UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(AMENDMENT NO. 2)
| ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2023
OR
| ☐ | TRANSITION REPORT UNDER 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 incorporation or organization) | | (I.R.S. Employer 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 under Section 12(b) of the Act:
| Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
| None | | Not applicable | | Not applicable |
Securities registered under Section 12(g) of the Act:
Common stock, par value $0.001 per share
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☐ Yes ☒ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
☐ Yes ☒ No
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 and posted pursuant to Rule 405 of Regulation S-T (§232.4.05 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 check mark 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act 915 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☒ Yes ☐ No
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked prices of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. $3,217,231 on June 30, 2023.
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. 390,687,459 shares of common stock are issued and outstanding as of April 26, 2024.
DOCUMENTS INCORPORATED BY REFERENCE
None.
EXPLANATORY NOTE
We are filing this amendment No. 2 (the “Amendment No. 2”) to our Annual Report on Form 10-K for the fiscal years ended December 31, 2023 and 2022. This Amendment No. 2 contains restatements our audited financial statements for the fiscal year ended December 31, 2023 (the “2023 Annual Financial Statements”) and our audited financials statements for the fiscal year ended December 31, 2022: (i) audited consolidated financial statements as of and for the fiscal year ended December 31, 2023, originally included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 as amended on April 30, 2024 (the “2023 10-K”), and (ii) unaudited condensed consolidated financial statements for the quarterly periods ended March 31, 2023 through September 30, 2023, originally included in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2023, June 30, 2023 and September 30, 2023 (collectively, the “Form 10-Qs” and together with the 2023 10-K, the “Prior Financial Statements”). Except as provided below, no other portion of the 2023 10-K is being amended and this Amendment No. 2 does not reflect any events occurring after the filing of the 2023 10-K.
Restatement Background
As previously disclosed in our Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on September 17, 2024, we, in consultation with our Board of Directors, concluded that the Prior Financial Statements should no longer be relied upon due to errors in such consolidated financial statements and should be restated to correct the misstatements therein.
During the three months ended March 31, 2023, the Company granted 5,000,000 options to purchase shares of our common stock to a consultant with a fair value of approximately $230,000. The previously filed Form 10-Qs and 2023 10-K do not give effect to stock options granted, resulting in understatement in operating expenses for the 2023 Annual Financial Statements.
Restatement Overview
The sections impacted by the restatement of the Prior Financial Statements and amended to reflect the fair value of the option grants are:
| · | Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
| · | Part II, Item 8. Financial Statements and Supplementary Data |
| · | Part II, Item 9A. Controls and Procedures |
| | · | Part IV, Item 15. Exhibits and Financial Statement Schedules |
The Company’s Principal Executive Officer and Principal Financial Officer have provided new certifications dated as of the date of this filing in connection with this Amendment No. 2 (Exhibits 31.1, 31.2, 32.1 and 32.2).
We have not filed, and do not intend to file, amendments to the previously filed Form 10-Qs. Accordingly, investors should rely only on the financial information and other disclosures regarding the restated periods in this Amendment No. 2 or in future filings with the SEC (as applicable), and not on any previously issued or filed reports, earnings releases or similar communications relating to these periods.
Refer to Note 2 – Restatement of Previously Issued Consolidated Financial Statements and Note 4 – Restatement of Previously Issued Unaudited Interim Condensed Consolidated Financial Statements in the accompanying consolidated financial statements included in Part II, Item 8 for additional information.
Internal Control Considerations
In connection with the Restatement Adjustments, management has evaluated its disclosure controls and procedures and internal control over financial reporting as of December 31, 2023. As a result of that assessment, management has concluded that the restatement is a result of our previously disclosed material weakness for the 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.
For a discussion of management’s consideration of disclosure controls and procedures, internal controls over financial reporting, and the material weaknesses identified, see Part II, Item 9A.
PART II
| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this report on Form 10-K.
Overview
The Company currently has no sources of revenue and absent significant financing to fund Bitcoin mining operations, has no specific business plan or purpose. The Company’s business plan is to seek a business combination. The evaluation and selection of a business opportunity is a complex and uncertain process, and the Company 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.
12 Months Ended December 31, 2023 (“2023 Period”) Compared to the 12 Months Ended December 31, 2022 (“2022 Period”).
Results of operations
We had no revenues for the 2023 Period compared to $438,042 for the 2022 Period. The reason for the decrease was that we ceased Ethereum mining operations in September 2022 when Ethereum switched its consensus protocol to proof of stake.
We had no cost of revenues for the 2023 Period compared to $812,882 for the 2022 Period. The reason for the decrease was a decrease in hosting fees incurred as a result of the power outages and seizing of Ethereum mining operations in September 2022.
Our operating expenses for the 2023 Period was $3,362,714 compared to $31,014,864, for the 2022 Period. In the 2023 Period, the Company incurred stock-based compensation expense of $1,465,522 compared to $24,582,181 for the 2022 Period, along with decreased loss on cryptocurrencies due to decreased transactions and changes in market prices.
Our other income for the 2023 Period was $347,933 compared to other expense of $856,293 for the 2022 Period. Other income for the 2023 period was comprised primarily of $700,000 related to a refund of equipment deposit offset by interest expense of $346,162 and a prepayment penalty on the preferred B shares of $51,859. Other expense for the 2022 Period was comprised of $148,119 in interest expense and $708,174 in loss related to the termination of a prepaid hosting arrangement
Subject to receiving funding, we expect that our operating expenses will increase as we attempt to develop our new mining operations and we 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 and we are unable to quantify at this time the expected increases in operating expenses in future periods.
Liquidity and Capital Resources
As of April 26, 2024, the Company had approximately $3,500 of cash. 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 mining operations and fund operations for the next 12 months, the Company is seeking to raise $45 million in debt facility. We currently have no available sources for capital and we can provide no assurances that any debt financings will be available in the future. Therefore, we primarily intend to seek a business combination.
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.
Convertible notes payable
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 the date of filing, the note is in default. 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% of the average of the three 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 December 31, 2023, the balance on the notes is $136,701. The notes are in default.
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 net 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 December 31, 2023, 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 December 31, 2023, 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. 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.
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 December 31, 2023, the balance on the note is $99,529. The note is in default.
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 are convertible into common stock.
Summary of cash flows
| | | December 31, 2023 | | | December 31, 2022 | |
| Net cash provided by (used in) operating activities | | $ | 42,237 | | | $ | (2,169,308 | ) |
| Net cash provided by (used in) investing activities | | $ | 34,100 | | | $ | 1,047,473 | |
| Net cash provided by (used in) financing activities | | $ | (76,109 | ) | | $ | 1,097,963 | |
Critical accounting policies
See Note 2 to the December 31, 2023 financial statements included as part of this report for a discussion of our Significant Accounting Policies.
Recent Accounting Pronouncements
The Company does not believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying financial statements.
Off Balance Sheet Arrangements
As of the date of this report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which we have any obligation arising under a guarantee contract, derivative instrument or variable interest or a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.
| Item 8. | Financial Statements and Supplementary Data. |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Edgemode, Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Edgemode, Inc. (the Company) as of December 31, 2023 and 2022, and the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended December 31, 2023, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 5 to the consolidated financial statements, the company has incurred recurring losses from operations and had not yet achieved profitable operations as of December 31, 2023 which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 5. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Restatement of the 2023 and 2022 Consolidated Financial Statements
As discussed in Note 2 and Note 4 to the consolidated financial statements, the accompanying 2023 and 2022 consolidated financial statements have been restated to correct for errors.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.
Derivatives Arising from Convertible Notes
The valuation of derivative liabilities arising from convertible notes payable represents a significant aspect of the audit due to its materiality and the complexity involved in its assessment. These liabilities are recognized based on the fair value of embedded conversion features associated with convertible notes. The determination of fair value necessitates intricate valuation models, incorporating various assumptions, which are inherently subjective and involve substantial management judgment.
To form our overall opinion on the financial statements, our audit procedures included assessing the reasonableness of key inputs used in the company’s valuation models, evaluating the appropriateness of management's valuation methodologies and assumptions, and assessing the impact of changes in these inputs on the fair value measurement. We also performed sensitivity analyses to inspect the potential effects of variations in key assumptions on the reported fair value of the derivative liabilities.
Given the significance of these liabilities to the financial statements and the complexity inherent in their valuation, our audit required significant auditor judgment and involved challenging evaluations of subjective inputs.
/s/ M&K CPAS, PLLC
PCAOB ID 2738
We have served as the Company’s auditor since 2021.
The Woodlands, TX
April 26, 2024 (February 21, 2025, as to the effects of the restatement discussed in Note 2 and Note 4)
Edgemode, Inc.
