What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-28 compared with 2025-11-14 · 274 added, 146 removed, 55 unchanged (88% 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 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”).

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, 2025.

The following discussion and analysis compares our consolidated

results of operations for the three months ended March 31, 2026 (the “2026 Quarter”) with those for the three months ended

March 31, 2025 (the “2025 Quarter”).

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, 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 transition from cryptocurrency mining to digital infrastructure colocation

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.

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 and 2025, 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 artificial intelligence (“AI”) data center and energy infrastructure development.

On October 15, 2025, the Company and Blackberry

AIF (“BAIF”) entered into a memorandum of understanding (the “MOU”) for the purposes of organizing DC Estate Solutions

Cayman Limited, a Cayman Island entity (“DC Estate Solutions”) which was organized by the Company on October 23, 2025.

November 6, 2025, DC Estate Solutions and BAIF entered into a share purchase agreement (the “SPV SPA”).

DC Estate Solutions

was initially owned and controlled 75% by the Company and 25% by BAIF.

The principal of BAIF is Jose Mora.

DC Estate Solutions has acquired

five property leases, which were previously assigned to and held by BAIF, consisting of 100 hectares of land each located in the Spain

cities of Malpica, Caceres, Vianos, Cordoba and Torrecampo (the “Spain Leases”).

The Spain Leases are held by wholly owned

subsidiaries of DC Estate Solutions.

The Spain Leases are for an average term of 35 years at an initial total average cost of $96,000

per month for all sites.

As a condition of each lease, the payments are subject to meeting certain milestones, such as obtaining favorable

urban compatibility reports and connection points.

Under the terms of the Spain Leases, the Company will pay approximately $15,000 to

the owners of the Cordoba site in 2026.

No further payments are expected in 2026.

The Company and BAIF intend to use the Spain Leases

to develop and operate HPC data center sites.

The Company paid BAIF $250,000 upon execution of the MOU and an additional $250,000 on the

closing of the SPV SPA.

The Company intends to develop the sites as gas powered fully autonomous energy islands for Tier 3 level uptime

AI data centers.

The total capacity to be developed across the five sites is anticipated to be up to 1.8 Gigawatts.

We believe that since

the sites will be autonomous energy islands no grid connection is required and there will be no material reliance on grid infrastructure.

Thereby, subject to financing, reducing time to power for our data center clients to 18 months.

The total capacity of the sites is planned

to be 360 MW per site.

An application to connect to the local gas pipeline for gas supply has already been made and approval has been

The Company is negotiating a power purchase agreement with an energy company to develop a 360MW gas Solid Oxide Fuel Cell facility

to convert gas fuel into electricity.

The Company will need to secure fibre connections, environmental permits and all necessary contractor

The sites will then be classed at Ready to Build (“RTB”) as the Company intends to sell the sites on a RTB basis.

We estimate the Company will require $5 million of working capital to achieve full RTB status on all five sites.

Additional capital is

required to develop the sites and the further development of the data centers to RTB will require substantial capital.

There are no assurances

that 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 data centers ultimately developed and sold or become

The Company’s goal is to utilize the assets

we have acquired via the purchase of BAIF sites to develop AI data center and energy infrastructure, 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 AI data center customer base.

January 22, 2026, the Company entered into a Joint Venture Agreement (the “JVA”) by and among the Company, BAIF and DC Estate

Solutions, which (i) amends and restates the MOU and (ii) supplements the SPV SPA.

Pursuant to the SPA, DC Estate Solutions acquired the

equity interests of five special purpose vehicles (the “SPVs”):

(i) DC Estate Córdoba SL 300MW, (ii) DC Estate Cáceres

SL 300 MW, (iii) DC Estate Vianos SL 300 MW, (iv) DC Estate Malpica SL 300 MW and (v) DC Estate Torrecampo SL 300 MW.

As a result of the

acquisition of the SPVs, DC Estate Solutions also acquired the Spain Leases.

Pursuant to the JVA, DC Estate Solutions shall

be owned and controlled 50.1% by the Company and 49.9% by BAIF.

