Edgemode, Inc. 10-K

Item 1. Business. Overview Edgemode, Inc. was incorporated under the laws of the State of Nevada in 2011. Our subsidiary, Edgemode Wyoming, was incorporated in the State of Wyoming in March 2020. Between 2021 and 2023, we attempted to become a key figure in Bitcoin mining but lacked the necessary funding to finance the purchase of Bitcoin mining hardware and hosting contracts. As a result, since late 2023 and throughout 2024, our business activities primarily consisted of identifying and evaluating suitable acquisition transaction candidates, which led to our now-planned strategic transition from cryptocurrency mining to digital infrastructure colocation services and high-performance computing (“HPC”) hosting. Effective April 7, 2025 (the “Effective Time” or “Closing Date”), Edgemode, Inc., Synthesis Analytics Production Ltd, an England and Wales private limited company (“SAPL”), and Adler Capital Limited, a company registered in Hong Kong, and the sole shareholder of SAPL, (“ACL”) closed on a Share Exchange Agreement dated April 7, 2025 (the “Share Exchange” or “Transaction”). In accordance with the Share Exchange, SAPL agreed to transfer 100% of SAPL’s outstanding capital stock to Edgemode in exchange for 1,260,246,354 shares of Edgemode common stock, par value $0.001 per share, which represented approximately 55% of the Company’s outstanding common stock at the Effective Time. The Company accounted for the acquisition as an asset acquisition under ASC 805 as SAPL did not meet the definition of a business as it did not contain a full set of integrated inputs and outputs at the time of closing. Following the closing of the Share Exchange, Edgemode, through SAPL, its wholly owned subsidiary, is now designing, building, and operating digital infrastructure for HPC with the goal of becoming a leading provider of digital colocation services. SAPL is an entity organized in 2022 under the laws of England and Wales. SAPL will change its name to EdgeMode Europe Limited. The acquisition of SAPL has positioned us to enter the rapidly evolving HPC hosting market in an efficient and effective manner. The acquisition has enabled us to plan to leverage SAPL’s existing infrastructure and expertise to meet the growing demand for data center facilities for third-party customers focused on cloud computing as well as machine learning and artificial intelligence. The acquisition of SAPL will enable us to become a premier provider and operator of dedicated, purpose-built data center facilities for our third-party customers. We believe that opportunities for growth exist in various applications of our data centers, which is another factor as to why we decided to begin offering digital infrastructure colocation services to third parties engaged in HPC. Our goal is to utilize the assets we have acquired via the purchase of SAPL for HPC hosting operations which will provide consistent dollar-based revenue and which represent substantially less risk than our historical digital asset self-mining operations. Our intent is to focus our business on development and marketing efforts to build data centers and expand our foundational HPC hosting customer base. Business Strategy Our business strategy is to generate revenue and achieve profitability by building large-scale data center infrastructure configured for specialized computers performing specific, high-value applications such as cloud computing, machine learning, and artificial intelligence and maximizing the use of assets acquired in the SAPL acquisition. We intend to strategically develop and to work to make operational the infrastructure necessary to support our contractual commitments to our HPC customers and to support expected customer growth and additional demand by leveraging our data center expertise and capabilities. We intend to seek additional opportunities and to engage additional customers in the HPC hosting market to expand our business using our knowledge, expertise, and existing and future infrastructure where favorable market opportunities exist. 1 Our strategy is focused on hyperscale cloud-based providers and enterprises, including potential customers that we believe have significant data center infrastructure needs that have not yet been outsourced or will require additional data center space and power to support their growth and their increasing reliance on technology infrastructure in their operations. We believe our capabilities for serving the needs of large hyperscale providers and enterprises will continue to enable us to capitalize on the growing demand for outsourced data center facilities in our markets and in new markets where our customers are located or plan to be located in the future. Our business strategy requires immediate funding of approximately $2,000,000 to enable us to commence our new operations and repay debt, as well as additional significant financing to develop and expand our new operations. There are no assurances that we will raise sufficient capital to execute our business plan or satisfy our liabilities. See “Risk Factors.” Products and Services High-Performance Computing Hosting HPC is a technology that uses clusters of powerful processors that work in parallel to process massive data sets and solve complex problems at extremely high speeds. The proliferation of data, as