Proceeds from sale of cryptocurrencies 489,936 1,043,242 Net cash provided by investing activities 1,047,473 ( 287,758 Financing Activities: Proceeds from issuance of common shares, net of offering costs 566,015 2,334,957 Proceeds from subscription receivable 158,850 – Proceeds from issuance of preferred shares, net of offering costs 201,250 334,980 Proceeds from exercise of common stock options – 155,433 Payments on equipment notes payable ( 208,152 ) ( 1,149,393 ) Proceeds from notes payable 380,000 1,700,000 Payments on notes payable – ( 1,575 ) Net cash provided by financing activities 1,097,963 3,374,402 Net change in cash ( 23,872 ) ( 38,493 ) Cash - beginning of period 23,942 62,435 Cash - end of period $ 70 $ 23,942 Supplemental Disclosures: Interest paid $ 89,993 $ 217,467 Income taxes paid $ – $ – Supplemental Disclosures of Noncash Financing Information: Shares issued for deferred financing costs $ 264,706 $ – Shares issued for cryptocurrency assets $ 50,000 $ 162,419 Equipment financed with notes payable $ – $ 2,441,591 Conversion of preferred shares into common shares $ 384,573 $ – Accrued dividends $ – $ 42,843 Cryptocurrency assets contributed by related party $ – $ 29,547 Equipment purchased with cryptocurrency assets $ – $ 363,008 Equipment sold in exchange for cryptocurrency assets $ – $ 62,549 Common shares cancelled pursuant to SEC legal case $ 14 $ – Subscription receivable $ – $ 158,850 Loans settled through release of restricted cryptocurrency assets $ – $ 85,174 Option exercise paid with cryptocurrency assets $ – $ 3,687 The accompanying notes are an integral part of these consolidated financial statements. F- 5 Edgemode, Inc. (Formerly Fourth Wave Energy, Inc.) Notes to the Consolidated Financial Statements Note 1. Basis of Presentation Edgemode, Inc. (Formerly Fourth Wave Energy, Inc.) (“we”, “our”, the “Company”) was incorporated in Nevada on January 21, 2011. Since its incorporation, the Company has attempted to become involved in a number of business ventures, all of which were unsuccessful and which it has abandoned. On March 16, 2020 we acquired all of the outstanding shares of Fourth Wave Energy, Inc., a Colorado corporation (“FWI”), for 6,200,000 restricted shares of our common stock. On March 20, 2020, shareholders owning a majority of the Company’s outstanding shares of common stock amended the Company’s Articles of Incorporation to change the name of the Company from Pierre Corp. to Fourth Wave Energy, Inc. In connection with the acquisition of FWI in March 2020, the Company entered into consulting agreements with certain founders of FWI. The consulting agreements require the Company to collectively pay $379,850 in consulting fees during the terms of the consulting agreements. In March 2021 the Company agreed to sell the FWI technologies and its business plan to GeoSolar Technologies, Inc. a Colorado corporation (“GST”) in exchange for 10,000,000 shares of GST common stock (the “GST Shares”), such GST Shares distributable to the Company’s shareholders. As a part of this transaction, the consultants agreed to release the Company from any liability for any consulting fees owed to them by the Company and return a portion of the Company’s common stock held by such consultants. During the year ended December 31, 2021, 4,700,000 shares of the Company's common stock were returned to the Company and cancelled. The technology granted to GST was carried on our balance sheet at zero value and the shares received were also recorded at no value. FWI was voluntarily dissolved on December 8, 2021. The ex-dividend date, record date and distribution date for the registered distribution of the GST Shares to the Company's shareholders, subject to FINRA clearance, is the following: Ex-Dividend Date: 12/06/2021 Record Date: 12/07/2021 Distribution Date: 12/14/2021 Merger Agreement Effective January 31, 2022 (the “Effective Time”), the Company, FWAV Acquisition Corp., a Wyoming corporation and wholly owned subsidiary of the Company (the “Acquisition Subsidiary”) and EdgeMode, a Wyoming corporation (“EdgeMode”) closed on the previously disclosed Agreement and Plan of Merger and Reorganization dated December 2, 2021 (the “Merger Agreement”). In accordance with the Merger Agreement, Acquisition Subsidiary merged with and into EdgeMode (the “Merger” or “Transaction”), with EdgeMode remaining as the surviving entity after the Merger and becoming a wholly owned subsidiary of the Company. In the Merger, the shares of common stock, no par value per share, of EdgeMode issued and outstanding immediately prior to the Effective Time, represent 80% of the Company’s outstanding common stock on a fully diluted basis (or 313,950,672 shares of common stock). Furthermore, pursuant to the terms of the Merger the Company’s sole shareholder of the Company’s preferred stock converted such shares into 1,000 shares of common stock. Joseph Isaacs, the Company’s sole officer and director resigned as an executive officer and director. Pursuant to the terms of the Merger Mr. Isaacs will provide services to the Company in a consultancy capacity at a fee of $11,500 per month and has