Consolidated Balance Sheets
| | | | | | | |
| | | December 31, 2023
(Restated) | | | December 31,
2022 | |
| | | | | | | |
| ASSETS | | | | | | | | |
| Current assets: | | | | | | | | |
| Cash | | $ | 298 | | | $ | 70 | |
| Prepaid expenses and other current assets | | | 20,258 | | | | 27,638 | |
| Prepaid hosting services | | | – | | | | 894,355 | |
| Deferred offering costs | | | – | | | | 264,706 | |
| | | | | | | | | |
| Total current assets | | | 20,556 | | | | 1,186,769 | |
| | | | | | | | | |
| Intangible assets - cryptocurrencies | | | 32 | | | | 2,630 | |
| | | | | | | | | |
| Total assets | | $ | 20,588 | | | $ | 1,189,399 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' DEFICIT | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accounts payable and accrued expenses | | $ | 721,780 | | | $ | 869,524 | |
| Accrued payroll | | | 661,201 | | | | 487,159 | |
| Accrued dividends | | | – | | | | 6,190 | |
| Equipment notes payable | | | 1,179,972 | | | | 1,179,972 | |
| Notes payable | | | 35,000 | | | | 35,000 | |
| Notes payable – related parties | | | 16,000 | | | | – | |
| Convertible notes payable | | | 342,501 | | | | – | |
| Derivative liabilities | | | 197,090 | | | | – | |
| Series B preferred shares liability, net | | | – | | | | 205,226 | |
| | | | | | | | | |
| Total current liabilities | | | 3,153,544 | | | | 2,783,071 | |
| | | | | | | | | |
| Total liabilities | | | 3,153,544 | | | | 2,783,071 | |
| | | | | | | | | |
| Commitments and contingencies | | | – | | | | – | |
| | | | | | | | | |
| Stockholders' deficit: | | | | | | | | |
| Preferred shares, $0.001 par value, 4,999,000 shares authorized; zero issued and outstanding December 31, 2023 and 2022 | | | – | | | | – | |
| Common shares, $0.001 par value, 950,000,000 shares authorized; 390,687,459 and 390,437,459 shares issued and outstanding, December 31, 2023 and 2022, respectively | | | 390,687 | | | | 390,437 | |
| Additional paid-in capital | | | 35,371,266 | | | | 33,896,019 | |
| Accumulated deficit | | | (38,894,909 | ) | | | (35,880,128 | ) |
| Stockholders' deficit | | | (3,132,956 | ) | | | (1,593,672 | ) |
| | | | | | | | | |
| Total liabilities and stockholders' deficit | | $ | 20,588 | | | $ | 1,189,399 | |
The accompanying notes are an integral part of these consolidated financial statements.
Edgemode, Inc.
Consolidated Statements of Operations
| | | | | | | |
| | | For the Year Ended | |
| | | December 31, 2023 (Restated) | | | December 31, 2022 | |
| | | | | | | |
| Revenue | | $ | – | | | $ | 438,042 | |
| Cost of revenue | | | – | | | | 812,882 | |
| Gross margin | | | – | | | | (374,840 | ) |
| | | | | | | | | |
| Operating expenses: | | | | | | | | |
| General and administrative expenses | | | 3,352,607 | | | | 27,784,864 | |
| Loss on sale of equipment and impairment | | | – | | | | 3,075,748 | |
| Loss on cryptocurrencies | | | 10,107 | | | | 154,252 | |
| Total operating expenses | | | 3,362,714 | | | | 31,014,864 | |
| | | | | | | | | |
| Loss from operations | | | (3,362,714 | ) | | | (31,389,704 | ) |
| | | | | | | | | |
| Other income (expense): | | | | | | | | |
| Interest expense | | | (346,162 | ) | | | (148,119 | ) |
| Penalty on prepayment of Preferred B shares | | | (51,859 | ) | | | – | |
| Refund of equipment deposit | | | 700,000 | | | | – | |
| Change in fair value of derivatives | | | 6,709 | | | | – | |
| Loss on settlement | | | (9,975 | ) | | | – | |
| Gain on settlement of liabilities | | | 50,000 | | | | – | |
| Other expense | | | (780 | ) | | | (708,174 | ) |
| Total other income (expense), net | | | 347,933 | | | | (856,293 | ) |
| | | | | | | | | |
| | | | | | | | | |
| Provision for income taxes | | | – | | | | – | |
| | | | | | | | | |
| Net loss | | $ | (3,014,781 | ) | | $ | (32,245,997 | ) |
| | | | | | | | | |
| Loss per common share - basic and diluted | | $ | (0.01 | ) | | $ | (0.09 | ) |
| | | | | | | | | |
| Weighted average shares outstanding - basic and diluted | | | 390,626,500 | | | | 377,574,305 | |
The accompanying notes are an integral part of these consolidated financial statements.
Edgemode, Inc.
Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
For the years ended December 31, 2023 and 2022
| | | | | | | | | | | | | | | | | | | | | | |
| | | Mezzanine Equity | | | | | | | | | | | | | | | Total | |
| | | | | | Preferred | | | | | | Common | | | Additional | | | | | | Stockholders’ | |
| | | Preferred | | | Stock | | | Common | | | Stock | | | Paid-In | | | Accumulated | | | Equity | |
| | | Shares | | | Amount | | | Shares | | | Amount | | | Capital | | | Deficit | | | (Deficit) | |
| | | | | | | | | | | | | | | | | | | | | | |
| Balance December 31, 2021 | | | 127,207 | | | $ | 341,730 | | | | 292,179,345 | | | $ | 292,179 | | | $ | 5,476,850 | | | $ | (3,634,131 | ) | | $ | 2,134,898 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Conversion of preferred shares into common | | | (127,207 | ) | | | (341,730 | ) | | | 20,796,933 | | | | 20,797 | | | | 363,776 | | | | – | | | | 384,573 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Recapitalization of reverse merger | | | – | | | | – | | | | 69,257,668 | | | | 69,258 | | | | 2,600,694 | | | | – | | | | 2,669,952 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common shares issued in exchange for cash | | | – | | | | – | | | | 1,617,756 | | | | 1,617 | | | | 564,398 | | | | – | | | | 566,015 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common shares issued in exchange for cryptocurrency | | | – | | | | – | | | | 78,638 | | | | 79 | | | | 49,921 | | | | – | | | | 50,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common shares issued in exchange for compensation | | | – | | | | – | | | | 4,000,000 | | | | 4,000 | | | | 314,000 | | | | – | | | | 318,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common shares issued in exchange for deferred financing costs | | | – | | | | – | | | | 2,521,008 | | | | 2,521 | | | | 262,185 | | | | – | | | | 264,706 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common shares cancelled pursuant to SEC Legal case | | | – | | | | – | | | | (13,889 | ) | | | (14 | ) | | | 14 | | | | – | | | | – | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Stock-based compensation | | | – | | | | – | | | | – | | | | – | | | | 24,264,181 | | | | – | | | | 24,264,181 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net loss | | | – | | | | – | | | | – | | | | – | | | | – | | | | (32,245,997 | ) | | | (32,245,997 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 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 | | | – | | | | – | | | | – | | | | – | | | | 1,465,522 | | | | – | | | | 1,465,522 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net loss | | | – | | | | – | | | | – | | | | – | | | | – | | | | (3,014,781 | ) | | | (3,014,781 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance December 31, 2023 (Restated) | | | – | | | $ | – | | | | 390,687,459 | | | $ | 390,687 | | | $ | 35,371,266 | | | $ | (38,894,909 | ) | | $ | (3,132,956 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
Edgemode, Inc.
