Edgemode, Inc. 10-Q

EDGEMODE, INC. Form 10-Q Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to ________________ Commission file number 000-55647 EDGEMODE, INC. (Exact name of registrant as specified in its charter) Nevada 47-4046237 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 110 E. Broward Blvd. , Suite 1700 , Ft. Lauderdale , FL 33301 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: ( 707 ) 687-9093 Securities registered pursuant to Section 12(b) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐ If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐ There were 390,687,459 shares of the registrant’s common stock outstanding as of May 21, 2024. TABLE OF CONTENTS Page PART I – FINANCIAL INFORMATION 3 Item 1. Financial Statements (Unaudited) 3 Consolidated Balance Sheets 3 Consolidated Statements of Operations 4 Consolidated Statements of Stockholders’ Equity (Deficit) 5 Consolidated Statements of Cash Flows 6 Notes to the Consolidated Financial Statements 7 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 16 Item 3. Quantitative and Qualitative Disclosures about Market Risk 18 Item 4. Controls and Procedures 19 PART II – OTHER INFORMATION 20 Item 1. Legal Proceedings 20 Item 1A. Risk Factors 20 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 20 Item 3. Defaults Upon Senior Securities 20 Item 4. Mine Safety Disclosures 20 Item 5. Other Information 20 Item 6. Exhibits 20 Signatures 21 Exhibit Index 22 Unless the context otherwise indicates, when used in this report, the terms the “Company,” “Edgemode”, “we,” “us, “our” and similar terms refer to Edgemode, Inc. and our wholly owned subsidiary, EdgeMode, a Wyoming corporation. Our corporate website is www.edgemode.io. There we make available copies of Edgemode documents, news releases and our filings with the U.S. Securities and Exchange Commission including financial statements. Unless specifically set forth to the contrary, the information that appears on our website is not part of this report. 2 PART I – FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Edgemode, Inc. Consolidated Balance Sheets (Unaudited) March 31, 2024 December 31, 2023 ASSETS Current assets: Cash $ – $ 298 Prepaid expenses and other current assets 20,258 20,258 Total current assets 20,258 20,556 Intangible assets – cryptocurrencies 32 32 Total assets $ 20,290 $ 20,588 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued expenses $ 782,001 $ 721,780 Accrued payroll 961,701 661,201 Equipment notes payable 1,179,972 1,179,972 Convertible notes payable 35,000 35,000 Notes payable 16,000 16,000 Notes payable – related parties 342,501 342,501 Derivative liabilities 287,275 197,090 – Total current liabilities 3,604,450 3,153,544 Total liabilities 3,604,450 3,153,544 Commitments and contingencies – – Stockholders’ deficit: Preferred shares, $ 0.001 par value, 4,999,000 shares authorized March 31, 2024 and December 31, 2023; none issued and outstanding – – Common shares, $ 0.001 par value, 950,000,000 shares authorized March 31, 2024 and December 31, 2023; 390,687,459 shares issued and outstanding, March 31, 2024 and December 31, 2023 390,687 390,687 Additional paid-in capital 35,142,231 35,142,231 Accumulated deficit ( 39,117,078 ) ( 38,665,874 ) Stockholders’ deficit ( 3,584,160 ) ( 3,132,956 ) Total liabilities and stockholders’ deficit $ 20,290 $ 20,588 See accompanying notes to the unaudited consolidated financial statements. 3 Edgemode, Inc. Consolidated Statements of Operations (unaudited) For the three months ended March 31, 2024 March 31, 2023 Operating expenses: General and administrative expenses $ 336,599 $ 1,705,525 Loss on cryptocurrencies – – Total operating expenses 336,599 1,705,525 Loss from operations ( 336,599 ) ( 1,705,525 ) Other expense: Interest expense ( 24,420 ) ( 7,274 ) Penalty on redemption of Preferred B shares – ( 51,859 ) Other expense – ( 3,378 ) Change in fair value of derivatives ( 90,185 ) – Loss on settlement – ( 9,975 ) Total other expense, net ( 114,605 ) ( 72,486 ) Loss before provision for income taxes ( 451,204 ) ( 1,778,011 ) Provision for income taxes – – Net loss $ ( 451,204 ) $ ( 1,778,011 ) Loss per common share - basic $ ( 0.00 ) $ ( 0.00 ) Loss per common share - diluted $ ( 0.00 ) $ ( 0.00 ) Weighted average shares outstanding - basic 390,687,459 390,440,237 Weighted average shares outstanding - diluted 390,687,459 390,440,237 See accompanying notes to the unaudited consolidated financial statements. 4 Edgemode, Inc. Consolidated Statements of Stockholders’ Equity (Deficit) For the three months ended March 31, 2024 and 2023 (Unaudited) Total Common Additional Stockholders' Common Stock Paid-In Accumulated Equity/ Shares Amount Capital Deficit (deficit) Balance December 31, 2023 390,687,459 $ 390,687 $ 35,142,231 $ ( 38,665,874 ) $ ( 3,132,956 ) Net Loss – – – ( 451,204 ) ( 451,204 ) Balance March 31, 2024 390,687,459 $ 390,687 $ 35,142,231 $ ( 39,117,078 ) $ ( 3,584,160 ) Balance December 31, 2022 390,437,459 $ 390,437 $ 33,896,019 $ ( 35,880,128 ) $ ( 1,593,672 ) Common shares issued for settlement of claims 250,000 250 9,725 – 9,975 Stock-based compensation – – 1,236,487 – 1,236,487 Net Loss – – – ( 1,778,011 ) ( 1,778,011 ) Balance March 31, 2023 390,687,459 $ 390,687 $ 35,142,231 $ ( 37,658,139 ) $ ( 2,125,221 ) See accompanying notes to the unaudited consolidated financial statements. 