been issued a stock option grant to purchase up to 19,987,095 shares of the Company’s common stock, 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. In addition, Mr. Isaacs received a $ 250,000 cash bonus and the Company entered into a contract with a company owned by Joes Isaacs to perform services for total value of $240,000. Charlie Faulkner and Simon Wajcenberg, the principals of EdgeMode, were appointed as directors and executive officers. Simultaneously with the Merger, approximately $ 4,574,132 of principal and interest of outstanding notes previously issued by the Company automatically converted into an aggregate of 18,296,528 shares of the Company’s common stock issued to 31 former noteholders. In addition, the Company has repaid approximately $ 988,000 of principal amount of notes. At the Effective Time the Company has nominal liabilities, excluding the debt and liabilities of EdgeMode. Prior to the closing of the Transaction, the Company was a shell company. F- 6 The merger was accounted for as a reverse merger, whereby EdgeMode Wyoming was considered the accounting acquirer and became our wholly-owned subsidiary. In accordance with the accounting treatment for a “reverse merger”, the Company’s historical financial statements prior to the reverse merger has been replaced with the historical financial statements of EdgeMode Wyoming prior to the reverse merger. The financial statements after completion of the reverse merger include the assets, liabilities, and results of operations of the combined company from and after the closing date of the reverse merger, with only certain aspects of pre-consummation stockholders’ equity remaining in the consolidated financial statements. On June 3, 2022 the Company changed its name from Fourth Wave Energy Inc. to Edgemode, Inc. Note 2. Summary of Significant Accounting Policies Basis of Presentation The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“US GAAP”). The accompanying financial statements include all the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for the fair presentation of the financial statements for the years presented have been included. Principles 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. Reclassification of Comparative Period Presentation The Company is reclassifying its financial statements for the year-ended ended December 31, 2021. These financial statements represent a reclassification of certain prior year account classifications and footnotes. 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. Risks and Uncertainties The Company's business and operations are sensitive to general business and economic conditions in the United States and other countries that the Company operates in. A host of factors beyond the Company's control could cause fluctuations in these conditions. Adverse conditions may include recession, downturn or otherwise, local competition or changes in consumer taste. These adverse conditions could affect the Company's financial condition and the results of its operations. Cash and Cash Equivalents The Company considers short-term, highly liquid investment with original maturities of three months or less at the time of purchase to be cash equivalents. Cash consists of funds held in the Company’s checking account. F- 7 Fixed Assets Equipment is recorded at cost. Expenditures for renewals and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Expenditures for maintenance and repairs are expensed. When equipment is retired or sold, the cost and related accumulated depreciation are eliminated from the accounts and the resultant gain or loss is reflected in income. Depreciation is provided using the straight-line method, based on useful lives of the assets which range from three to fifteen years . The Company reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of the assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition, and other economic factors. 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. The Company has no assets or liabilities valued using level 1, level 2, or level 3 inputs as of December 31, 2020. Income Taxes Income taxes are provided for the tax effects of transactions reporting in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the basis of receivables, inventory, property and equipment, intangible assets, and accrued expenses for financial and income tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Any deferred tax items of the Company have been fully valued based on the determination of the Company that the utilization of any deferred tax assets is uncertain. The Company complies with FASB ASC 740 for accounting for uncertainty in income taxes recognized in a company’s financial statements, which prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. FASB ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. The Company believes that its income tax positions would be sustained on audit and does not anticipate any adjustments that would result in a material change to its financial position. 