Consolidated Statements of Cash Flows
| | | | | | | |
| | | For the Year Ended | |
| | | December 31, 2023
(Restated) | | | December 31,
2022 | |
| | | | | | | |
| Operating Activities: | | | | | | | | |
| Net loss | | $ | (3,014,781 | ) | | $ | (32,245,997 | ) |
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | | | | | | | | |
| Depreciation | | | – | | | | 630,670 | |
| Amortization | | | 25,215 | | | | 3,976 | |
| Interest expense on principal default | | | 88,618 | | | | 95,926 | |
| Interest expense charge for day one derivative loss | | | 203,799 | | | | – | |
| Prepayment on penalty of Preferred B shares | | | 51,859 | | | | – | |
| Change in fair value of derivative liabilities | | | (6,709 | ) | | | – | |
| Loss on sale of equipment and impairment | | | – | | | | 3,075,748 | |
| Stock-based compensation | | | 1,465,522 | | | | 24,582,181 | |
| Cryptocurrency used for compensation | | | – | | | | 144,423 | |
| Loss on cryptocurrency transactions | | | 10,107 | | | | 154,252 | |
| Loss on settlement | | | 9,975 | | | | – | |
| Gain on settlement of liabilities | | | (50,000 | ) | | | – | |
| Loss on prepaid hosting termination | | | – | | | | 691,942 | |
| Changes in operating assets and liabilities: | | | | | | | | |
| Prepaid expenses and other current assets | | | 1,166,441 | | | | 151,815 | |
| Prepaid expenses and other current assets – related parties | | | – | | | | (7,500 | ) |
| Cryptocurrencies - mining | | | – | | | | (438,042 | ) |
| Accounts payable and accrued expenses | | | (93,739 | ) | | | 504,139 | |
| Accrued payroll | | | 185,930 | | | | 487,159 | |
| Lease liabilities | | | – | | | | – | |
| Net cash provided by (used in) operating activities | | | 42,237 | | | | (2,169,308 | ) |
| | | | | | | | | |
| Investing Activities: | | | | | | | | |
| Cash acquired in acquisition | | | – | | | | 743,513 | |
| Purchase of equipment | | | – | | | | (245,976 | ) |
| Proceeds from sale of equipment | | | – | | | | 60,000 | |
| Proceeds from sale of cryptocurrencies | | | 34,100 | | | | 489,936 | |
| Net cash provided by investing activities | | | 34,100 | | | | 1,047,473 | |
| | | | | | | | | |
| Financing Activities: | | | | | | | | |
| Proceeds from issuance of common shares, net of offering costs | | | – | | | | 566,015 | |
| Proceeds from subscription receivable | | | – | | | | 158,850 | |
| Proceeds from issuance of preferred shares, net of offering costs | | | – | | | | 201,250 | |
| Payments on equipment notes payable | | | – | | | | (208,152 | ) |
| Proceeds from notes payable | | | 220,000 | | | | 380,000 | |
| Proceeds from related party advances | | | 16,000 | | | | – | |
| Payments of convertible notes | | | (41,560 | ) | | | – | |
| Payments on notes payable | | | (270,549 | ) | | | – | |
| Net cash provided by (used in) financing activities | | | (76,109 | ) | | | 1,097,963 | |
| | | | | | | | | |
| Net change in cash | | | 228 | | | | (23,872 | ) |
| Cash - beginning of period | | | 70 | | | | 23,942 | |
| Cash - end of period | | $ | 298 | | | $ | 70 | |
| | | | | | | | | |
| Supplemental Disclosures: | | | | | | | | |
| Interest paid | | $ | 4,388 | | | $ | 89,993 | |
| Income taxes paid | | $ | – | | | $ | – | |
| | | | | | | | | |
| Supplemental Disclosures of Noncash Financing Information: | | | | | | | | |
| Shares issued for deferred financing costs | | $ | – | | | $ | 264,706 | |
| Conversion of preferred shares into common shares | | $ | – | | | $ | 384,573 | |
| Common shares cancelled pursuant to SEC legal case | | $ | – | | | $ | 14 | |
| Convertible notes issued in exchange for cryptocurrency | | $ | 57,502 | | | $ | – | |
| Note payable issued in exchange for cryptocurrency | | $ | 50,142 | | | $ | – | |
| Repayment of note payable using cryptocurrency | | $ | 50,142 | | | $ | – | |
| Cryptocurrency used to pay accrued salaries | | $ | 11,888 | | | $ | – | |
| Cryptocurrency used to pay accounts payable | | $ | 4,005 | | | $ | – | |
The accompanying notes are an integral part of these consolidated financial statements.
Edgemode, Inc.
Notes to the Consolidated Financial Statements
Note 1. Basis of Presentation
Edgemode, Inc. (“we”, “our”, the “Company”) was incorporated in Nevada on January 21, 2011. Since its incorporation, the Company has attempted to become involved in a number of prior business ventures, all of which were unsuccessful and which it has abandoned. After the merger described below, the Company became a cryptocurrency mining company and is currently in the process of purchasing cryptocurrency mining equipment to restart its mining operations.
On March 16, 2020 we acquired all of the outstanding shares of Fourth Wave Energy, Inc., a Colorado corporation (“FWI”), for 6,200,000 restricted shares of our common stock. On March 20, 2020, shareholders owning a majority of the Company’s outstanding shares of common stock amended the Company’s Articles of Incorporation to change the name of the Company from Pierre Corp. to Fourth Wave Energy, Inc.
Effective January 31, 2022 (the “Effective Time”), the Company, FWAV Acquisition Corp., a Wyoming corporation and wholly owned subsidiary of the Company (the “Acquisition Subsidiary”) and EdgeMode, a Wyoming corporation (“EdgeMode”) closed on the previously disclosed Agreement and Plan of Merger and Reorganization dated December 2, 2021 (the “Merger Agreement”). In accordance with the Merger Agreement, Acquisition Subsidiary merged with and into EdgeMode (the “Merger” or “Transaction”), with EdgeMode remaining as the surviving entity after the Merger and becoming a wholly owned subsidiary of the Company. In the Merger, the shares of common stock, no par value per share, of EdgeMode issued and outstanding immediately prior to the Effective Time, represent 80% of the Company’s outstanding common stock on a fully diluted basis (or 313,950,672 shares of common stock). Furthermore, pursuant to the terms of the Merger the Company’s sole shareholder of the Company’s preferred stock converted such shares into 1,000 shares of common stock.
Joseph Isaacs, the Company’s sole officer and director resigned as an executive officer and director. Pursuant to the terms of the Merger Mr. Isaacs will provide services to the Company in a consultancy capacity at a fee of $11,500 per month and has been issued a stock option grant to purchase up to 19,987,095 shares of the Company’s common stock, vesting in 90 days, at an exercise price of $0.40 per share. The consulting agreement may be terminated by the Company without cause after three months. In addition, Mr. Isaacs received a $250,000 cash bonus and the Company entered into a contract with a company owned by Joe Isaacs to perform services for total value of $240,000. Charlie Faulkner and Simon Wajcenberg, the principals of EdgeMode, were appointed as directors and executive officers.
Simultaneously with the Merger, approximately $ of principal and interest of outstanding notes previously issued by the Company automatically converted into an aggregate of 18,296,528 shares of the Company’s common stock issued to 31 former noteholders. In addition, the Company has repaid approximately $988,000 of principal amount of notes. At the Effective Time the Company has nominal liabilities, excluding the debt and liabilities of EdgeMode.
The merger was accounted for as a reverse merger, whereby EdgeMode was considered the accounting acquirer and became our wholly-owned subsidiary. In accordance with the accounting treatment for a “reverse merger”, the Company’s historical financial statements prior to the reverse merger has been replaced with the historical financial statements of EdgeMode prior to the reverse merger. The financial statements after completion of the reverse merger include the assets, liabilities, and results of operations of the combined company from and after the closing date of the reverse merger, with only certain aspects of pre-consummation stockholders’ equity remaining in the consolidated financial statements.
On June 3, 2022 the Company changed its name from Fourth Wave Energy Inc. to Edgemode, Inc.
Note 2. Restatement of Previously Issued Consolidated Financial Statements
On September 17, 2024, the Company determined that 5,000,000 options to purchase shares of our common stock granted to a consultant during the three months ended March 31, 2023 were omitted from its previously issued (i) audited consolidated financial statements as of and for the fiscal year ended December 31, 2023, originally included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “Annual Period”), and (ii) unaudited condensed consolidated financial statements for the quarterly periods ended March 31, 2023 through September 30, 2023, originally included in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2023, June 30, 2023 and September 30, 2023 (collectively, the “Interim Periods” and together with the Annual Period, the “Affected Periods”).
The Company evaluated the materiality of these misstatements both qualitatively and quantitatively in accordance with Staff Accounting Bulletin (“SAB”) No. 99, Materiality, and SAB No. 108, Considering the Effects of Prior Year Misstatements in Current Year Financial Statements, and determined the effect of correcting these misstatements was material to the Affected Periods. As a result of the material misstatements, the Company has restated its consolidated financial statements for the Affected Periods in accordance with ASC 250, Accounting Changes and Error Corrections (the “Restated Consolidated Financial Statements”).
A reconciliation from the amounts previously reported for the Affected Periods to the restated amounts in the Restated Consolidated Financial Statements is provided for the impacted financial statement line items below for: (i) the consolidated balance sheet as of December 31, 2023; (ii) the consolidated statement of operations for the year ended December 31, 2023; (iii) the consolidated statement of changes in stockholders’ equity for the year ended December 31, 2023; and (iv) the consolidated statement of cash flows for the year ended December 31, 2023. The amounts labeled “Restatement Adjustments” represent the effects of the Restatement Adjustments.