The purpose of the JVA is to manage and coordinate the development of

high-performance computing data center (the “Data Centers”) sites on the properties governed by the Spain Leases.

Substantially,

all material decisions of the JVA and Joint Venture Company shall require the unanimous consent of the Company and BAIF.

Under the JVA,

the Company agreed to fund DC Estate Solutions with $3,500,000 USD as follows:

(i) $250,000 USD, which was previously paid upon the execution

of the MOU, (ii) $250,000 USD, which was previously paid upon execution of the SPA, (iii) $375,000 USD paid on the effectiveness of a

notarial public deed in Spain in connection with the transfer of the SPVs to the JVA on the Effective Date, and (iv) $2,625,000 USD payable

in monthly installments of $125,000 USD commencing on March 1, 2026.

The funds shall be distributed by DC Estate Solutions to BAIF.

Company also agreed to grant to BAIF, or its assignee, a non-qualified option to purchase up to 250,000,000 shares of the Company’s

common stock (the “First Mora Option”) at an exercise price of $0.02 per share.

The First Mora Option is fully vested and

exercisable upon the grant date and terminates on the earlier of (i) five years following the date of the First Mora Option or (ii) the

termination of the JVA.

Additionally, pursuant to the JVA, DC Estate Solutions’

equity interests in the SPVs are subject to the Company making minimum aggregate cash payments and contributions to DC Estate Solutions

(including amount payable under the SPV SPA) in the amount of $8,750,000 USD, which shall be distributed to BAIF (the “BAIF Funding”).

If the Company fails to make such payments, BAIF may foreclose on the pro rata amount of equity interests in the SPVs.

In the event of

any sale or lease of a Data Center, profits of DC Estate Solutions shall be shared equally by and between the Company and BAIF.

event DC Estate Solutions develops the Data Centers and sells such Data Centers, BAIF will be entitled to a bonus as defined under the

Further, effective January 27, 2026, the Company,

BAIF and DC Estate Solutions entered into an addendum to the JVA (the “Addendum”) to account for the development of additional

Data Centers in (i) Villasequilla, Spain 600 MW, (ii) Tomelloso, Spain 450 MW (collectively, with the above-mentioned Spain Leases, the

“Spain Leases”) and (iii) Tocumen, Panama 1000 MW (the “Panama Lease”).

The Villasequilla and Tomelloso data centers

shall each be owned by Spanish special purpose vehicles, DC Villasequilla SL and DC Tomelloso SL, respectively, and shall subsequently

be assigned to DC Estate Solutions.

The Tocumen data center shall be owned by a Panamanian special purpose vehicle, DC Tocumen SA, which

shall subsequently be assigned to DC Estate Solutions.

The Company, in addition to the already agreed upon $125,000 USD monthly payments,

agreed to fund the development of the additional Data Centers by paying a minimum of $2,400,000 USD payable in monthly installments of

$100,000 USD to DC Estate Solutions commencing on May 1, 2026 for a minimum of 24 months, thereby increasing the minimum BAIF Funding

amount to a total of $11,150,000 USD.

The funds shall be distributed by DC Estate Solutions to BAIF.

The Company also agreed to grant

to BAIF, or its assignee, an additional stock option to acquire 150,000,000 shares of the Company’s common stock (the “Second

Mora Option”) at an exercise price of $0.02 per share.

The Second Mora Option is fully vested and exercisable as of the grant date

and terminates on the earlier of (i) five years following the date of the Second Mora Option or (ii) the termination of the JVA.

On March 23, 2026, the Company, BAIF and DC Estate

Solutions entered into a second addendum (the “Second Addendum”) to the JVA.

Pursuant to the Second Addendum, the parties

(1) increase the capacity of the Spain-based data centers to 4,350 MW and (2) exchange the stock options to purchase an aggregate

of 400,000,000 shares of common stock of the Company issued to BAIF or its assignees issued under the JVA for 400,000,000 shares of the

Company’s restricted common stock to BAIF or its assignees with the such shares being fully paid and non-assessable on the date

of execution of the Second Addendum.