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. F- 8 The Company has entered into digital asset mining pools by executing contracts, as amended from time to time, with the mining pool operators to provide computing power to the mining pool. The contracts are terminable at any time by either party and the Company’s enforceable right to compensation only begins when the Company provides computing power to the mining pool operator. In exchange for providing computing power, the Company is entitled to a fractional share of the fixed cryptocurrency award the mining pool operator receives (less digital asset transaction fees to the mining pool operator which are recorded as a component of cost of revenues), for successfully adding a block to the blockchain. The terms of the agreement provides that neither party can dispute settlement terms after thirty-five days following settlement. The Company’s fractional share is based on the proportion of computing power the Company contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm. Providing computing power in digital asset transaction verification services is an output of the Company’s ordinary activities. The provision of providing such computing power is the only performance obligation in the Company’s contracts with mining pool operators. The transaction consideration the Company receives, if any, is noncash consideration, which the Company measures at fair value on the date received, which is not materially different than the fair value at contract inception or the time the Company has earned the award from the pools. The consideration is all variable. Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the mining pool operator successfully places a block (by being the first to solve an algorithm) and the Company receives confirmation of the consideration it will receive, at which time revenue is recognized. There is no significant financing component in these transactions. Fair value of the cryptocurrency award received is determined using the quoted price of the related cryptocurrency at the time of receipt. There is currently no specific definitive guidance under GAAP or alternative accounting framework for the accounting for cryptocurrencies recognized as revenue or held, and management has exercised significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is enacted by the FASB, the Company may be required to change its policies, which could have an effect on the Company’s consolidated financial position and results from operations. 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. The Company accounts for equity-based transactions with non-employees under the provisions of ASC Topic No. 505-50, “Equity-Based Payments to Non-Employees” (“Topic No. 505-50”). Topic No. 505-50 establishes that equity-based payment transactions with non-employees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. Advertising The Company expenses advertising costs as they are incurred. Deferred Offering Costs The Company has capitalized qualified direct costs related to its efforts to raise capital through a sale of its common stock in a private offering. Deferred offering costs will be deferred until the completion of the private offering, at which time they will be reclassified to additional paid-in capital as a reduction of the offering proceeds. If the Company terminates the planned offering or there is a significant delay, all of the deferred offering costs will be immediately written off to operating expenses. As of December 31, 2022, $ 264,706 of deferred offering costs were capitalized. Recent Accounting Pronouncements There are no recently issued accounting pronouncements that the Company has yet to adopt that are expected to have a material effect on its financial position, results of operations, or cash flows. F- 9 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 December 31, 2022 the Company had not yet achieved profitable operations and expects to incur further losses in the development of its business, all of which raise substantial doubt about the Company’s ability to continue as a going concern. 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 but considers that the Company 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. Note 4. Reverse Merger Transaction Pursuant to the terms of the Merger Agreement, and in exchange for all 100% of the issued and outstanding shares of EdgeMode Wyoming, the shareholders of EdgeMode received an aggregate of 313,950,672 shares of common stock, par value $.001 per share, of the Company. Prior to the Merger, EdgeMode Wyoming was authorized to issue 300,000 shares of preferred stock with no par value per share, of which 261,438 were designated as Series Seed Preferred Stock (“Series Seed Preferred”). Immediately prior to the Merger, the holders of the Series Seed Preferred stock converted the shares into 261,438 shares of EdgeMode Wyoming common stock. As a result of the Reverse Merger, the Company has acquired the following assets and liabilities which were recorded at the pre-combination carrying basis. The assets acquired and liabilities assumed are as follows: Schedule of assets acquired and liabilities January 31, 2022 Cash $ 743,513 Prepaids 149,580 Note receivable - EdgeMode 2,040,447 Accounts payable ( 7,774 ) Other accrued Expenses ( 196,500 ) Accrued interest ( 24,314 ) Notes payable ( 35,000 ) Total identified net assets $ 2,669,952 Note 5. Related Party Transactions Pursuant to the terms of the Merger Mr. Isaacs will provide services to the Company in a consultancy capacity at a fee of $11,500 per month and has been issued a stock option grant to purchase up to 19,987,095 shares of the Company’s common stock, 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. In addition, Mr. Isaacs received a $ 250,000 cash bonus and the Company entered into a contract with a company owed by Joe Isaacs to perform services for total value of $240,000, which was paid in advance. As of December 31, 2022, $ 0 of services are left to be performed. During the year ended December 31, 2022, the Company granted options to the officers and a consultant of the Company to purchase up to 65,920,895 shares of the Company’s stock, vesting immediately, at an exercise price of $ 0.40 per share. During the year ended December 31, 2022, the Company granted options to the officers of the Company to purchase up to 153,239,206 shares of the Company’s stock, which vest upon the Company listing its shares on the NASDAQ Global Market, New York Stock Exchange, or another equivalent market, at an exercise price of $ 0.10 per share. As of December 31, 2022 the Company owed the executive officers of the Company $ 487,159 in accrued payroll for services performed. F- 10 Note 6. Prepaid Hosting Services Prepaid hosting services are amounts paid to secure the use of data hosting services at a future date or continuously over one or more future periods. When the prepaid hosting services are eventually consumed, they are charged to expense. As of December 31, 2022 the company has prepaid a total of $ 1,586,297 . Subsequent to December 31, 2022, the company was notified of the Chapter 11 bankruptcy filing of the hosting company and in January 2023 the Company received $ 894,355 in return of the initial deposit and the remainder of the deposit is subject to bankruptcy claims. As a result, the Company has expensed $ 691,942 , the remaining amount of the claim, due to the uncertainty of collectability through the bankruptcy claim. Note 7. Fixed Assets Fixed assets are stated at cost and depreciated using the straight-line method over their estimated useful lives. When retired or otherwise disposed, the carrying value and accumulated depreciation of the fixed asset is removed from its respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. Expenditures for maintenance and repairs which do not extend the useful lives of the related assets are expensed as incurred. As of December 31, 2022 and 2021 fixed assets were made up of the following: Schedule of fixed assets Estimated Useful Life December 31, December 31, (years) 2022 2021 Cryptomining equipment 2-5 years $ – $ 2,615,721 Cryptomining equipment - not in service – 1,737,186 – 4,352,907 Accumulated depreciation – ( 832,464 ) Net book value $ – $ 3,520,443 Total depreciation expense for the year ended December 31, 2022 and 2021, was $ 630,670 and $ 836,174 respectively. During the year ended December 31, 2022, the Company terminated all future purchase orders related to Ethereum mining equipment and related hosting services, as the Company will focus on Bitcoin mining, and returned equipment not yet placed in service and investing in new Bitcoin mining equipment . The remaining equipment not placed in service as of December 31, 2022 has been delayed and it is unknown when or if it will be delivered to the Company. As a result of the delays and uncertainties, the Company has recorded an impairment expense of $ 1,138,687 related to undelivered equipment. During the year ended December 31, 2022 the Company recorded an impairment to cryptomining equipment in the amount of $ 1,937,061 as a result of the Company terminating the financing agreements with the equipment manufactures. Of the total impairment, $ 131,232 relates to assets the company disposed of due to the switch away from Etherium mining, and the other $ 1,545,829 was related to mining equipment purchased with the Equipment Notes Payable discussed below in Note 9. The remaining $ 260,000 of impairment was related to the equipment acquired in 2020. A portion of this equipment was sold for $ 60,000 during the year months ended December 31, 2022. Note 8. Equity Preferred shares We are authorized to issue 4,999,000 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. F- 11 During the year ended December 31, 2021, the Company issued 125,001 Preferred shares for total cash considerations of $ 382,480 . In connection with the fundraising the Company paid $ 47,500 in advisory fees to a related party for net cash proceeds of $ 334,980 . During the year ended December 31, 2021, the Company issued 2,206 Series Seed Preferred shares for total fair value of $ 6,750 for services. For the year ended December 31, 2021, total dividends applicable to Preferred shares were $ 42,843 . The Company did not declare or pay any dividends during the year ended December 31, 2021. Although