The following table presents the effects of the Restatement Adjustments on the Company’s consolidated balance sheet as of December 31, 2023:
Restated Schedules
| | | Balance as of December 31, 2023 | |
| | | As Previously | | | Restatement | | | As | |
| | | Stated | | | Adjustments | | | Restated | |
| | | | | | | | | | |
| Additional paid-in capital | | $ | 35,142,231 | | | $ | 229,035 | | | $ | 35,371,266 | |
| Accumulated deficit | | $ | (38,665,874 | ) | | $ | (229,035 | ) | | $ | (38,894,909 | ) |
The following table presents the effects of the Restatement Adjustments on the Company’s consolidated statement of operations for the year ended December 31, 2023:
| | | For the Year Ended December 31, 2023 | |
| | | As Previously | | | Restatement | | | As | |
| | | Stated | | | Adjustments | | | Restated | |
| | | | | | | | | | |
| General and administrative expenses | | $ | 3,123,572 | | | $ | 229,035 | | | $ | 3,352,607 | |
| Total operating expenses | | $ | 3,133,679 | | | $ | 229,035 | | | $ | 3,362,714 | |
| Loss before provision for income taxes | | $ | ) | | $ | ) | | $ | ) |
| Net loss | | $ | (2,785,746 | ) | | $ | (229,035 | ) | | $ | (3,014,781 | ) |
The following table presents the effects of the Restatement Adjustments on the Company’s consolidated statement of changes in stockholders’ equity for the year ended December 31, 2023:
| | | For the Year Ended December 31, 2023 | |
| | | As Previously | | | Restatement | | | As | |
| | | Stated | | | Adjustments | | | Restated | |
| | | | | | | | | | |
| Stock-based compensation | | $ | 1,236,487 | | | $ | 229,035 | | | $ | 1,465,522 | |
| Net loss | | $ | (2,785,746 | ) | | $ | (229,035 | ) | | $ | (3,014,781 | ) |
The following table presents the effects of the Restatement Adjustments on the Company’s consolidated statement of cash flows for the year ended December 31, 2023:
| | | For the Year Ended December 31, 2023 | |
| | | As Previously | | | Restatement | | | As | |
| | | Stated | | | Adjustments | | | Restated | |
| Net loss | | $ | (2,785,746 | ) | | $ | (229,035 | ) | | $ | (3,014,781 | ) |
| Stock-based compensation | | $ | 1,236,487 | | | $ | 229,035 | | | $ | 1,465,522 | |
Note 3. Summary of Significant Accounting Policies
Basis of Presentation
The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“US GAAP”). The accompanying financial statements include all the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for the fair presentation of the financial statements for the years presented have been included.
Principles 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.
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.
Risks and Uncertainties
The Company's business and operations are sensitive to general business and economic conditions in the United States and other countries that the Company operates in. A host of factors beyond the Company's control could cause fluctuations in these conditions. Adverse conditions may include recession, downturn or otherwise, local competition or changes in consumer taste. These adverse conditions could affect the Company's financial condition and the results of its operations.
Cash and Cash Equivalents
The Company considers short-term, highly liquid investment with original maturities of three months or less at the time of purchase to be cash equivalents. Cash consists of funds held in the Company’s checking account.
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. |
The following fair value hierarchy table presents information about the Company’s liabilities measured at fair value on a recurring basis:
| Schedule of liabilities measured at fair value on recurring basis | | | | | | | | | |
| | | 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 December 31, 2023.
The Company had no assets or liabilities valued using level 1, level 2, or level 3 inputs as of December 31, 2022.
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.
Income Taxes
Income taxes are provided for the tax effects of transactions reporting in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the basis of receivables, inventory, property and equipment, intangible assets, and accrued expenses for financial and income tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Any deferred tax items of the Company have been fully valued based on the determination of the Company that the utilization of any deferred tax assets is uncertain.
The Company complies with FASB ASC 740 for accounting for uncertainty in income taxes recognized in a company’s financial statements, which prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. FASB ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. The Company believes that its income tax positions would be sustained on audit and does not anticipate any adjustments that would result in a material change to its financial position.
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 Full-Pay-Per-Share payout of Bitcoin based on a contractual formula, which primarily calculates the hash rate provided by us to the mining pool as a percentage of total network hash rate, and other inputs. We are entitled to consideration even if a block is not successfully placed by the mining pool operator. The terms of the agreement provides that neither party can dispute settlement terms after thirty-five days following settlement. The Company’s Full-Pay-Per-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.
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 amount of consideration recognized is constrained to the amount of consideration received, 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. Under current GAAP, crypto assets held by the Company are accounted for as indefinite-lived intangible assets. Those assets are tested for impairment annually and more frequently if events or circumstances indicate that it is more likely than not that an asset is impaired. If the carrying amount of the asset exceeds its fair value, an entity is required to recognize an impairment loss and reduce the carrying amount of the asset to its fair value. See further discussion under Recently Accounting Pronouncements.
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.
Advertising
The Company expenses advertising costs as they are incurred.
Deferred Offering Costs
The Company had capitalized qualified direct costs related to its efforts to raise capital through a sale of its common stock in a private offering as of December 31, 2022. Deferred offering costs will be deferred until the completion of the private offering, at which time they will be reclassified to additional paid-in capital as a reduction of the offering proceeds. Due to the delays in the financing, during the year ended December 31, 2023, $264,706 of deferred offering costs were expensed, which included in general and administrative expenses in the accompanying statement of operations.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity). ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock, which results in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Additionally, ASU 2020-06 affects the diluted earnings per share calculation for instruments that may be settled in cash or shares and for convertible instruments and requires enhanced disclosures about the terms of convertible instruments and contracts in an entity’s own equity. ASU 2020-06 allows entities to use a modified or full retrospective transition method and is effective for smaller reporting companies for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted. The Company has elected to early adopt the provision of the ASU as of January 1, 2023 and has applied the guidance to the accounting of the convertible debt and treatment of derivative liabilities. In addition, there was no retrospective impact upon adoption.
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.
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 4. Restatement of Previously Issued Unaudited Interim Condensed Consolidated Financial Statements
The following tables present the effects of the Restatement Adjustments described in Note 2 - Restatement of Previously Issued Consolidated Financial Statements on the Company’s unaudited interim condensed consolidated financial statements for the periods indicated.
The following tables present the effects of the Restatement Adjustments on the Company’s unaudited interim condensed consolidated balance sheets as of the dates indicated:
Restated interim financial schedules
| | | Balance as of March 31, 2023 | |
| | | As Previously | | | Restatement | | | As | |
| | | Stated | | | Adjustments | | | Restated | |
| | | | | | | | | | |
| Additional paid-in capital | | $ | 35,142,231 | | | | 229,035 | | | $ | 35,371,266 | |
| Accumulated deficit | | $ | (37,658,139 | ) | | | (229,035 | ) | | $ | (37,887,174 | ) |
| | | Balance as of June 30, 2023 | |
| | | As Previously | | | Restatement | | | As | |
| | | Stated | | | Adjustments | | | Restated | |
| | | | | | | | | | |
| Additional paid-in capital | | $ | 35,142,231 | | | $ | 229,035 | | | $ | 35,371,266 | |
| Accumulated deficit | | $ | (37,595,499 | ) | | $ | (229,035 | ) | | $ | (37,824,534 | ) |
| | | Balance as of September 30, 2023 | |
| | | As Previously | | | Restatement | | | As | |
| | | Stated | | | Adjustments | | | Restated | |
| | | | | | | | | | |
| Additional paid-in capital | | $ | 35,142,231 | | | $ | 229,035 | | | $ | 35,371,266 | |
| Accumulated deficit | | $ | (38,262,900 | ) | | $ | (229,035 | ) | | $ | (38,491,935 | ) |
The following tables present the effects of the Restatement Adjustments on the Company’s unaudited interim condensed consolidated statements of operations for the periods indicated:
| | | For the Three Months Ended March 31, 2023 | |
| | | As Previously | | | Restatement | | | As | |
| | | Stated | | | Adjustments | | | Restated | |
| | | | | | | | | | |
| General and administrative expenses | | $ | 1,705,525 | | | $ | 229,035 | | | $ | 1,934,560 | |
| Total operating expenses | | $ | 1,708,123 | | | $ | 229,035 | | | $ | 1,937,158 | |
| Loss from operations | | $ | (1,708,123 | ) | | $ | (229,035 | ) | | $ | (1,937,158 | ) |
