What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-14 compared with 2025-08-14 · 104 added, 112 removed, 97 unchanged (69% 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, 2024.

The following discussion and analysis compares our consolidated

results of operations for the three months ended June 30, 2025 (the “2025 Quarter”) with those for the three months ended

June 30, 2024 (the “2024 Quarter”) and our consolidated results of operations for the six months ended June 30, 2025 (the

“2025 Period”) with those for the six months ended June 30, 2024 (the “2024 Period”).

The following discussion and analysis should be read

in conjunction with our unaudited 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, 2024.

The following discussion and analysis compares our consolidated results

of operations for the three months ended September 30, 2025 (the “2025 Quarter”) with those for the three months ended September

30, 2024 (the “2024 Quarter”) and our consolidated results of operations for the nine months ended September 30, 2025 (the

“2025 Period”) with those for the nine months ended September 30, 2024 (the “2024 Period”).

Cautionary Note Regarding Forward-Looking Statements

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Business Overview

Edgemode was incorporated under the laws of the

State of Nevada in 2011.

Edgemode 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

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.

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services and HPC hosting.

Effective April 7, 2025, Edgemode, SAPL, and ACL

closed on the Share Exchange dated April 7, 2025.

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.

Effective April 7, 2025, Edgemode, SAPL, and ACL closed

on the Share Exchange dated April 7, 2025.

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,

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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.

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

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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

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

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to support their colocation operations where revenue is primarily based on power usage as well as square footage.

On January 21, 2025, the Company entered into

the Master Services Agreement with Cudo, a cloud computing company.

Under this agreement, the Company will provide Tier 3 data center

hosting infrastructure and colocation services to Cudo.

The Master Services Agreement supports a 1 MW capacity during a 5 year term at

our Marviken data center and is accompanied by a strict service level agreement to ensure 99% up time which can be terminated early by

either party if certain conditions are met.

The colocation space is designated for SingularityNet’s 1st modular datacenter container

from Ecoblox.

The Company will also provide optional smart hands engineering support at an hourly rate of $130 per hour, with a 50% premium

for evening and weekend services.

In consideration of the services, the Company shall receive electricity fees passed through at a variable

base cost multiplied be estimated usage plus an admin charge capped at 5%.

The minimum fee increase of 3% is waived for the first 3 years

and the annual CPI increase is capped at 2% for the first three years and 5% for the final two years.

The monthly rental payable is $75,887.

On February 18, 2025, an initial payment of $303,549 was made to the Company consisting of a $227,661 deposit, which is refundable at

the end of the term of the Master Services Agreement, and the first month’s rental payment of $75,887.

The initial payment was primarily

used to buildout the data center, including installing electrical and other infrastructure in order to support Cudo’s hardware through

the advance of $183,000 to SAPL.

The Master Services Agreement term commenced on April 8, 2025 when Cudo’s hardware was delivered

to our data center.

Gas Powered Tier 3 AI Data center development

See “Note 11 Subsequent Events” to

the financial statements included in this report for a description of memorandum of understanding dated October 15, 2025 between the Company

and BAIF for the purposes of organizing the SPV and the SPV SPA and for a discussion of the Company’s plan of operations for the

SPA and the Spain Leases.

There are no assurances the Company will receive sufficient capital or will receive capital on reasonable terms.

In addition, there are no assurances the application and permits will be received or that agreements will be completed or the datacenters

ultimately developed and sold or become operational.

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, 2024, 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.

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, 2024, 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 June 30, 2025 Compared to

the Three Months Ended June 30, 2024

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

Three Months Ended September 30, 2025 Compared

to the Three Months Ended September 30, 2024

Results of operations

Our operating expenses for the three months ended

June 30, 2025 (the “2025 Quarter”) was $3,262,408 compared to $380,819, for the three months ended June 30, 2024 (the “2024

Quarter”), an increase of 88%.

In the 2025 Quarter, the Company incurred stock-based compensation expense of $26,250 compared to

$0 for the 2024 Quarter.

The stock-based compensation for the 2025 Quarter was related to shares issued to a consultant for services performed.

Our other expense for the 2025 period was $564,873

compared to other income of $69,941 for the 2024 Quarter.

Other expenses in the 2025 period was comprised of $20,377 in interest expense,

$396,443 for the loss on the change in fair value of derivative liabilities and $148,053 on the loss on settlement of debt.

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 deposit.

Six Months Ended June 30, 2025 Compared to

the Six Months Ended June 30, 2024

Our operating expenses for the 2025 Quarter was $734,255

compared to $380,738, for the 2024 Quarter, an increase of 93%.

In the 2025 Quarter, the Company incurred stock-based compensation expense

of $166,500 compared to $0 for the 2024 Quarter.

The stock-based compensation for the 2025 Quarter was related to shares issued to a consultant

for services performed.

Our other income for the 2025 Quarter was $11,071,528

compared to other expense of $1,017,534 for the 2024 Quarter.

Other expense in the 2025 quarter was comprised of $5,869,219 in interest

expense, comprised of $5,665,276 of day one charges related to the derivative liabilities offset by the $16,940,747 for the gain on the

change in fair value of derivative liabilities.

Other expense in the 2024 quarter was comprised of $13,493 in interest expense and $1,279,091

for the loss on the change in fair value of derivative liabilities offset by income of $275,000 on the refund of an equipment deposit.

Nine Months Ended September 30, 2025 Compared to

the Nine Months Ended September 30, 2024

Results of operations

Our operating expenses for the six months ended

June 30, 2025 (the “2025 Period”) was $25,377,549 compared to $722,018, for the six months ended June 30, 2024 (the “2024

Period”), an increase of 723%.

In the 2025 Period, the Company incurred stock-based compensation expense of $24,273,137 compared

to $0 for the 2024 Period.