no dividends have been declared, the cumulative total of preferred shares dividends due to these stockholders upon declaration was $ 42,843 as of December 31, 2021. In connection with the Merger Transaction, the only outstanding preferred stock and accrued dividends were converted into common stock. Series A On March 26, 2020, the Company designated 1,000 shares of its original 5,000,000 authorized shares of Preferred Stock as Series A Preferred Stock (“Series A”) with a $0.001 par value. Each Series A Preferred share entitles the holder to vote on all matters submitted to a vote of the Company’s shareholders or with respect to actions that may be taken by written consent. The 1,000 shares of Series A shares have the voting power of 250% of the outstanding common shares at the time of any vote. The holders of the Series A shares are entitled to receive, when, as and if declared by the Board of Directors out of funds legally available, annual dividends payable in cash on the 31st day of December in each year, commencing on December 31, 2020 at the rate of $0.10 per share per year. As part of the recapitalization, the 1,000 shares were converted into 1,000 common shares. On March 30, 2022 the Company reduced its authorized preferred shares from 5,000,000 to 4,999,000 shares and removed the 1,000 shares of Series A from the designation. Series B On July 19, 2022, the Company designated 1,000,000 shares of its original 5,000,000 authorized shares of Preferred Stock as Series B Preferred Stock (“Series B”) with a $ 0.001 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 a 8% cumulative annual dividend. In the event of default, the dividend rate increases to 22%. The Company may not, with consent of a majority of the holders of Series B Convertible Preferred Stock, alter or changes the rights of the Series B Convertible Preferred Stock, amend the articles of incorporation, create any other class of stock ranking senior to the Series B Convertible Preferred Stock, increase the authorized shares of Series B Convertible Preferred Stock, or liquidate or dissolve the Company. Beginning 180 days from issuance, the Series B Convertible Preferred Stock may be converted into common stock at a price based on 65% of the average of the two lowest trading prices during the 15 days prior to conversion. The Company may redeem the Series B Convertible Preferred Stock during the first 180 days from issuance, subject to early redemption penalties of up to 25%. The Series B Convertible Preferred Stock must be redeemed by the Company 12 months following issuance if not previously redeemed or converted. Based on the terms of the Series B Convertible Preferred Stock, the Company determined that the preferred stock is mandatorily redeemable and will be accounted for as a liability under ASC 480. During the year ended December 31, 2022, the Company entered into purchase agreements for the sale of 212,500 shares of Series B Convertible Preferred Stock with 1800 Diagonal Lending, LLC, with $ 11,250 of proceeds being kept by the lender for legal fees, resulting in cash proceeds of $ 201,250 . As of December 31, 2022, the Company owes $ 6,190 in accrued dividends, reflected as interest expense, and the carrying value of the Series B Preferred stock was $ 205,226 , net of unamortized discount of $ 7,274 . F- 12 Common shares The Company has authorized 950,000,000 shares of common stock, par value of $ 0.001 , and as of December 31, 2022 has issued 390,437,459 shares of common stock. All of the common shares have the same voting rights and liquidation preferences. On March 30, 2022 the Company increased its authorized common shares from 500,000,000 to 950,000,000 . During the year ended December 31, 2022, the Company issued 1,696,394 common shares for cash and cryptocurrency proceeds of $ 616,015 . In connection with the stock purchases, the company issued warrants to purchase 300,000 shares of common stock with an exercise price of $0.50, which expire five years from the date of grant. During the year ended December 31, 2021, the company issued 48,563,068 common shares for cash and cryptocurrency proceeds of $ 2,838,476 . In connection with the fundraising the company paid $ 182,250 in advisory fees, of which $168,500 were paid to a related party, for net cash and cryptocurrency proceeds of $2,656,226. During the year ended December 31, 2022, the Company amortized $ 44,875 of stock compensation expense related to shares issued for services pursuant to a consulting agreement entered into during 2021. As of December 31, 2022, $ 0 of unrecognized expense remains to be amortized. During the year ended December 31, 2022, the Company issued 4,000,000 common shares as compensation to a third party for advisory services with a fair value of $ 318,000 which was expensed in the current period. During the year ended December 31, 2022, the Company had 13,889 of its common stock cancelled and returned to treasury as a result of the settlement of a legal case. On September 19, 2022, the Company entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) with Alumni Capital LP, a Delaware limited partnership (“Alumni Capital”), pursuant to which the Company agreed to sell, and Alumni Capital agreed to purchase, upon request of the Company in one or more transactions, a number of shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”) providing aggregate gross proceeds to the Company of up to $ 15,000,000 (the “Maximum”). The Purchase Agreement expires upon the earlier of the aggregate gross proceeds from the sale of shares meeting the Maximum or December 31, 2023. Among other limitations, unless otherwise agreed upon by Alumni Capital, each sale of shares will be limited to 50,000 shares and further limited to no more than the number of shares that would result in the beneficial ownership by Alumni Capital and its affiliates, at any single point in time, of more than 9.99% of the then-outstanding shares of Common Stock. Alumni Capital will purchase the shares of Common Stock under the Agreement at a discount 20% of the lowest traded price of the Common Stock in the five business days preceding the Company delivering notice of the required purchase of shares to Alumni Capital. In exchange for Alumni Capital entering into the Purchase Agreement, the Company issued 2,521,008 shares of Common Stock to Alumni Capital upon execution of the Purchase Agreement (the “Initial Commitment Shares”). Alumni Capital represented to the Company, among other things, that it was an “accredited investor” (as such term is defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”)). The Company shares of Common Stock, including the Commitment Shares, are being offered and sold under the Purchase Agreement in reliance upon an exemption from the registration requirements of the Securities Act afforded by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D promulgated thereunder. The securities sold may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The Purchase Agreement provides that the Company will file a registration statement under the Securities Act covering the resale of the shares issued to Alumni Capital. Alumni Capital’s obligation to purchase shares of Common Stock under the Purchase Agreement is conditioned upon, among other things, the registration statement having been declared effective by the Securities and Exchange Commission. F- 13 As of December 31, 2022, no shares have been sold or issued to Alumni Capital pursuant to the Purchase Agreement other than the 2,521,008 Commitment Shares. The Commitment shares were valued $ 0.105 per share for total value of $ 264,706 which has been recorded as deferred offering costs which will be offset against the future proceeds. During the year ended December 31, 2021, the Company issued 9,147,858 common shares upon the exercise of options for cash and cryptocurrency proceeds of $ 159,120 . In addition, the Company issued 43,733,770 shares for the exercise of options on a cashless basis. During the year ended December 31, 2021, a director of the Company contributed cryptocurrencies to the company with a value of $ 29,547 , which was accounted for as a capital contribution. Stock Options During the year ended December 31, 2022, the Company issued a stock option grant to purchase up to 85,907,990 shares of the Company’s common stock, vesting immediately and in 90 days, at an exercise price of $0.40 per share. The expected term was estimated using the simplified method for employee stock options since the Company does not have adequate historical exercise data to estimate the expected term. During the year ended December 31, 2022, the Company issued a stock option grant to purchase up to 153,239,206 shares of the Company’s common stock, which vest upon the Company listing its shares on the NASDAQ Global Market, New York Stock Exchange, or another equivalent market, at an exercise price of $0.10 per share. The expected term was estimated using the simplified method for employee stock options since the Company does not have adequate historical exercise data to estimate the expected term. The Company used the black-scholes option pricing model to value the options and expensed $ 24,219,306 and $ 2,530,668 during the year ended December 31, 2022 and 2021, respectively. As of December 31, 2022, the Company has $17,715,672 of value remaining to be expensed based upon completions of milestones, of which $16,865,676 is contingently subject to expense recognition based on the timing of when the Company is able to up-list the shares (which is reliant on various regulatory approvals outside of the Company’s control) as describe above, and $0 of remaining amortization to expensed pursuant to the vesting terms. The following table summarizes the stock option activity for the years ended December 31, 2022 and 2021: Schedule of option activity Options Weighted-Average Exercise Price Per Share Outstanding, December 31, 2020 48,519 $ 0.00 Granted 412,411 1.10 Exercised ( 323,457 ) 1.41 Forfeited – – Expired – – Outstanding, December 31, 2021 137,473 0.00 Granted 239,147,196 0.21 Exercised – – Forfeited – – Expired – Outstanding, December 31, 2022 239,284,669 $ 0.21 As of December 31, 2022, the Company had 85,907,990 stock options that were exercisable and 137,473 that are in dispute. The weighted average remaining life of all outstanding stock options was 4.48 years as of December 31, 2022. 