| Loss before provision for income taxes | | $ | ) | | $ | ) | | $ | ) |
| Net loss | | $ | (1,778,011 | ) | | $ | (229,035 | ) | | $ | (2,007,046 | ) |
| Loss per common share - basic and diluted | | $ | (0.00 | ) | | $ | (0.01 | ) | | $ | (0.01 | ) |
| Weighted average shares outstanding - basic and diluted | | | 390,440,237 | | | | | | | | 390,440,237 | |
| | | For the Six Months Ended June 30, 2023 | |
| | | As Previously | | | Restatement | | | As | |
| | | Stated | | | Adjustments | | | Restated | |
| | | | | | | | | | |
| Operating expenses: | | | | | | | | | | | | |
| General and administrative expenses | | $ | 2,123,026 | | | $ | 229,035 | | | $ | 2,352,061 | |
| Total operating expenses | | $ | 2,130,370 | | | $ | 229,035 | | | $ | 2,359,405 | |
| Loss from operations | | $ | (2,130,370 | ) | | $ | (229,035 | ) | | $ | (2,359,405 | ) |
| Loss before provision for income taxes | | $ | ) | | $ | ) | | $ | ) |
| Net loss | | $ | (1,715,371 | ) | | $ | (229,035 | ) | | $ | (1,944,406 | ) |
| Loss per common share - basic and diluted | | $ | (0.00 | ) | | $ | – | | | $ | (0.00 | ) |
| Weighted average shares outstanding - basic and diluted | | | 390,564,531 | | | | | | | | 390,564,531 | |
| | | For the Nine Months Ended September 30, 2023 | |
| | | As Previously | | | Restatement | | | As | |
| | | Stated | | | Adjustments | | | Restated | |
| | | | | | | | | | |
| Operating expenses: | | | | | | | | | | | | |
| General and administrative expenses | | $ | 2,759,350 | | | $ | 229,035 | | | $ | 2,988,385 | |
| Total operating expenses | | $ | 2,777,448 | | | $ | 229,035 | | | $ | 3,006,483 | |
| Loss from operations | | $ | (2,777,448 | ) | | $ | (229,035 | ) | | $ | (3,006,483 | ) |
| Loss before provision for income taxes | | $ | ) | | $ | ) | | $ | ) |
| Net loss | | $ | (2,382,772 | ) | | $ | (229,035 | ) | | $ | (2,611,807 | ) |
| Loss per common share - basic and diluted | | $ | (0.01 | ) | | $ | – | | | $ | (0.01 | ) |
| Weighted average shares outstanding - basic and diluted | | | 390,564,531 | | | | | | | | 390,564,531 | |
The following tables present the effects of the Restatement Adjustments on the Company’s unaudited interim condensed consolidated statements of changes in stockholders’ equity for the periods indicated:
| | | For the Three Months March 31, 2023 | |
| | | As Previously | | | Restatement | | | As | |
| | | Stated | | | Adjustments | | | Restated | |
| | | | | | | | | | |
| Stock-based compensation | | | 1,236,487 | | | | 229,035 | | | | 1,465,522 | |
| Net loss | | | (1,778,001 | ) | | | (229,035 | ) | | | (2,007,046 | ) |
The following tables present the effects of the Restatement Adjustments on the Company’s unaudited interim condensed consolidated statements of cash flows for the periods indicated:
| | | For the Three Months Ended March 31, 2023 | |
| | | As Previously | | | Restatement | | | As | |
| | | Stated | | | Adjustments | | | Restated | |
| Net loss | | | (1,778,011 | ) | | | (229,035 | ) | | | (2,007,046 | ) |
| Stock-based compensation | | | 1,236,487 | | | | 229,035 | | | | 1,465,522 | |
| Net cash provided by (used in) operating activities | | | 281,586 | | | | – | | | | 281,586 | |
| | | For the Six Months Ended June 30, 2023 | |
| | | As Previously | | | Restatement | | | As | |
| | | Stated | | | Adjustments | | | Restated | |
| Net loss | | | (1,715,371 | ) | | | (229,035 | ) | | | (1,944,406 | ) |
| Stock-based compensation | | | 1,236,487 | | | | (229,035 | ) | | | 1,465,522 | |
| Net cash provided by (used in) operating activities | | | 400,994 | | | | – | | | | 400,994 | |
| | | For the Nine Months September 30, 2023 | |
| | | As Previously | | | Restatement | | | As | |
| | | Stated | | | Adjustments | | | Restated | |
| Net loss | | | (2,382,772 | ) | | | (229,035 | ) | | | (2,611,807 | ) |
| Stock-based compensation | | | 1,236,487 | | | | (229,035 | ) | | | 1,465,522 | |
| Net cash provided by (used in) operating activities | | | 51,683 | | | | – | | | | 51,683 | |
Note 5. 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 December 31, 2023 the Company had not yet achieved profitable operations and expects to incur further losses in the development of its business, all of which raise substantial doubt about the Company’s ability to continue as a going concern. 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 but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances, however there is no assurance of additional funding being available.
Note 6. Reverse Merger Transaction
Pursuant to the terms of the Merger Agreement, and in exchange for all 100% of the issued and outstanding shares of EdgeMode Wyoming, the shareholders of EdgeMode received an aggregate of 313,950,672 shares of common stock, par value $.001 per share, of the Company.
Prior to the Merger, EdgeMode Wyoming was authorized to issue 300,000 shares of preferred stock with no par value per share, of which 261,438 were designated as Series Seed Preferred Stock (“Series Seed Preferred”). Immediately prior to the Merger, the holders of the Series Seed Preferred stock converted the shares into 261,438 shares of EdgeMode Wyoming common stock.
As a result of the Reverse Merger, the Company acquired the following assets and liabilities which were recorded at the pre-combination carrying basis. The assets acquired and liabilities assumed are as follows:
| Schedule of assets acquired and liabilities | | | |
| | | January 31, 2022 | |
| | | | |
| Cash | | $ | 743,513 | |
| Prepaids | | | 149,580 | |
| Note receivable - EdgeMode | | | 2,040,447 | |
| Accounts payable | | | (7,774 | ) |
| Other accrued expenses | | | (196,500 | ) |
| Accrued interest | | | (24,314 | ) |
| Notes payable | | | (35,000 | ) |
| Total identified net assets | | $ | 2,669,952 | |
Note 7. Related Party Transactions
Pursuant to the terms of the Merger, Mr. Isaacs will provide services to the Company in a consultancy capacity at a fee of $11,500 per month and has been issued a stock option grant to purchase up to 19,987,095 shares of the Company’s common stock, vesting in 90 days, at an exercise price of $0.40 per share. The consulting agreement may be terminated by the Company without cause after three months. In addition, Mr. Isaacs received a $250,000 cash bonus and the Company entered into a contract with a company owed by Joe Isaacs to perform services for total value of $240,000, which were expensed during the year ended December 31, 2022. During the year ended December 31, 2023, the Company and Mr. Isaacs, entered into a settlement and release agreement whereby Mr. Isaacs agreed to a reduction in the compensation to a total of $55,000, subject to the Company making payments on or before May 14, 2023 and June 14, 2023. During the year ended, December 31, 2023, the Company made total payments in the aggregate of $65,000 in accordance with the terms of the settlement agreement. No additional amounts are owed to Mr. Isaacs as of December 31, 2023.
On January 31, 2022, the Company granted options to the officers and a consultant of the Company to purchase up to 65,920,895 shares of the Company’s stock, vesting immediately, at an exercise price of $0.40 per share. On January 25, 2023, the Company amended stock option grants dated January 31, 2022 to each of Charlie Faulkner and Simon Wajcenberg, the Chief Executive Officer and Chief Financial Officer of the Company, respectively. The amendment reduces the exercise price of the options from $0.40 per share to $0.06 per share.
On September 12, 2022, the Company granted options to the officers of the Company to purchase up to 153,239,206 shares of the Company’s stock, which vest upon the Company listing its shares on the NASDAQ Global Market, New York Stock Exchange, or another equivalent market, at an exercise price of $0.10 per share. On March 3, 2023, the Company amended stock option grants dated September 12, 2022 to each of Charlie Faulkner and Simon Wajcenberg, the Chief Executive Officer and Chief Financial Officer of the Company, respectively. The amendment provides for the vesting to be only upon the closing of the purchase of at least $15 million of crypto mining equipment, rather than conditioned on an uplisting of the Company’s shares on the NASDAQ Global Market, New York Stock Exchange, or another equivalent market.
On March 3, 2023, the Company granted to each of Charlie Faulkner and Simon Wajcenberg, the Chief Executive Officer and Chief Financial Officer of the Company, respectively, options to purchase up to 77,000,000 shares of the Company’s common stock at an exercise price of $0.04 per share, exercisable for five years (the “Stock Options”). The Stock Options shall each be a non-qualified option and shall become vested and exercisable upon the Company closing on the purchase of at least $15 million of crypto mining equipment.
As of December 31, 2023 and 2022 the Company owed the executive officers of the Company $661,201 and $487,159 in accrued payroll for services performed, respectively.
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 8. Prepaid Hosting Services
Prepaid hosting services are amounts paid to secure the use of data hosting services at a future date or continuously over one or more future periods. When the prepaid hosting services are eventually consumed, they are charged to expense. As of December 31, 2022 the company had prepaid a total of $1,586,297. In January 2023, the Company was notified of the Chapter 11 bankruptcy filing of the hosting company and in January 2023 the Company received $894,355 in return of the initial deposit and the remainder of the deposit is subject to bankruptcy claims. As a result, the Company has expensed $691,942 during the year ended December 31, 2022, the remaining amount of the claim, due to the uncertainty of collectability through the bankruptcy claim. As of December 31, 2023, the Company has $0 of amounts recorded related to the remaining claims due to the uncertainty of collectability.
Note 9. Fixed Assets
Total depreciation expense for the year ended December 31, 2023 and 2022, was $0 and $630,670 respectively.