5 Edgemode, Inc. Consolidated Statements of Cash Flows (unaudited) For the three months ended March 31, 2024 March 31, 2023 Operating Activities: Net loss $ ( 451,204 ) $ ( 1,778,011 ) Adjustments to reconcile net loss to net cash used in operating activities: Amortization of discounts – 7,274 Penalty on redemption of Preferred B shares – 51,859 Loss on settlement – 9,975 Stock-based compensation – 1,236,487 Change in fair value of derivative liabilities 90,185 – Changes in operating assets and liabilities: Prepaid expenses and other current assets – 901,735 Accounts payable and accrued expenses 60,221 ( 98,338 ) Accrued payroll 300,500 ( 49,395 ) Net cash provided by (used in) operating activities ( 298 ) 281,586 Investing Activities: Proceeds from sale of cryptocurrencies – 2,598 Net cash provided by investing activities – 2,598 Financing Activities: Payments on preferred B shares – ( 270,549 ) Net cash used in financing activities – ( 270,549 ) Net change in cash ( 298 ) 13,635 Cash - beginning of period 298 70 Cash - end of period $ – $ 13,705 Supplemental Disclosures: Interest paid $ – $ – Income taxes paid $ – $ – See accompanying notes to the unaudited consolidated financial statements. 6 Edgemode, Inc. Notes to the Consolidated Financial Statements (Unaudited) NOTE 1 – Basis of Presentation The accompanying unaudited interim financial statements of Edgemode, Inc. (“we”, “our”, “Edgemode” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as amended, as filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for our interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate the disclosure contained in the audited financial statements for fiscal 2023, as reported in the Form 10-K for the fiscal year ended December 31, 2023 of the Company, have been omitted. NOTE 2 – Summary of Significant Accounting Policies 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. Principals 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. 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. 7 The following fair value hierarchy tables present information about the Company’s liabilities measured at fair value on a recurring basis: Schedule of liabilities measured at fair value Fair Value Measurements at March 31, 2024 Level 1 Level 2 Level 3 Liabilities: Derivative liabilities $ – $ – $ 287,275 Fair Value Measurements at December 31, 2023 Level 1 Level 2 Level 3 Liabilities: Derivative liabilities $ – $ – $ 197,090 The Company had no assets valued using level 1, level 2, or level 3 inputs as of March 31, 2024 or December 31, 2023. Derivative Financial Instruments Derivatives are measured at their fair value on the balance sheet. In determining the appropriate fair value, the Company uses a binomial calculator model. Changes in fair value are recorded in the consolidated statements of operations. 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. 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. 8 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. Long-Lived Assets – Cryptocurrencies We account for our cryptocurrencies, intangible assets and long-term license agreement in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 350-30, General Intangibles Other Than Goodwill, and ASC Subtopic 360-10-05, Accounting for the Impairment or Disposal of Long-Lived Assets. ASC Subtopic 350-30 requires assets to be measured based on the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and, thus, more reliably measurable. Our cryptocurrencies are deemed to have an indefinite useful life; therefore amounts are not amortized, but rather are assessed for impairment as further discussed in our impairment policy. Under ASC Subtopic 350-30 any intangible asset with a useful life is required to be amortized over that life and the useful life is to be evaluated every reporting period to determine whether events or circumstances warrant a revision to the remaining period of amortization. If the estimate of useful life is changed the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life. Costs of internally developing, maintaining, or restoring intangible assets are recognized as an expense when incurred. Recent Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) : Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 on a retrospective basis. The Company is currently evaluating the effect of this pronouncement on its disclosures. 9 In December 2023, the FASB issued ASU 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”). This ASU is intended to improve the accounting for certain crypto assets by requiring an entity to measure those crypto assets at fair value each reporting period with changes in fair value recognized in net income. The amendments also improve the information provided to investors about an entity’s crypto asset holdings by requiring disclosure about significant holdings, contractual sale restrictions, and changes during the reporting period. ASU 2023-08 requires a cumulative-effect adjustment to the opening balance of retained earning as of the beginning of the annual reporting period in which the entity adopts the amendment and is effective for all reporting companies for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the impact that this ASU may have on its consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) : Improvements to Income Tax Disclosures, which expands the disclosures required for income taxes. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendment should be applied on a prospective basis while retrospective application is permitted. The Company is currently evaluating the effect of this pronouncement on its disclosures. 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 March 31, 2024, the Company had not yet achieved profitable operations and expects to incur further losses as it has suspended its operations until such time, if any, that the Company receives adequate funding, all of which raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s management has also begun exploring possible opportunities for the Company involving mergers, acquisitions or other business combination transactions in an effort to diversify our business. The Company is not currently a party to any agreement or understandings with any third parties, and there are no assurances even if the Company’s management locates an opportunity which it believes will be in the best interests of the Company’s shareholders that it will ever consummate such a transaction. Accordingly, investors should not place undue reliance on these efforts. 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. NOTE 4 – Related Party Transactions As of March 31, 2024 the Company owed the executive officers of the Company $ 961,701 in accrued payroll for services performed. During the year ended December 31, 2023, the executive officers of the Company advanced $ 16,000 to the Company for working capital needs. The advances are non-interest bearing and are due on demand. NOTE 5 – 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. In connection with the Transaction, the only outstanding preferred stock was converted into common stock. As of the date of this report, there are no outstanding shares of preferred stock. 10 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 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 an 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. As of March 31, 2024, there are no shares of the Series B preferred shares outstanding. Common shares The Company has authorized 950,000,000 shares of common stock, par value of $ 0.001 , and as of March 31, 2024 has issued 390,687,459 shares of common stock. All of the common shares have the same voting rights and liquidation preferences. Stock Options As of March 31, 2024, the Company has $ 22,529,707 of value remaining to be expensed based upon completions of milestones, of which $ 21,679,711 is contingently subject to expense recognition based on the timing of when the Company is able to close on a purchase of at least $15 million of crypto mining equipment 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 three months ended March 31, 2024: Schedule of stock option activity Options Weighted-Average Exercise Price Per Share Outstanding, December 31, 2023 393,284,669 $ 0.09 Granted – – Exercised – – Forfeited – – Expired – – Outstanding, March 31, 2024 393,284,669 $ 0.09 As of March 31, 2024, 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 3.5 years as of March 31, 2024. 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 March 31, 2024, the intrinsic value for the options vested and outstanding was $ 0 and $ 302 , respectively. 11 Stock Warrants The following table summarizes the stock warrant activity for the three months ended March 31, 2024: Schedule of stock warrant activity Warrants Weighted-Average Exercise Price Per Share Outstanding, December 31, 2023 9,530,000 $ 0.50 Granted – – Exercised – – Forfeited – – Expired – – Outstanding, March 31, 2024 9,530,000 $ 0.50 NOTE 6 – Notes Payable and Convertible Notes Payable Notes Payable Pursuant to the merger agreement, the Company acquired 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. 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 years 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 September 30, 2023, 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. The balance of the loans as of March 31, 2024 is $ 1,179,972 , which is due on demand as a result of the default. Convertible notes payable 1800 Diagonal Lending Notes On April 11, 2023, the Company entered into a Securities Purchase Agreement effective April 20, 2023 with 1800 Diagonal Lending LLC, an accredited investor, pursuant to which the Company sold the investor an unsecured promissory note in the principal amount of $ 60,760 (the “April Promissory Note”). The Company received net proceeds of $ 50,000 in consideration of issuance of the April Promissory Note after original issue discount of $ 6,510 and legal fees of $ 4,250 . The aggregate debt discount of $ 10,760 is being amortized to interest expense over the respective term of the note. The April Promissory Note shall incur a one-time interest charge of 13 %, which is added to the principal balance, has a maturity date of March 11, 2024 , and requires monthly payments of $ 7,629 beginning on September 15, 2023. The April Promissory Note is convertible into common shares of the Company upon an event of default, at a rate of 71% of the lowest price for the preceding 20 trading days. In addition, upon default, the Company must repay an amount equal to 150% of the then outstanding amount of principal and accrued interest combined. As of March 31, 2024, the balance on the note is $ 42,262 , with a remaining unamortized discount of $ 0 . 