Effective April 7, 2025 (the “Effective

Time” or “Closing Date”), the Company and Synthesis Analytics Production, Ltd.

(“SAPL”) and Adler Capital

Limited (“ACL”) closed on a Share Exchange Agreement dated April 7, 2025 (the “Share Exchange”) and an employment

agreement between the Company and Mr.

Niclas Adler (the “Employment Agreement”).

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

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

through SAPL, its wholly owned subsidiary, began 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.

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.

The acquisition of SAPL enabled the Company to begin 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.

In or around May 2025, the Company discovered

that Synthesis Analytics Production Ltd.

and ACL breached material representations and warranties under the Share Exchange.

The Employment

Agreement was terminated on or about September 1, 2025, upon Dr.

Adler’s resignation.

Pursuant to a letter dated December 8, 2025

and a complaint filed by the Company in the United States District Court for the Southern District of Florida, the Company intends to

seek rescission of the Share Exchange and rescind the shares of Company common stock issued to ACL pursuant to the Share Exchange and

the Company has sent notice to Dr.

Adler for the termination of the option to purchase common stock issued to Dr.

Adler under the Employment

Agreement and the termination of such agreement for “cause” as defined under the agreement.

Among other material breaches,

without limitation, the Company has discovered that the real property and material assets of SAPL were encumbered at the time of the

closing of the Share Exchange and remain encumbered and subject to liens.

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

Our business focus 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 a recent

We intend to strategically develop and to work to make operational the infrastructure necessary to support our contractual

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business using our knowledge, expertise, and existing and future infrastructure where favorable market opportunities exist.

yet generated any revenues to date and require significant financing to develop our business.

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 $5,000,000

to enable us to commence our new operations and repay debt, as well as additional significant financing to develop and expand our new

There are no assurances that we will raise sufficient capital to execute our business plan or satisfy our liabilities.

the “Risk Factors” in our Form 10-K for the fiscal year ended December 31, 2024 and Form 8-K Current Report dated April 8,

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.

There are no assurances that we will raise sufficient

capital to execute our business plan or satisfy our liabilities.

See the “Risk Factors” in our Form 10-K for the fiscal year

ended December 31, 2025 and Form 8-K Current Report dated April 13, 2026.

Products and Services

High-Performance Computing Hosting

AI Data Center Infrastructure Development

HPC is a technology that uses clusters of powerful

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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.

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.

Our AI Data Center Infrastructure revenue will

be generated by licensing colocation data center space and related services to a licensee at the Data Centers in Spain and Panama.

may choose to acquire our sites at RTB or contract with us to build the data center on our site to their specification and enter into

a license agreement.

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.

On January 21, 2025, the Company entered into

the Master Services Agreement with Cudo Ventures Ltd, a cloud computing company (“Cudo”).

Under this agreement, the Company

agreed to provide Tier 3 data center hosting infrastructure and colocation services to Cudo.

The Master Services Agreement supported a

1 MW capacity during a five year term at our previously planned Marviken data center.

On February 18, 2025, Cudo made an initial payment

of $303,549 to the Company consisting of a $227,662 deposit, which was intended to be 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

The Master Services Agreement term commenced on April 8, 2025 when Cudo’s hardware was delivered to our data center.

as a result of the Company’s intention to rescind the SAPL Share Exchange, the Master Services Agreement was terminated and the

Company is obligated to refund the deposit paid thereunder.

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, 2025, 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 consolidated financial statements.

Three Months Ended September 30, 2025 Compared

to the Three Months Ended September 30, 2024

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

Three Months Ended March 31, 2026 Compared

to the Three Months Ended March 31, 2025

Results of operations

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 operating expenses for the three months ended

March 31, 2026 (the “2026 Quarter”) was $14,242,832 compared to $22,115,041, for the three months ended March 31, 2025 (the

“2025 Quarter”), a decrease of 36%.

In the 2026 Quarter, the Company incurred stock-based compensation expense of $13,218,936

compared to $21,679,711 for the 2025 Quarter.