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 December 31, 2022, the intrinsic value for the options vested and outstanding was $ 0 and $ 8,248 , respectively. F- 14 Stock Warrants Pursuant to the reverse merger transaction, the 11,515,714 issued and outstanding warrants of the Company prior to the merger transaction remain outstanding and are shown as granted as part of the recapitalization as described in Note 4. Of the total recapitalized, 1,142,857 are presented as reclassified in the year ended 2022 as they were not previously shown as outstanding in the pre-merger Edgemode, Inc. December 31, 2021 10-K. These warrants were subsequently forfeited as discussed below and as such have no material impact on the financial statements. During the year ended December 31, 2022, the Company had 2,285,714 warrants to purchase shares of common stock forfeited as a result of the settlement of a SEC legal case. The following table summarizes the stock warrant activity for the year ended December 31, 2022 and 2021: Schedule of warrant activity Warrants Weighted-Average Exercise Price Per Share Outstanding, December 31, 2020 – $ – Granted – – Exercised – – Forfeited – – Expired – – Outstanding, December 31, 2021 – – Granted 300,000 0.63 Recapitalization 10,372,857 0.45 Exercised 1,142,857 0.04 Forfeited ( 2,285,714 ) 0.04 Expired – – Outstanding, December 31, 2022 9,530,000 $ 0.50 Note 9. Notes Payable Notes Payable Pursuant to the merger agreement, the Company acquire outstanding note payables in the amount of $ 35,000 . These loans were advanced as due on demand and no communication has been received from the original lenders. Simultaneously with the Merger, approximately $ 4,574,132 of principal and interest of outstanding notes previously issued by the Company automatically converted into an aggregate of 18,296,528 shares of the Company’s common stock issued to 31 former noteholders. The conversion and issuance of shares of the Company’s common stock is presented as part of the recapitalization on the equity statement. Equipment Notes Payable In 2021, the Company entered into multiple financing agreements whereby the company agreed to purchase assets related to its crypto mining operations. The financing agreements required a down payments in the aggregate of $ 600,408 and 24 equal monthly payments . The Company used a 15% discount rate to determine the net present value of the loan value in the aggregate of $ 2,441,591 . During the year ended December 31, 2022 and 2021 the company made payments of $ 248,184 and $ 1,366,860 , respectively, of which $ 40,032 and $ 217,467 was recorded as interest expense. On July 11, 2022, the Company terminated its agreements with the vendor for the financed equipment described above. As of December, 31, 2022, and through the date of this filing, no agreement or communication from the vendor has been received confirming the terms of the termination, and therefore the Company has maintained these balances in equipment notes payable on the Company's balance sheet. In addition the Company has recorded the remaining $ 95,926 interest amounts owed under the agreements as of December 31, 2022 as the Company is in technical default due to lack of payments. The balance of the loans as of December 31, 2022 is $ 1,179,972 . F- 15 The following table presents the future maturities and principal payments of all notes payable listed above for the next five years and thereafter are as follows: Schedule of future maturities and principal payments Year Principal Amount 2023 $ 1,179,972 2024 – 2025 – 2026 – 2027 – Remaining – Total $ 1,179,972 Note 10 – Cryptocurrency Assets The Company began cryptocurrency mining activities during the year ended December 31, 2021. In addition to mining activities, the Company conducts other business activities using its cryptocurrency assets as compensation. The below table represents the cryptocurrency activities during the years ended December 31, 2022 and 2021: Schedule of cryptocurrency activities – Revenue recognized from cryptocurrency mined $ 1,572,906 Additions of cryptocurrency - sale of common stock 162,419 Additions of cryptocurrency – exercise of common stock options 3,687 Additions of cryptocurrency – contribution from director 29,547 Additions of cryptocurrency - sale of fixed assets 62,549 Proceeds from sale of cryptocurrencies ( 1,043,242 ) Fixed assets acquired with cryptocurrency ( 363,008 ) Settlement of loans with cryptocurrency ( 85,174 ) Realized loss on sale/exchange of cryptocurrencies ( 36,485 ) Cryptocurrency at December 31, 2021 303,199 Revenue recognized from cryptocurrency mined 438,042 Additions of cryptocurrency - sale of common stock 50,000 Proceeds from sale of cryptocurrencies ( 489,936 ) Cryptocurrency used for officer compensation ( 144,423 ) Realized loss on sale/exchange of cryptocurrencies ( 154,252 ) Cryptocurrency at December 31, 2022 $ 2,630 Note 11. Income Taxes The cumulative tax effect at the expected rate of 21 % of significant items