The stock-based compensation for the 2025 Quarter was related to the amendment of options to the officers of

the Company and issuance of shares to an outside consultant.

Our operating expenses for the 2025 Period was $26,111,804

compared to $1,102,756, for the 2024 Period, an increase of 2,278%.

In the 2025 Period, the Company incurred stock-based compensation

expense of $24,439,637 compared to $0 for the 2024 Period.

The stock-based compensation for the 2025 Quarter was related to the amendment

of options to the officers of the Company and issuance of shares to an outside consultant.

Our other income for the 2025 Period was $11,749,715

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Other income in the 2025 Period was comprised of $5,900,783 in interest expense

$857,804 for the gain on the change in fair value of derivative liabilities and $148,053 on the loss on settlement of debt.

Other expense

in the 2024 Period was comprised of $45,552 in interest expense, $60 in other 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 deposit.

comprised of $5,665,276 of day one charges related to the derivative liabilities, $17,798,551 for the gain on the change in fair value

of derivative liabilities and $148,053 on the loss on settlement of debt.

Other expense in the 2024 period was comprised of $56,045 in

interest expense and $1,431,143 for the loss on the change in fair value of derivative liabilities offset by income of $425,000 on the

refund of an equipment deposit.

Liquidity and Capital Resources

As of August 14, 2025, the Company had approximately

As of November 14, 2025, the Company had approximately

$650,000 of cash on hand.

Historically, our liquidity was primarily derived from debt and equity investments from accredited investors.

During the six months ended June 30, 2025, we received an initial payment of approximately $303,000 for colocation services to be provided

by the Company.

In addition, in April 2025 we sold 38,510,911 shares of restricted common stock to an accredited investor in consideration

On April 7, 2025, we executed the Share Exchange with SAPL and, now, we are seeking to raise at least $2,000,000 to commence

our HPC hosting operations and generate revenue.

We require significant funding to develop our HPC operations.

Subject to receiving funding,

we expect that our operating expenses will increase as we attempt to develop our new HPC operations and we will devote additional resources

toward new business opportunities.

However, as set forth elsewhere in this report, our ability to develop our business and achieve our

operational goals is dependent upon our ability to raise significant additional working capital.

As the availability of this capital is

unlikely, at this time, we are unable to quantify the expected increases in operating expenses in future periods.

During the nine months ended September 30, 2025, we received an initial payment of approximately $303,000 for colocation services to

be provided by the Company.

In addition, through the date of this filing in 2025 we have sold 45,177,578 shares of restricted common

stock to accredited investors in consideration of $500,000.

On April 7, 2025, we executed the Share Exchange with SAPL.

October 2025 we entered into a binding MOU with BAIF to acquire 5 properties in Spain and, now, we are seeking to raise at least $5,000,000

to commence our HPC hosting operations and develop our gas powered AI data centers and generate revenue.

We require significant funding

to develop our HPC operations.

We have received cash proceeds $1,096,000 from the issuance of convertible notes payable during 2025.

Subject to receiving funding, we expect that our operating expenses will increase as we attempt to develop our new HPC operations and

we will devote additional resources toward new business opportunities.

However, as set forth elsewhere in this report, our ability to

develop our business and achieve our operational goals is dependent upon our ability to raise significant additional working capital.

As the availability of this capital is unlikely, at this time, we are unable to quantify the expected increases in operating expenses

in future periods.

Summary of cash flows

June 30, 2025

June 30, 2024

September 30, 2025

September 30, 2024

Net cash provided by (used in) operating activities

Net cash used in investing activities

Net cash provided by (used in) investing activities

Net cash provided by (used in) financing activities

During the 2025 Quarter and the 2024 Quarter,

our sources and uses of cash were as follows:

During the 2025 Quarter and the 2024 Quarter, our

sources and uses of cash were as follows:

Operating Activities

During the 2025 period, cash used in operating

activities of $43,487 primarily resulted from the Prepaid AI hosting services (customer deposits), offset by the net loss of $24,699,362

and stock-based compensation of $24,273,137, and change in the fair value of derivative liabilities of $857,804.

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 2025 period, cash used in operating activities

of $352,479 primarily resulted from the Prepaid AI hosting services (customer deposits), offset by the net loss of $14,362,089 and stock-based

compensation of $24,439,637, and change in the fair value of derivative liabilities of $17,798,551 and day one interest charge of $5,665,276.

During the 2024 Period, cash provided by operating

activities of $22,740 primarily resulted from the refund of prepaid hosting services, offset by the net loss of $2,164,954, change in

fair value of derivative liabilities of $1,431,143, increases in accounts payable and accrued expenses of $68,492 and increases in accrued

payroll of $653,338.

Investing Activities

During the 2025 Period, the Company paid $47,915

of cash for assets in the construction of the HPC facility as well as $183,000 in connection with the acquisition of SAPL.

Cash used in investing activities in the 2024

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

During the 2025 Period, the Company paid $47,916 of

cash for assets in the construction of the HPC facility, $183,000 in connection with the acquisition of SAPL, and advanced $260,000 of

cash for working capital needs in connection with the business acquisition of BAIF for purposes of financing the construction of the HPC

Cash used in investing activities in the 2024 Period

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

Financing Activities

During the 2025 Period, the Company received $300,000

in cash proceeds in connection with the sale of shares of common stock of the Company, offset by repayments of related party advances

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 cash proceeds in connection with the sale of shares of common stock of the Company and $852,000 in cash proceeds from convertible notes

payable offset by net repayments of related party advances of $8,280.

In the 2024 Period, cash used in financing activities

of $13,275 consisted of $30,000 for the repayment of convertible notes payable, offset by proceeds from related party advances of $16,725.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis