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Item 2. Management’s Discussion and Analysis

2025-02-21 compared with 2022-08-22 · 143 added, 104 removed, 9 unchanged (96% of the section changed)

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

The following discussion

and analysis should be read in conjunction with our unaudited condensed consolidated financial statements, and the notes thereto, and

other financial information appearing elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements

and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and the annual financial statements

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

The following discussion and analysis compares our consolidated results of operations

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

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

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 June 30, 2024 (the “2024 Quarter”) with those for the six months ended June

30, 2023 (the “2023 Quarter”) and our consolidated results of operations for the six months ended June 30, 2024 (the “2024

Period”) with those for the six months ended June 30, 2023 (the “2023 Period”).

Cautionary Note Regarding Forward-Looking Statements

This report contains

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

These statements include, among other things, statements regarding expanding our business and our liquidity as well as other

statements regarding our future operations, financial condition and prospects, and business strategies.

Forward-looking statements

generally can be identified by words such as "anticipates," "believes," "estimates,"

"expects," "intends," "plans," "predicts," "projects," "will be,"

"will continue," "will likely result," and similar expressions.

These forward-looking statements are based on

current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ

materially and adversely from those reflected in the forward-looking statements.

Factors that could cause or contribute to such

differences include, but are not limited to, our ability to raise capital to buy the machines we have commitments to purchase and

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

in other documents we file with the SEC.

We undertake no obligation to revise or publicly release the results of any revision to

these forward-looking statements, except as required by law.

Given these risks and uncertainties, readers are cautioned not to place

undue reliance on such forward-looking statements.

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

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

Business Overview

We are an early-stage cryptocurrency mining.

Although Edgemode, our

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

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

Critical Accounting Policies

and Estimates

We discuss the material accounting

policies that are critical in making the estimates and judgments in our Annual Report on Form 10-K for the fiscal year ended December

31, 2021, under the caption “Management’s Discussion and Analysis—Critical Accounting Policies and Estimates”.

There has been no material change in critical accounting policies or estimates during the period covered by this report.

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

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.

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.

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.

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.

RESULTS OF OPERATIONS FOR

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

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

The reason for the increase was the Company began

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

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

The reason for the increase was the Company

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

For information on recent accounting pronouncements

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

Three Months Ended June 30, 2024 Compared to

the Three Months Ended June 30, 2023

Results of operations

Our operating expenses for the 2024 Quarter was

$23,345,463 compared to $86,002 for the 2021 Quarter.

The reason for the increase was the company began operations in March of 2021 for

one month of initial operations versus having a full quarter of operations for the 2022 Quarter.

In the 2022 Quarter, the Company incurred

stock-based compensation expense of $22,385,917 compared to $6,750 for the 2021 Quarter.

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

The reason for the increase was an increase

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

market prices.

$385,419 compared to $422,247, for the 2023 Quarter, a decrease of 9%.

The 2024 Quarter had lower expenses as the Company continues to

reduce cost compared to the 2023 Quarter.

Our other income for the 2024 Quarter was

$69,941 compared to other income of $484,887 for the 2023 Quarter.

Other income in the 2024 quarter was comprised of $18,132 in interest

expense and $61,867 for the loss on the change in fair value of derivative liabilities offset by income of $150,000 on the refund of

an equipment deposit.

Other income for the 2023 quarter was comprised of $15,113 in interest expense, offset by income of $500,000

in deposits from equipment refunds.

Six Months Ended June 30, 2024 Compared to

the Six Months Ended June 30, 2023

Results of operations

Our operating expenses for the 2024 Period was

$722,018 compared to $2,355,273, for the 2023 Period, a decrease of 70%.

In the 2024 Quarter, the Company incurred stock-based compensation

expense of $0 compared to $1,468,734 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 Period was $44,664

compared to other income of $414,999 for the 2023 Period.

Other expense in the 2024 quarter was comprised of $45,552 in interest expense

and $152,052 for the loss on the change in fair value of derivative liabilities offset by income of $150,000 on the refund of an equipment

Other income for the 2023 quarter was comprised of $22,387 in interest expense, $51,859 in prepayment penalties on the preferred

B shares, loss on legal settlement of $9,975, offset by income of $500,000 in deposits from equipment refunds.

Liquidity and Capital Resources

As of May 16, 2022, the Company had approximately

$150,000 of cash.

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

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

equity capital through private placements.

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

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

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

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

The Company has signed $300 million in hardware

purchase orders.

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

We can provide

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

we would accept.

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

If we fail to raise sufficient additional funds

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

The Company has approximately $2.3 million of

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

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

We can provide no assurance that we

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

As of June 30, 2024, and the date of the filing

of this report, Company had approximately $400 and $64,000 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.

On July 5, 2024, subsequent to the period

covered by this report, the Company received an additional refund of $275,000 related to prior advances made for the purchase of equipment.

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 $226,000, 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 for accrued salary.

We have suspended our operations.

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 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

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.

Summary of cash flows

March 31, 2022

March 31, 2021

Net cash (used) in operating activities

$ (1,109,921 )

Net cash (used) in investing activities

Net cash provided by financing activities

During the 2022 Quarter and

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

During the 2022 Quarter,

cash used in operating activities of $1,109,921 primarily resulted from its net loss of $23,626,491, offset by stock-based compensation

of $22,385,917 and loss on cryptocurrency transactions of $124,529.

During the 2021 Quarter,

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

and loss on cryptocurrency transactions of $20,708.

Cash provided by investing

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

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

Cash used in investing activities

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

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

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

on equipment notes payable of $220,999.

In the 2021 Quarter, cash

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

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

June 30, 2024

June 30, 2023

Net cash provided by (used in) operating activities

Net cash provided by (used in) investing activities

Net cash provided by (used in) financing activities

During the 2024 Quarter and the 2023 Quarter,

our sources and uses of cash were as follows:

Operating Activities

During the 2024 Period, cash used in operating

activities of $2,047 primarily resulted from the net loss of $766,682 offset by change in fair value of derivative liabilities of $152,052,

increases in accounts payable and accrued expenses of $45,725 and increases in accrued payroll of $532,137.

During the 2023 Period, cash provided by operating

activities of $400,994 primarily resulted from the refund of prepaid hosting services, offset by the net loss of $1,715,371 and stock-based

compensation of $1,236,487.

Investing Activities

Cash used in investing activities in the 2024

Period of $4,600 resulted from the purchase of cryptocurrency assets.

Cash provided by investing activities in the 2023

Period of $20,000 resulted from the sale of cryptocurrency assets.

Financing Activities

In the 2024 Period, cash provided by financing

activities of $6,725 consisted of $10,000 for the repayment of convertible notes payable, offset by proceeds from related party advances

In the 2023 Period, cash used in financing activities

of $124,051 consisted of the repayment of Series B preferred shares, offset by proceeds from convertible notes payable of $160,000.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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What changed 10-Q/A

Item 2. Management’s Discussion and Analysis