The stock-based compensation for the 2026 quarter was for common stock options issued as

acquisition costs related to the DC Estates Solutions formation while the 2025 Quarter was related to the amendment of options to the

officers of the Company.

Our other income for the 2026 Quarter was $8,523,765

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 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

compared to other expense of $1,062,198 for the 2024 Period.

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

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.

compared to other income of $1,243,060 for the 2025 Quarter.

Other income in the 2026 quarter was comprised of $1,201,433 in interest

expense, of which $830,699 is for the day one loss on the derivative liability valuation and $9,724,722 for the gain on the change in

fair value of derivative liabilities.

Other income in the 2025 Quarter was comprised of $11,187 in interest expense and $1,254,247 for

the gain on the change in fair value of derivative liabilities.

Liquidity and Capital Resources

As of November 14, 2025, the Company had approximately

As of May 15, 2026, the Company had approximately

$35,000 of cash on hand.

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

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.

During the year ended December 31, 2025, we received an initial payment of approximately $303,000 for colocation services to be provided

by the Company.

In addition, during the year ended December 31, 2025, we 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.

On October 15, 2025, we entered into

a binding memorandum of understanding with BAIF to acquire 5 properties in Spain and we are now 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.

Furthermore, potential legal proceedings relating to SAPL and its affiliates may cause us to incur significant

expenses or liability.

Adverse outcomes in such proceedings or claims could result in significant liabilities which may materially affect

our financial condition, results of operations, or cash flows.

We have received cash proceeds of $1,327,000 from the issuance of convertible

notes payable during 2025 and an additional $373,500 in 2026 through April 13, 2026.

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.

We have received cash proceeds of $365,500 from

the issuance of convertible notes payable during three months ending March 31, 2026 and an additional $[125,000] in 2026 through May [15],

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.

On September 4, 2025, the Company also entered

into a Securities Purchase Agreement (the “ELOC Agreement”) with an accredited investor purchaser.

Pursuant to the ELOC Agreement,

the Company agreed to sell, and the purchaser agreed to purchase up to $50,000,000 (the “Commitment Amount”) of the Company’s

common stock, par value $0.001 per share (the “Purchase Shares”).

We have received cash proceeds of $632,125 from the issuance

of common shares during three months ending March 31, 2026 and an additional $70,000 through May 15, 2026 related to the sale of an aggregate

of 70,781,966 shares of common stock under the ELOC Agreement and expect to continue to utilize it to fund current operational needs.

Summary of cash flows

September 30, 2025

September 30, 2024

March 31, 2026

March 31, 2025

Net cash provided by (used in) operating activities

Net cash provided by (used in) investing activities

Net cash 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 2026 Quarter and the 2025 Quarter,

our sources and uses of cash were as follows:

Operating Activities

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.

During the 2026 Quarter, cash used in operating

activities of $571,920 primarily resulted from the net loss of $5,719,067 offset by stock-based compensation of $13,218,936, amortization

of debt discount of $361,546, day one interest expense from derivative liabilities of $830,699 and the gain on the change in the fair

value of derivative liabilities of $9,724,722.

During the 2025 Quarter, cash provided by operating

activities of $74,858 primarily resulted from the Prepaid AI hosting services (customer deposits), offset by the net loss of $20,872,081

and stock-based compensation of $21,679,711, and change in the fair value of derivative liabilities of $1,254,247.

Investing Activities

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.

During the 2026 Quarter, the Company advanced

$419,000 of cash for the development of the leased assets in the joint venture with DC Estate Solutions under the JVA.

During the 2025 Quarter, the Company advanced

$183,000 of cash for working capital needs in connection with the business acquisition of SAPL for purposes of financing the construction

of the HPC facility.

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 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.

During the 2026 Quarter, the Company received

$782,135 in cash proceeds in connection with the sale of shares of common stock of the Company pursuant to the ELOC Agreement, and $365,500

in proceeds from convertible notes payable, offset by repayments of convertible notes of $42,420.

During the 2025 Quarter, 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 of $9,900.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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What changed 10-Q

Item 2. Management’s Discussion and Analysis