well as data-intensive and AI enabled applications and use cases, is driving demand for the computing power of HPC. Traditionally, HPC has involved an on-premises infrastructure, investing in supercomputers or computer clusters. Our HPC hosting revenue will be generated by licensing colocation data center space and related services to a licensee at our Marviken data center. These licensing agreements and orders include lease components, non-lease components (such as power delivery, physical security, maintenance and other billable expenses), as well as non-component elements such as taxes. Under these contracts, customers pay fixed payments (based on electric capacity) and variable payments on a recurring basis. HPC colocation leases may include all or portions of a data center, where customers may also lease office space to support their colocation operations where revenue is primarily based on power usage as well as square footage. Competition and Market Conditions The HPC market is highly competitive. In the HPC market, we compete with numerous established data center providers, including Equinix, Inc., Digital Realty Trust, NTT, Switch, Inc., and Core Scientific, Inc., as well as private operators specializing in HPC or colocation services, and digital asset miners looking to convert existing digital mining facilities into HPC colocation facilities. Many of these competitors are better established, have better brand recognition, are well capitalized, and organized to take advantage of certain tax benefits for their investors, lowering their external cost of capital. Many of our competitors seek to establish data centers in the same geographic regions as we do and compete for the same sources of power, equipment, and customers as our Company. Competitors compete on price, facility location, reputation, and perceived skill with respect to performance. We believe that our ability to take advantage of our recently acquired assets to rapidly deliver scalable, purpose-built data centers, combined with cutting-edge, energy-efficient technologies, will enable us to compete favorably within the HPC market. Dependence on Suppliers and Customers Our hosting activities will compete with many other hosting operations. Our success in our hosting operations depends on our ability to supply hosting space and power, our performance with respect to installation, operation, and repair of customer equipment, our ability to obtain replacement parts, the value of our service offering to our customers, and the availability of necessary equipment. To compete effectively as a hosting provider, we will market our services to large-scale third-party HPC customers that value our ability to host at scale and who are willing to pay a premium-hosting fee for our high up-time and operational expertise. 2 Suppliers and Development Efforts Power Providers Through SAPL, and the agreement dated December 27, 2024, as amended on February 20, 2025, between SAPL and Marviken ONE AB, a company organized in Sweden (“Marviken One”), we have secured a 95MW power purchase agreement (the “Power Purchase Agreement”). We will continue to cultivate relationships with power providers and work to leverage our operating capabilities to take advantage of any potential cost saving opportunities. Facility Development Through our acquisition of SAPL, and SAPL’s agreement with Marviken One dated December 27, 2024, we acquired a 10-year lease on a 1,050 square meter (“sqm”) building space and 28 sqm of office space located in Marviken, Sweden (the “Building Lease”). Our initial intent is to use the 1,050 sqm space to build a Tier 3 specification datacenter with a total of 16MW IT load capacity (a 20MW gross) (the “20MW Center”). The estimated cost to complete the 20MW Center is $70 million, which necessitates the need to raise further equity and debt capital to finance the build. Based on our acquisition, we have already secured our first client for an initial 1MW, which we plan to have operational in April 2025, and we are negotiating with another client for use of the remaining 15MW IT capacity. In addition to the acquisition of the Building Lease, we also obtained a 20,000 sqm plot of land in Marviken, Sweden (the “Marviken Property”), via a property purchase agreement entered into between SAPL and Marviken TWO AB, a company incorporated in Sweden (“Marviken Two”), on December 4, 2024 (the “Property Purchase”). The property is located at Marviken Kraftverk, 610 27 Vikbolandet, Sweden and we plan to build an additional datacenter with 75MW gross capacity (the “75MW Center”). The estimated cost to complete this development is between $400-470 million. The Company will have to raise further equity and debt capital to finance the development and construction, but we anticipate that a significant amount of the cost will be borne by our clients. Regarding both the 20MW Center and the 75MW Center, we will not commence building until the clients are secured. We have also secured a cooling agreement (the “Cooling Agreement”) via the agreement dated December 27, 2024 between SAPL and Marviken One. Marviken One has water rights which provide access to the Baltic Sea. Through our relationship with Marviken One, we intend to supply power and cooling to the 20MW Center and 75MW Center. We also assumed a 5% promissory note in the