During the year ended December 31, 2022, the Company terminated all future purchase orders related to Ethereum mining equipment and related hosting services, as the Company will focus on Bitcoin mining, and returned equipment not yet placed in service and investing in new Bitcoin mining equipment. The remaining equipment not placed in service as of December 31, 2022 has been delayed and it is unknown when or if it will be delivered to the Company. As a result of the delays and uncertainties, the Company recorded an impairment expense of $1,138,687 related to undelivered equipment. During the year ended December 31, 2023, the Company received refunds totaling $700,000 as a result of these delays, which were recorded as other income in the accompanying statement of operations.
During the year ended December 31, 2022 the Company recorded an impairment to cryptomining equipment in the amount of $1,937,061 as a result of the Company terminating the financing agreements with the equipment manufactures. Of the total impairment, $131,232 relates to assets the company disposed of due to the switch away from Etherium mining, and the other $1,545,829 was related to mining equipment purchased with the Equipment Notes Payable discussed below in Note 9. The remaining $260,000 of impairment was related to the equipment acquired in 2020. A portion of this equipment was sold for $60,000 during the year ended December 31, 2022.
Note 10. 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.
Series A
On March 26, 2020, the Company designated 1,000 shares of its original 5,000,000 authorized shares of Preferred Stock as Series A Preferred Stock (“Series A”) with a $0.001 par value. Each Series A Preferred share entitles the holder to vote on all matters submitted to a vote of the Company’s shareholders or with respect to actions that may be taken by written consent. The 1,000 shares of Series A shares have the voting power of 250% of the outstanding common shares at the time of any vote. The holders of the Series A shares are entitled to receive, when, as and if declared by the Board of Directors out of funds legally available, annual dividends payable in cash on the 31st day of December in each year, commencing on December 31, 2020 at the rate of $0.10 per share per year. As part of the recapitalization, the 1,000 shares were converted into 1,000 common shares.
On March 30, 2022 the Company reduced its authorized preferred shares from 5,000,000 to 4,999,000 shares and removed the 1,000 shares of Series A from the designation.
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 (“Series B”) 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 a 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.
During the year ended December 31, 2022, the Company entered into purchase agreements for the sale of 212,500 shares of Series B Convertible Preferred Stock with 1800 Diagonal Lending, LLC, with $11,250 of proceeds being kept by the lender for legal fees, resulting in cash proceeds of $201,250. As of December 31, 2022, the Company owes $6,190 in accrued dividends, reflected as interest expense, and the carrying value of the Series B Preferred stock was $205,226, net of unamortized discount of $7,274.
On January 25, 2023, the Company redeemed the Preferred B shares and paid to the holder a total of $270,549 which included the stated value of $212,500, $6,190 in accrued dividends and the early redemption premium of $51,859.
Common shares
The Company has authorized 950,000,000 shares of common stock, par value of $0.001, and as of December 31, 2022 has issued 390,437,459 shares of common stock. All of the common shares have the same voting rights and liquidation preferences.
On March 30, 2022 the Company increased its authorized common shares from 500,000,000 to 950,000,000.
During the year ended December 31, 2022, the Company issued 1,696,394 common shares for cash and cryptocurrency proceeds of $616,015. In connection with the stock purchases, the company issued warrants to purchase 300,000 shares of common stock with an exercise price of $0.50, which expire five years from the date of grant.
During the year ended December 31, 2022, the Company amortized $44,875 of stock compensation expense related to shares issued for services pursuant to a consulting agreement entered into during 2021. As of December 31, 2022, $0 of unrecognized expense remains to be amortized.
During the year ended December 31, 2022, the Company issued 4,000,000 common shares as compensation to a third party for advisory services with a fair value of $318,000 which was expensed in the current period. In addition, the Company was to pay $50,000 in cash compensation each quarter for ongoing advisory services. As of December 31, 2022 the Company had accrued the first $50,000 that was owed. During the year ended December 31, 2023, no additional services were provided and the Company and the advisor agreed to settle the first $50,000 in exchange for the Company removing the Rule 144 restrictive legend. As a result, the Company recorded a gain on settlement in the amount of $50,000.
During the year ended December 31, 2022, the Company had 13,889 of its common stock cancelled and returned to treasury as a result of the settlement of a legal case.
On September 19, 2022, the Company entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) with Alumni Capital LP, a Delaware limited partnership (“Alumni Capital”), pursuant to which the Company agreed to sell, and Alumni Capital agreed to purchase, upon request of the Company in one or more transactions, a number of shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”) providing aggregate gross proceeds to the Company of up to $15,000,000 (the “Maximum”). The Purchase Agreement expires upon the earlier of the aggregate gross proceeds from the sale of shares meeting the Maximum or December 31, 2023.
Among other limitations, unless otherwise agreed upon by Alumni Capital, each sale of shares will be limited to 50,000 shares and further limited to no more than the number of shares that would result in the beneficial ownership by Alumni Capital and its affiliates, at any single point in time, of more than 9.99% of the then-outstanding shares of Common Stock. Alumni Capital will purchase the shares of Common Stock under the Agreement at a discount 20% of the lowest traded price of the Common Stock in the five business days preceding the Company delivering notice of the required purchase of shares to Alumni Capital.
In exchange for Alumni Capital entering into the Purchase Agreement, the Company issued 2,521,008 shares of Common Stock to Alumni Capital upon execution of the Purchase Agreement (the “Initial Commitment Shares”). Alumni Capital represented to the Company, among other things, that it was an “accredited investor” (as such term is defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”)). The Company shares of Common Stock, including the Commitment Shares, are being offered and sold under the Purchase Agreement in reliance upon an exemption from the registration requirements of the Securities Act afforded by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D promulgated thereunder. The securities sold may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
The Purchase Agreement provides that the Company will file a registration statement under the Securities Act covering the resale of the shares issued to Alumni Capital. Alumni Capital’s obligation to purchase shares of Common Stock under the Purchase Agreement is conditioned upon, among other things, the registration statement having been declared effective by the Securities and Exchange Commission.
As of December 31, 2023, no shares have been sold or issued to Alumni Capital pursuant to the Purchase Agreement other than the 2,521,008 Commitment Shares. The Commitment shares were valued $0.105 per share for total value of $264,706 which were recorded as deferred offering costs and expensed due to the delays in the financing.
On March 30, 2023, the Company entered into a settlement agreement with a previous note holder for settlement of outstanding claims of a note payable that had been paid in full previously. Per the terms of the settlement agreement, the Company issued 250,000 shares of common stock, and as a result the Company recorded a loss on settlement of $9,975.
Stock Options
During the year ended December 31, 2023, the Company granted to each of Charlie Faulkner and Simon Wajcenberg, the Chief Executive Officer and Chief Financial Officer of the Company, respectively, options to purchase up to 77,000,000 shares of the Company’s common stock at an exercise price of $0.04 per share, exercisable for five years (the “Stock Options”). The Stock Options shall each be a non-qualified option and shall become vested and exercisable upon the Company closing on the purchase of at least $15 million of crypto mining equipment. The Company used the black-scholes option pricing model to value the options and determined a fair value of $4,814,035. As of December 31, 2023, the Company had not met the contingent vesting requirements, and as such no amounts have been expensed related to these options.
During the year ended December 31, 2023, the Company granted to a consultant, options to purchase up to 5,000,000 shares the Company’s common stock at an exercise price of $0.07 per share, exercisable for five years and vest immediately. The Company used the black-scholes option pricing model to value the options and determined a fair value of $191,676. In addition the Company modified 1,962,191 previously issued option to the consultant in which it lowered the exercise price to $0.07. Upon the modification the Company recorded an additional $37,359 in stock based compensation for the incremental fair value on the date of the modification.
During the year ended December 31, 2022, the Company issued a stock option grant to purchase up to 85,907,990 shares of the Company’s common stock, vesting immediately and in 90 days, at an exercise price of $0.40 per share. The expected term was estimated using the simplified method for employee stock options since the Company does not have adequate historical exercise data to estimate the expected term. The Company used the black-scholes option pricing model to value the options and expensed $24,219,306 during the year ended December 31, 2022. During the year ended December 31, 2023, the Company amended stock option grants dated January 31, 2022 to each of Charlie Faulkner and Simon Wajcenberg, the Chief Executive Officer and Chief Financial Officer of the Company, respectively. The amendment reduces the exercise price of the options from $0.40 per share to $0.06 per share. As a result of the amendment, the Company recorded an additional $1,236,487 of stock-based compensation expense based on the incremental fair value resulting from the change in exercise price.
During the year ended December 31, 2022, the Company issued a stock option grant to purchase up to 153,239,206 shares of the Company’s common stock, which vest upon the Company listing its shares on the NASDAQ Global Market, New York Stock Exchange, or another equivalent market, at an exercise price of $0.10 per share. The expected term was estimated using the simplified method for employee stock options since the Company does not have adequate historical exercise data to estimate the expected term. On March 3, 2023, the Company amended stock option grants dated September 12, 2022 to each of Charlie Faulkner and Simon Wajcenberg, the Chief Executive Officer and Chief Financial Officer of the Company, respectively. The amendment provides for the vesting to be only upon the closing of the purchase of at least $15 million of crypto mining equipment, rather than conditioned on an uplisting of the Company’s shares on the NASDAQ Global Market, New York Stock Exchange, or another equivalent market. The amendment resulted in no additional incremental fair value being recorded.