comprising the Company’s net deferred tax amount is as follows: Schedule of deferred tax assets and liabilities December 31, 2022 December 31, 2021 Deferred tax asset attributable to: Net operating loss $ 996,800 $ 211,000 Valuation allowance ( 996,800 ) ( 211,000 ) Net deferred income tax assets $ – $ – F- 16 A reconciliation of income tax provision to the provision that would be recognized under the statutory rates is as follows: Schedule of components of income tax expense (benefit) December 31, 2022 December 31, 2021 Benefit attributable to operating loss $ 6,771,700 $ 747,300 Non-deductible ( 5,985,900 ) ( 540,500 ) Valuation allowance ( 785,800 ) ( 206,800 ) Provisions for income taxes $ – $ – The amount taken into income as deferred tax assets must reflect that portion of the income tax loss carry forwards that is more likely-than-not to be realized from future operations. The Company has chosen to provide an allowance of 100% against all available income tax loss carry forwards, regardless of their time of expiry. No provision for income taxes has been provided in these financial statements due to the net loss. At December 31, 2022, the Company has net operating loss carry forwards totaling approximately $ 4,800,000 , which will be carried forward to future periods. Note 12. 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 are still entitled to the remaining unvested options which the Company believes to be cancelled. The total number of stock options being contested is 137,473 , which are still shown as issued and outstanding in Note 8 above. Note 13. Subsequent Events On January 25, 2023, the Company amended stock option grants dated January 31, 2022 to each of Charlie Faulkner and Simon Wajcenberg, the Chief Executive Officer and Chief Financial Officer of the Company, respectively. The amendment reduces the exercise price of the options from $0.40 per share to $0.06 per share. On January 25, 2023, the Company redeemed the Preferred B shares and paid to the holder a total of $270,549 which included the stated value of $212,500, $6,190 in accrued dividends and the early redemption premium of $51,859. On February 27, 2023, the Company entered into a loan facility agreement with an unrelated third-party for up to an initial amount of BTC 3,000 which is to be repaid in 5 years from the date of the first advance. Additional advances may be provided under the agreement with approval from the lender. Advances shall accrue interest daily at a rate of 8.5%. No amounts have been advanced as of the date of this filing. On March 3, 2023, the board of directors of the Company granted to each of Charlie Faulkner and Simon Wajcenberg, the Chief Executive Officer and Chief Financial Officer of the Company, respectively, options to purchase up to 77,000,000 shares of the Company’s common stock at an exercise price of $0.04 per share, exercisable for five years (the “Stock Options”). The Stock Options shall each be a non-qualified option and shall become vested and exercisable upon the Company closing on the purchase of at least $15 million of crypto mining equipment. On March 3, 2023, the Company amended stock option grants dated September 12, 2022 to each of Charlie Faulkner and Simon Wajcenberg, the Chief Executive Officer and Chief Financial Officer of the Company, respectively. The amendment provides for the vesting to be only upon the closing of the purchase of at least $15 million of crypto mining equipment, rather than conditioned on an uplisting. its shares on the NASDAQ Global Market, New York Stock Exchange, or another equivalent market. On March 30, 2023, the Company entered into a settlement agreement with a previous note holder for settlement of outstanding claims. Per the terms of the settlement agreement, the Company issued 250,000 shares of common stock. On April 11, 2023, the Company entered into a promissory note with an unrelated third-party for $60,760 and an original issue discount of $6,510 and $4,250 in fees for net proceeds of $50,000. The note is to be repaid by March 11, 2024, and incurs a one-time, 13% interest charge of $7,898 and requires monthly payments of $7,629. In the event of default, the note is convertible into shares of common stock of the Company at a rate of 71% of the lowest trading price for common stock during the 20 trading days prior to the conversion date. The Company expects to receive the funds from this note immediately following the filing of the Form 10-K. On April 11, 2023, the Company entered into a promissory note with an unrelated third-party for $56,962 and an original issue discount of $2,712 and $4,250 in fees for net proceeds of $50,00. The note is to be repaid by March 11, 2024, and bears interest at a rate of 8%. The note is convertible into shares of common stock of the Company beginning 180 days after the date of the note at a rate of 65% of the lowest trading price for common stock during the 15 trading days prior to the conversion date. The Company expects to receive the funds from this note immediately following the filing of the Form 10-K. F- 17 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. None.