principal amount of $1,750,000 issued by SAPL to Marviken Two on December 4, 2024 (the “Note”), which represents part of the purchase price for the Property Purchase. The Note, together with accrued interest, is due in full on or before December 3, 2027. In the event SAPL raises any capital during 2025, a portion of the proceeds shall be used to pay down the Note. The Note is secured by the Marviken Property. Marviken One and Marviken Two are entities beneficially owned and controlled by Dr. Adler. Further, from our acquisition of SAPL, we also received cooling systems, tanks, heat exchangers, dielectric fluids, and other necessary data center components. These components will be used to build out our data center infrastructure throughout the spaces we have acquired. For all facility development, we will rely heavily on the expertise of third parties, focusing on sourcing, evaluating, designing, engineering, and developing the facilities where we will host our customers’ HPC colocation needs. Revenues Our HPC hosting operations will generate revenue by providing colocation, cloud, and connectivity services to customers in exchange for a fee. The HPC hosting operation provides colocation, facilities operations, security, and other services to third-party HPC customers to support workloads for machine learning and artificial intelligence. Through the acquisition of SAPL we have secured approximately 95MW of contracted power capacity and operational capacity of approximately 68 MW IT Load. 3 Intellectual Property We have acquired the intellectual property (“IP”) consisting of trade secrets associated with the SAPL brand, as well as SAPL’s immersion cooling technology and heat exchange technology through an intellectual property and trade secrets agreement originally entered into between SAPL and ACL on August 31, 2024 (the “IP Agreement”). This IP may be used in the future to build and provide services to data center clients, however there is no immediate use planned. There is potential to provide heated water to local utility companies from the residual heat created by our data centers using the heat exchange technology and IP that we are acquiring. Regulation The regulatory landscape surrounding HPC services, AI, and cloud computing is evolving rapidly, and we anticipate increased scrutiny and potential regulation in the near and long term. These developments may significantly affect our business and operations in ways that are difficult to predict. In the realm of cloud computing, there are growing concerns about the ethical implications and potential misuse of these technologies, particularly in association with AI and machine learning. Governments and regulatory bodies are considering measures to ensure the responsible development and deployment of AI systems, including transparency, accountability, and fairness guidelines. As a company whose customers will be operating in this space, we closely monitor these developments and attempt to adhere to any forthcoming regulations or industry best practices. Environmental The effects of human activity on global climate change have attracted considerable public and scientific attention, as well as the attention of the United States and other foreign governments. In general, efforts are being made by government regulators and others to reduce greenhouse gas emissions, particularly those from coal combustion power plants. Some of these plants may be those our operations rely upon for power. In addition, there are increasing concerns over the quantity of energy, particularly from non-renewable sources, used for bitcoin mining and its effects on the environment. While the nature or effect on the Company of any environmental regulatory changes by federal, state, local or foreign governments or self-regulatory agencies is impossible to predict, the added cost of any environmental taxes, charges, assessments, or penalties levied on power plants we rely upon could be passed on to us, increasing the cost to run our facilities. If environmental laws or regulations or industry standards are either changed or adopted and impose significant operational restrictions and compliance requirements on our operations, our business, capital expenditures, results of operations, financial condition, and competitive position could be materially adversely impacted. Human Capital/Employees As of April 7, 2025, we had 2 full-time employees, including 2 of our executive officers, and 1 part time employee including one of our executive officers. We also intend to engage consultants and contractors to supplement our permanent workforce on an as needed basis. None of our employees are represented by a labor union or covered by collective bargaining agreements, and we have not experienced any work stoppages. Corporate Information Our principal executive offices and telephone number are listed on the cover page of this report and our website address is www.Edgemode.io. We have not incorporated by reference into this report the information that can be accessed through our website and you should not consider such information to be part of this report. 4 Item 1A. Risk Factors. Not applicable to small reporting companies. However, our principal risk factors are described under “Management’s Discussions and Analysis of Financial Condition and Results of Operations.”