As of December 31, 2023, 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 years ended December 31, 2023 and 2022:
| Schedule of stock option activity | | | | | | |
| | | Options | | | Weighted-Average Exercise Price Per Share | |
| | | | | | | |
| Outstanding, December 31, 2021 | | | 137,473 | | | $ | 0.00 | |
| Granted | | | 239,147,196 | | | | 0.21 | |
| Exercised | | | – | | | | – | |
| Forfeited | | | – | | | | – | |
| Expired | | | – | | | | – | |
| Outstanding, December 31, 2022 | | | 239,284,669 | | | $ | 0.21 | |
| Granted | | | 159,000,000 | | | | 0.04 | |
| Exercised | | | – | | | | – | |
| Forfeited | | | – | | | | – | |
| Expired | | | – | | | | – | |
| Outstanding, December 31, 2023 | | | 398,284,669 | | | $ | 0.09 | |
As of December 31, 2023, the Company had 90,907,990 stock options that were exercisable and 137,473 that are in dispute. The weighted average remaining life of all outstanding stock options was 3.75 years as of December 31, 2023. 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 December 31, 2023, the intrinsic value for the options vested and outstanding was $0 and $302, respectively.
Stock Warrants
Pursuant to the reverse merger transaction, the 11,515,714 issued and outstanding warrants of the Company prior to the merger transaction remain outstanding and are shown as granted as part of the recapitalization as described in Note 4. Of the total recapitalized, 1,142,857 are presented as reclassified in the year ended 2022 as they were not previously shown as outstanding in the pre-merger Edgemode, Inc. December 31, 2021 10-K. These warrants were subsequently forfeited as discussed below and as such have no material impact on the financial statements.
During the year ended December 31, 2022, the Company had 2,285,714 warrants to purchase shares of common stock forfeited as a result of the settlement of a SEC legal case.
The following table summarizes the stock warrant activity for the year ended December 31, 2023 and 2022:
| Schedule of stock warrant activity | | | | | | |
| | | Warrants | | | Weighted-Average Exercise Price Per Share | |
| | | | | | | |
| Outstanding, December 31, 2021 | | | 300,000 | | | $ | 0.63 | |
| Granted | | | 10,372,857 | | | | 0.45 | |
| Exercised | | | 1,142,857 | | | | 0.04 | |
| Forfeited | | | (2,285,714 | ) | | | 0.04 | |
| Expired | | | – | | | | – | |
| Outstanding, December 31, 2022 | | | 9,530,000 | | | $ | 0.50 | |
| Granted | | | – | | | | – | |
| Recapitalization | | | – | | | | – | |
| Exercised | | | – | | | | – | |
| Forfeited | | | – | | | | – | |
| Expired | | | – | | | | – | |
| Outstanding, December 31, 2023 | | | 9,530,000 | | | $ | 0.50 | |
Note 11. Notes Payable
Notes Payable
Pursuant to the merger agreement, the Company acquire 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.
Simultaneously with the Merger, approximately $4,574,132 of principal and interest of outstanding notes previously issued by the Company automatically converted into an aggregate of 18,296,528 shares of the Company’s common stock issued to 31 former noteholders. The conversion and issuance of shares of the Company’s common stock is presented as part of the recapitalization on the equity statement.
In April 2023, the Company utilized an existing marginal lending facility with SFOX, a digital assets broker. The marginal lending facility allows the Company to borrow funds up to a maximum aggregate amount of $50,000 to finance its investment activities in digital assets. The terms of the marginal lending facility include an interest rate on the borrowed funds of 11% and the maximum borrowing period under the facility is 28 days, the facility can be rolled over provided there is sufficient collateral. The facility is secured by a pledged collateral of digital assets. The Company is required to maintain a collateral balance equal to 110% of the outstanding principal balance with the lender. As of December 31, 2023, the collateral balance was returned and the loan balance has been settled in full.
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 year ended December 31, 2022 the company made payments of $248,184, of which $40,032 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 December, 31, 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. In addition the Company has recorded the remaining $95,926 of interest amounts owed under the agreements as of December 31, 2022 as the Company is in technical default due to lack of payments.
The balance of the loans as of December 31, 2023 is $1,179,972.
The following table presents the future maturities and principal payments of all notes payable listed above for the next five years and thereafter are as follows:
| Schedule of future maturities and principal payments | | | |
| Year | | Principal Amount | |
| 2023 | | $ | 1,179,972 | |
| 2024 | | | – | |
| 2025 | | | – | |
| 2026 | | | – | |
| 2027 | | | – | |
| Remaining | | | – | |
| Total | | $ | 1,179,972 | |
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 December 31, 2023, the balance on the note is $42,262, with a remaining unamortized discount of $2,280.
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 December 31, 2023, the balance on the note is $94,439, with a remaining unamortized discount of $1,940.
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 December 31, 2023, the balance on the note is $99,529, with a remaining unamortized discount of $5,647.
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 10.
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 December 31, 2023, 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 December 31, 2023, 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.
Note 12. 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 fair value of derivative liabilities | | | | | | | | |
| | | As of December 31, 2023 |
| | | Conversion Option | | Warrants | |
| | | | | | | |
| Volatility | | | 120.13% | | | | 124.36% | |
| Dividend Yield | | | 0% | | | | 0% | |
| Risk-free rate | | | 4.79% | | | | 4.01% | |
| Expected term | | | 1 year | | | | 2.5-3.25 years | |
| Stock price | | | $0.0022 | | | | $0.0022 | |
| Exercise price | | | $0.0014-0.01 | | | | $0.5 | |
| Derivative liability fair value | | | $196,593 | | | | $498 | |
| Number of shares issued upon conversion, exercise, or satisfaction of required conditions as of December 31, 2023 | | | 179,123,059 | | | | 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 change in the fair value of derivative liabilities | | | | |
| Fair value as of December 31, 2022 | | $ | – | |
| Fair value on the date of issuance related to principal default | | | 203,799 | |
| Fair value on the date of issuance related to warrants issued | | | 1,372 | |
| Change in fair value of derivatives | | | (8,081 | ) |
| Fair value as of December 31, 2023 | | $ | 197,090 | |
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 $8,081 during the year ended December 31, 2023. The fair value of the derivatives related to the principal default on the notes was charged directly to interest expense. In addition, as a result of the default, all other potentially dilutive instruments must also be recorded at fair value pursuant to ASC 815. The initial fair value of the outstanding warrants was charged to the change in fair value of derivatives.
Note 13. 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 years ended December 31, 2023 and 2022:
| Schedule of cryptocurrency activities | | | |
| Cryptocurrency at December 31, 2021 | | $ | 303,199 | |
| Revenue recognized from cryptocurrency mined | | | 438,042 | |
| Additions of cryptocurrency - sale of common stock | | | 50,000 | |
| Sale of cryptocurrencies for cash proceeds | | | (489,936 | ) |
| Cryptocurrency used for officer compensation | | | (144,423 | ) |
| Realized loss on sale/exchange of cryptocurrencies | | | (154,252 | ) |
| Cryptocurrency at December 31, 2022 | | | 2,630 | |
| Additions of cryptocurrency – convertible notes | | | 57,502 | |
| Additions of cryptocurrency – other notes | | | 50,142 | |
| Cryptocurrency used for payment of accounts payable | | | (4,005 | ) |
| Cryptocurrency used for payment of salaries | | | (11,888 | ) |
| Cryptocurrency used for payment of other notes | | | (50,142 | ) |
| Sale of cryptocurrencies for cash proceeds | | | (34,100 | ) |
| Realized loss on sale/exchange of cryptocurrencies | | | (10,107 | ) |
| Cryptocurrency at December 31, 2023 | | $ | 32 | |
Note 14. Income Taxes
The cumulative tax effect at the expected rate of 21% of significant items comprising the Company’s net deferred tax amount is as follows:
| Schedule of deferred tax assets and liabilities | | | | | | |
| | | December 31, 2023 | | | December 31, 2022 | |
| Deferred tax asset attributable to: | | | | | | | | |
| Net operating loss | | $ | 1,252,700 | | | $ | 996,800 | |
| Valuation allowance | | | (1,252,700 | ) | | | (996,800 | ) |
| Net deferred income tax assets | | $ | – | | | $ | – | |
A reconciliation of income tax provision to the provision that would be recognized under the statutory rates is as follows:
| Schedule of components of income tax expense (benefit) | | | | | | |
| | | December 31, 2023 | | | December 31, 2022 | |
| Benefit attributable to operating loss | | $ | 633,800 | | | $ | 6,771,700 | |
| Non-deductible | | | (335,100 | ) | | | (5,985,900 | ) |
| Valuation allowance | | | (298,600 | ) | | | (785,800 | ) |
| Provisions for income taxes | | $ | – | | | $ | – | |
The amount taken into income as deferred tax assets must reflect that portion of the income tax loss carry forwards that is more likely-than-not to be realized from future operations. The Company has chosen to provide an allowance of 100% against all available income tax loss carry forwards, regardless of their time of expiry.