12 In addition, on April 11, 2023, the Company entered into an additional Securities Purchase Agreement effective April 20, 2023 with the above investor, pursuant to which the Company sold the investor an unsecured promissory note in the principal amount of $ 56,962 (the “Convertible Note”), bears interest at a rate of 8 %, or 22% in the event of default, and matures on April 11, 2024 . The Company received net proceeds of $ 50,000 in consideration of issuance of the Convertible Note after original issue discount of $ 2,712 and legal fees of $ 4,250 . The aggregate debt discount of $6,962 is being amortized to interest expense over the respective term of the note. The Convertible Note is convertible into common shares of the Company beginning on the sixth-month anniversary, at a rate of 65% average of the three of the lowest prices for the preceding 15 trading days. In addition, upon default, the Company must repay an amount equal to 150% of the then outstanding amount of principal and accrued interest combined. As of March 31, 2024, the balance on the note is $ 94,439 , with a remaining unamortized discount of $ 0 . On August 4, 2023, the Company entered into a Securities Purchase Agreement with 1800 Diagonal Lending LLC, an accredited investor, pursuant to which the Company sold the investor an unsecured original issuance discount promissory note in the principal amount of $ 71,450 (the “August Promissory Note”). The Company received net proceeds of $ 60,000 in consideration of issuance of the August Promissory Note after original issue discount of $ 7,200 and legal fees of $ 4,250 . The aggregate debt discount of $11,450 is being amortized to interest expense over the respective term of the note. The August Promissory Note shall incur a one-time interest charge of 13 %, which is added to the principal balance, has a maturity date of May 24, 2024 , and requires monthly payments of $ 8,971 beginning on September 15, 2023. The August Promissory Note is convertible into common shares of the Company at any time following an event of default at a rate of 71% of the lowest trading price of the Company’s common stock during the twenty prior trading days. In addition, upon default, the Company must repay an amount equal to 150% of the then outstanding amount of principal and accrued interest combined. As of March 31, 2024, the balance on the note is $ 99,529 , with a remaining unamortized discount of $ 0 . On October 20, 2023 the Company received notice from 1800 Diagonal Lending LLC, the holder of the April Promissory Note, Convertible Note and August Promissory Note (collectively, the “1800 Notes”) that such notes were in default. The holder has made demand for the immediate payment of the 1800 Notes of a sum representing 150% of the remaining outstanding principal balances of the 1800 Notes in the aggregate of $250,008.99, together with accrued interest and default interest as provided for in the 1800 Notes. As a result of the default, the 1800 Notes became convertible into common stock and an additional $ 88,618 of principal was added to the note balance. In addition, as a result of the default the notes became convertible at a variable rate resulting in derivative liability accounting under ASC 815. The fair value of the derivative on the date of default was charged directly to interest expense, as the notes are passed due. See further discussion under Note 7. Other Convertible Promissory Notes On April 25, 2023, the Company entered into a Securities Purchase Agreement with an accredited investor, pursuant to which the Company sold the investor an unsecured promissory note in the principal amount of $ 60,000 . The Company received proceeds of $ 60,000 in consideration of issuance of the Promissory Note. The Promissory Note shall bear interest at a rate of 10 % and have a maturity date of May 26, 2023 . The Promissory Note has a prepayment percentage of 130% for the period beginning on the issuance date and ending on the maturity date. As of March 31, 2024, the balance on the note is $ 60,000 . The note is past due. In addition, on April 26, 2023, the Company entered into a Promissory Note Purchase Agreement with another investor, pursuant to which the Company sold the investor an unsecured convertible promissory note in the principal amount of $ 57,502 Promissory Note. The Company received gross proceeds of $ 57,502 in consideration of issuance of the Promissory Note. The Promissory Note shall bear interest at a rate of 10 % and have a maturity date of May 26, 2023 . The Promissory Note has a prepayment percentage of 130% for the period beginning on the issuance date and ending on the maturity date. As of March 31, 2024, the balance on the note is $ 57,502 . The note is past due. The investors may in their option, at any time following the 180-day anniversary from the issuance date, as defined in the Promissory Notes, convert all or any part of the outstanding and unpaid amount of the Promissory Notes into fully paid and non-assessable shares of Common Stock. If the Promissory Notes are not repaid on or prior to the maturity date, the conversion price will be $0.20 or 50% of the preceding five day VWAP on the six month anniversary, which is lower, subject to a floor conversion price of $0.01 per share. On the 180-day anniversary date the resulting conversion price is equal to $0.01 Furthermore, the Promissory Notes contain a “most favored nation” provision that allows each investor to claim any preferable terms from any future securities, excluding certain exempt issuances. 13 NOTE 7 – Derivative Liabilities The fair values of the conversion option of outstanding convertible notes payable and common stock warrants were determined to be derivative liabilities under ASC 815 due to the default on convertible notes payable disclosed above, which resulted in a variable conversion price on the outstanding convertible note payable. The fair value of the derivative liabilities was estimated using a binomial model with the following assumptions: Schedule of assumptions for derivative liabilities As of March 31, 2024 Conversion Option Warrants Volatility 203.89% 151.16% Dividend Yield 0% 0% Risk-free rate 5.03% 4.40% Expected term 1 year 2.25-3 years Stock price $ 0.0022 $ 0.0022 Exercise price $0.0014-0.01 $ 0.5 Derivative liability fair value $ 285,733 $ 1,542 Number of shares issued upon conversion, exercise, or satisfaction of required conditions as of March 31, 2024 176,373,841 9,530,000 All fair value measurements related to the derivative liabilities are considered significant unobservable inputs (Level 3) under the fair value hierarchy of ASC 820. The table below presents the change in the fair value of the derivative liability during the year ended December 31, 2023: Schedule of fair value of derivative liability Fair value as of December 31, 2023 $ 197,090 Fair value on the date of issuance related to principal default – Fair value on the date of issuance related to warrants issued – Change in fair value of derivatives 90,185 Fair value as of March 31, 2024 $ 287,275 The total impact of derivative liabilities recognized in the Company’s consolidated statements of operations includes the change in fair value of derivatives, with the Company recognizing a total gain of $ 90,185 during the three months ended March 31, 2024. In addition, as a result of the default, all other potentially dilutive instruments must also be recorded at fair value pursuant to ASC 815. 14 NOTE 8 – 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 three months ended March 31, 2024: Schedule of cryptocurrency Cryptocurrency at December 31, 2024 $ 32 Loss on cryptocurrency – Cryptocurrency at March 31, 2024 $ 32 NOTE 9 – 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 . No additional communication has been received related to the claims from Taylor. 15 ITEM 2. 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, 2023. The following discussion and analysis compares our consolidated results of operations for the three months ended March 31, 2024 (the “2024 Quarter”) with those for the three months ended March 31, 2023 (the “2023 Quarter”). Cautionary Note Regarding Forward-Looking Statements This report contains “forward-looking statements”. 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 crypto mining machines we have commitments to purchase, regulatory issues which affect our business model, and those discussed under the caption "Risk Factors" in our Form 10-K for the year ended December 31, 2023 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 Since our incorporation, the Company has attempted to become involved in a number of business ventures, all of which, excluding Edgemode Wyoming, were unsuccessful and which have been abandoned. Edgemode Wyoming historically mined Ethereum from late 2020 until September 2022. Although Edgemode Wyoming historically mined Ethereum, due to the change of Ethereum (ETH) from Proof of Work (POW) to Proof of stake (POS), the Company terminated all rental agreements and future purchase orders related to Ethereum mining operations. We now intend to mine Bitcoin, subject to financing. However, we require significant financing to commence Bitcoin mining. Since late 2022 we have focused on securing a debt facility. We cannot provide any assurances we will receive any capital under a debt facility. Any debt financing will be used to finance the purchase of Bitcoin mining hardware and hosting contracts. We have suspended our daily operations subject to receiving additional funding. There are no assurances we will receive adequate financing. Our management has also begun exploring possible opportunities for the Company involving mergers, acquisitions or other business combination transactions in an effort to diversify our business. We are not currently a party to any agreement or understandings with any third parties, and there are no assurances even if our management locates an opportunity which it believes will be in the best interests of our shareholders that we will ever consummate such a transaction. Accordingly, investors should not place undue reliance on these efforts. As stated above, at present, the Company has no sources of revenue and has no specific business plan or purpose without significant financing. Therefore, the Company’s business plan is to also seek an acquisition or merger candidate (a “Business Combination”). As a result, the Company is considered a “blank check” or “shell” company. See the Risk Factors included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Management does not intend to undertake any efforts to cause a market to develop in the Company’s securities until such time as the Company has successfully implemented its business plan and/or closed on a suitable Business Combination. Although we have been in discussions with potential partners or targets, we have not entered into any definitive agreements. The evaluation and selection of a business opportunity is a complex and uncertain process, and we have not yet identified a target operating business for acquisition. Business opportunities that we believe are in the best interests of the Company and its shareholders may be scarce, or we may be unable to attract the businesses we identify as viable for our objectives, including due to competitive forces in the marketplace beyond our control. There is no assurance that we will be able to locate compatible business opportunities for the Company. 16 Critical Accounting Policies and Estimates We discuss the material accounting policies that are critical in making the estimates and judgments in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, 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. Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023 Results of operations Our operating expenses for the three months ended March 31, 2024 (the “2024 Quarter”) was $336,599 compared to $1,705,525, for the three months ended March 31, 2023 (the “2023 Quarter”), a decrease of 80%. In the 2024 Quarter, the Company incurred stock-based compensation expense of $0 compared to $1,236,487 for the 2023 Quarter. The stock-based compensation for the 2023 Quarter was related to the amendment of options to the officers of the Company. Our other expense for the 2024 Quarter was $114,605 compared to other expense of $72,486 for the 2023 Quarter. Other expense in the 2024 quarter was comprised of $24,420 in interest expense and $90,185 for the loss on the change in fair value of derivative liabilities. Other expense for the 2023 quarter was comprised of $7,274 in interest expense, $51,859 in a prepayment penalty on the redemption of our Series B Preferred shares, $9,975 from a loss on settlement and $3,378 in other expenses. Liquidity and Capital Resources As of March 31, 2024 and May 21, 2024, the Company had approximately $0 of cash on hand. Our liquidity was primarily derived from debt and equity investments from accredited investors and also from selling the crypto that we mined through September 2022. To recommence our crypto operations and fund operations for the next 12 months, the Company is seeking to raise $75 million in debt facility. We currently have no available sources of capital and we can provide no assurances that any debt financings will be available in the future. Additionally, the Company is (i) in default under the 1800 Notes in the sum of 150% of the remaining outstanding principal balances of the 1800 Notes in the aggregate of approximately $235,000, plus accrued interest and default interest as defined under such notes, (ii) in default under two other notes in the aggregate principal amount of approximately $120,000 and (iii) owes a significant amount of money to its executive officers. We have suspended our operations. If we fail to close on a debt facility or raise sufficient additional funds from other sources, we will be required to abandon our plan of operations. The Company has terminated the agreements for approximately $1.6 million of debt for equipment that the Company was using for mining and returned the equipment to the vendor to settle the outstanding liabilities. The Company is making no further payments against the potential balance. No confirmation has been received from 2CRSI and as such the balance remains outstanding on the Company’s balance sheet in the accompanying financial statements. 17 Summary of cash flows March 31, 2024 March 31, 2023 Net cash provided by (used in) operating activities $ (298 ) $ 281,586 Net cash provided by investing activities $ – $ 2,598 Net cash provided by (used in) financing activities $ – $ (270,549 ) During the 2024 Quarter and the 2023 Quarter, our sources and uses of cash were as follows: Operating Activities During the 2024 Quarter, cash used in operating activities of $298 primarily resulted from the net loss of $451,204 offset by change in fair value of derivative liabilities of $90,185, increases in accounts payable and accrued expenses of $60,221 and increases in accrued payroll of $300,500. During the 2023 Quarter, cash provided by operating activities of $281,586 primarily resulted from the refund of prepaid hosting services, offset by the net loss of $1,788,011 and stock-based compensation of $1,236,487. Investing Activities The Company had no investing activities during the 2024 Quarter. Cash provided by investing activities in the 2023 Quarter of $2,598 resulted from the sale of cryptocurrency assets. Financing Activities The Company had no financing activities during the 2024 Quarter. In the 2023 Quarter, cash used in financing activities of $270,549 consisted of the redemption of our outstanding Series B preferred shares. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. 18 ITEM 4. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures . We are required to maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”). Based on their evaluation as of the end of the period covered by this report, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were not effective to ensure that the information relating to our company, required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure as a result of material weaknesses in our internal control over financial reporting result from limited segregation of duties and limited multiple levels of review in the financial close process, along with a lack of well-established policies and procedures to identify, approve, and report related party transactions. We will continue to monitor our internal control over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow. We do not, however, expect that the material weaknesses in our disclosure controls will be remediated until such time as we have added additional personnel, including additional accounting and administrative staff, allowing improved internal control over financial reporting. Changes in Internal Control Over Financial Reporting . There were no changes in our internal control over financial reporting as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 19 PART II – OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS From time to time, the Company may become a party to legal actions or proceedings in the ordinary course of its business. At March 31, 2024, there were no such actions or proceedings, either individually or in the aggregate, that, if decided adversely to the Company’s interests, the Company believes would be material to its operation or cash flow. ITEM 1A. RISK FACTORS While we attempt to identify, manage, and mitigate risks and uncertainties associated with our business to the extent practical under the circumstances, some level of risk and uncertainty will always be present. Our “Risk Factors” in the Form 10-K for the fiscal year ended December 31, 2023 describes some of the risks and uncertainties associated with our business, which we strongly encourage you to review. These risks and uncertainties have the potential to materially affect our business, financial condition, results of operations, cash flows, projected results, and future prospects. There have been no material changes in our risk factors from those disclosed in the Form 10-K for the fiscal year ended December 31, 2023. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS There were no unregistered sales of the Company’s equity securities during the 2023 Quarter. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. ITEM 5. OTHER INFORMATION During the quarter ended March 31, 2024, no director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation S-K. ITEM 6. EXHIBITS The exhibits listed in the accompanying “ Index to Exhibits ” are filed or incorporated by reference as part of this Form 10-Q. 20 Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. Dated: May 21, 2024 EDGEMODE, INC. By: /s/ Charlie Faulkner Charlie Faulkner Chief Executive Officer (Principal Executive Officer) By: /s/Simon Wajcenberg Simon Wajcenberg Chief Financial Officer (Principal Financial and Accounting Officer)\ 21 EXHIBIT INDEX Incorporated by Reference Exhibit No. Exhibit Description Form Date Number Filed or Furnished Herewith 2.1 Agreement and Plan of Merger and Reorganization + 8-K 12/8/2021 2.1 3.1 Certificate of Incorporation, as Amended and Restated 10-K 4/12/2022 3.1 3.2 Bylaws 8-K 2/7/2022 3.1 3.2(a) Amendment No. 1 to the Bylaws 8-K 4/15/2022 3.1 31.1 CEO Certification (302) Filed 31.2 CFO Certification (302) Filed 32.1 CEO Certification (906) Furnished 32.2 CFO Certification (906) Furnished 101.INS XBRL Instance Document Filed 101.SCH XBRL Taxonomy Extension Schema Document Filed 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document Filed 101.DEF XBRL Taxonomy Extension Definition Linkbase Document Filed 101.LAB XBRL Taxonomy Extension Label Linkbase Document Filed 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document Filed 104 Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101) + Exhibits and/or Schedules have been omitted. The Company hereby agrees to furnish to the Staff of the Securities and Exchange Commission upon request any omitted information. Copies of this filing (including the financial statements) and any of the exhibits referred to above will be furnished at no cost to our shareholders who make a written request to Edgemode, Inc., 110 E. Broward Blvd., Suite 1700, Ft. Lauderdale, FL 33301; Attention: Corporate Secretary. 22