No provision for income taxes has been provided in these financial statements due to the net loss. At December 31, 2023, the Company has net operating loss carry forwards totaling approximately $6,000,000, which will be carried forward to future periods.
Note 14. 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, which are still shown as issued and outstanding in Note 8 above.
| Item 9A. | 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.
Management’s Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:
| | · | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; |
| | | |
| | · | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and |
| | | |
| | · | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013). Management’s assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of these controls. Based on this assessment our management has concluded that as of December 31, 2023, our internal control over financial reporting was not effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles as a result of material weaknesses. These 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.
As previously disclosed in our Current Report on Form 8-K filed with the SEC on September 17, 2024, the continuing weakness resulted in our management’s failure to account for 5,000,000 options to purchase shares of our common stock granted to a consultant with a fair value of approximately $230,000 during the period ended March 31, 2023.
The existence of the continuing material weaknesses in our internal control over financial reporting increases the risk that a future restatement of our financials is possible. In order to remediate these material weaknesses, we will need to expand our accounting resources. We will continue to monitor and evaluate the effectiveness of our disclosure controls and procedures and our internal control over financial reporting on an ongoing basis, however, we do not expect that the deficiencies in our disclosure controls will be remediated until such time as we have remediated the material weaknesses in our internal control over financial reporting. In order to do so, we will need to hire employees and put the requisite controls in place.
Changes in Internal Control over Financial Reporting. There have been no changes in our internal control over financial reporting during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART IV
| Item 15. | Exhibits, Financial Statement Schedules. |
| (1) | Financial Statements. See Index to Consolidated Financial Statements, which appears on page F-1 hereof. The financial statements listed in the accompanying Index to Consolidated Financial Statements are filed herewith in response to this Item. |
| (2) | Financial Statements Schedules. All schedules are omitted because they are not applicable or because the required information is contained in the Consolidated Financial Statements or notes included herein. |
| (3) | Exhibits. |
EXHIBIT INDEX
| | | | | Incorporated by Reference | | Filed or Furnished |
| Exhibit # | | Exhibit Description | | Form | | Date | | Number | | Herewith |
| 2.1 | | Agreement and Plan of Merger and Reorganization (1) | | 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 | | 3.2 | | |
| 3.2(a) | | Amendment No. 1 to the Bylaws | | 8-K | | 4/15/2022 | | 3.1 | | |
| 3.3 | | Certificate of Designation of Series B Preferred Stock filed July 20, 2022 | | 8-K | | 7/27/2022 | | 3.1 | | |
| 4.1 | | Description of Securities | | 10-K | | 4/12/2022 | | 4.1 | | |
| 10.1 | | Form of Executive Employment Agreement (2) | | 8-K | | 2/7/2022 | | 10.1 | | |
| 10.2 | | Consulting Agreement - Isaacs (2) | | 8-K | | 2/7/2022 | | 10.2 | | |
| 10.3 | | Form of Option Agreement | | 8-K | | 2/7/2022 | | 10.3 | | |
| 10.4 | | Form of Note Conversion | | 8-K | | 2/7/2022 | | 10.4 | | |
| 10.5 | | Compute North Master Agreement | | 8-K | | 2/7/2022 | | 10.5 | | |
| 10.6 | | Trinity Mining Technologies | | 8-K | | 2/7/2022 | | 10.6 | | |
| 10.7 | | 2CRSI Agreements | | 8-K | | 2/7/2022 | | 10.7 | | |
| 10.8 | | Series A Preferred Stock Purchase Agreement, dated as of July 18, 2022, by and between Edgemode, Inc. and 1800 Diagonal Lending LLC | | 8-K | | 7/27/2022 | | 10.1 | | |
| 10.9 | | Series B Preferred Stock Purchase Agreement, effective as of August 26, 2022, by and between Edgemode, Inc. and 1800 Diagonal Lending LLC | | 8-K | | 8/29/2022 | | 10.1 | | |
| 10.10 | | Charlie Faulkner Stock Option Grant dated September 12, 2022 (2) | | 8-K | | 9/12/2022 | | 10.1 | | |
| 10.11 | | Simon Wajcenberg Stock Option Grant dated September 12, 2022 (2) | | 8-K | | 9/12/2022 | | 10.2 | | |
| 10.12 | | Common Stock Purchase Agreement between EdgeMode, Inc. and Alumni Capital LP dated September 19, 2022 | | 8-K | | 9/23/2022 | | 10.1 | | |
| 10.13 | | Series B Preferred Stock Purchase Agreement, effective as of September 28, 2022, by and between Edgemode, Inc. and 1800 Diagonal Lending LLC | | 8-K | | 9/28/2022 | | 10.1 | | |
| | | | | Incorporated by Reference | | Filed or Furnished |
| Exhibit # | | Exhibit Description | | Form | | Date | | Number | | Herewith |
| 10.14 | | Amendment to Charlie Faulkner Stock Option Grant dated January 25, 2023 (2) | | 8-K | | 1/26/2023 | | 10.1 | | |
| 10.15 | | Amendment to Simon Wajcenberg Stock Option Grant dated January 25, 2023 (2) | | 8-K | | 1/26/2023 | | 10.2 | | |
| 10.16 | | Stock Option Grant to Charlie Faulkner dated March 3, 2023 (2) | | 8-K | | 3/7/2023 | | 10.1 | | |
| 10.17 | | Stock Option Grant to Simon Wajcenberg dated March 3, 2023 (2) | | 8-K | | 3/7/2023 | | 10.2 | | |
| 10.18 | | Amendment to Charlie Faulkner Stock Option Grant dated January 25, 2023 (2) | | 8-K | | 3/7/2023 | | 10.3 | | |
| 10.19 | | Amendment to Simon Wajcenberg Stock Option Grant dated January 25, 2023 (2) | | 8-K | | 3/7/2023 | | 10.4 | | |
| 10.20 | | Securities Purchase Agreement between Edgemode, Inc. and 1800 Diagonal Lending LLC effective April 20, 2023 for purchase of Promissory Note | | 8-K | | 4/24/2023 | | 10.1 | | |
| 10.21 | | Promissory Note issued by Edgemode, Inc. in favor of 1800 Diagonal Lending LLC effective April 20, 2023 | | 8-K | | 4/24/2023 | | 10.2 | | |
| 10.22 | | Securities Purchase Agreement between Edgemode, Inc. and 1800 Diagonal Lending LLC dated April 20, 2023 for purchase of Convertible Promissory Note | | 8-K | | 4/24/2023 | | 10.3 | | |
| 10.23 | | Convertible Promissory Note issued by Edgemode, Inc. in favor of 1800 Diagonal Lending LLC effective April 20, 2023 | | 8-K | | 4/24/2023 | | 10.4 | | |
| 10.24 | | Form of Securities Purchase Agreement for purchase of Promissory Note | | 8-K | | 4/28/2023 | | 10.1 | | |
| 10.25 | | Form of Promissory Note | | 8-K | | 4/28/2023 | | 10.2 | | |
| 10.26 | | Securities Purchase Agreement between Edgemode, Inc. and 1800 Diagonal Lending LLC effective August 4, 2024 | | 8-K | | 8/8/2023 | | 10.1 | | |
| 10.27 | | Promissory Note issued by Edgemode, Inc. in favor of 1800 Diagonal Lending LLC effective August 4, 2023 | | 8-K | | 8/8/2023 | | 10.2 | | |
| 14.1 | | Code of Ethics and Business Conduct | | 10-K | | 4/17/2023 | | 14.1 | | |
| 16.1 | | Letter from MaloneBailey, LLP to the SEC dated January 7, 2022 | | 8-K | | 1/7/2022 | | 16.1 | | |
| 19.1 | | Insider Trading Policy | | 10-K | | 4/24/24 | | 19.1 | | |
| 21.1 | | List of Subsidiaries | | 10-K | | 4/17/2023 | | 21.1 | | |
| 31.1 | | Certification of Principal Executive Officer (Section 302) | | | | | | | | Filed |
| 31.2 | | Certification of Principal Financial Officer (Section 302) | | | | | | | | Filed |
| 32.1 | | Certification of Principal Executive Officer (Section 906) (3) | | | | | | | | Furnished |
| 32.2 | | Certification of Principal Financial Officer (Section 906) (3) | | | | | | | | Furnished |
| 101.INS | | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | | | | | | | | Filed |
| 101.SCH | | Inline XBRL Taxonomy Extension Schema Document | | | | | | | | Filed |
| 101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | | | | | | | Filed |
| 101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document | | | | | | | | Filed |
| 101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document | | | | | | | | Filed |
| 101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document | | | | | | | | Filed |
| 104 | | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). | | | | | | | | Filed |
______________________
| (1) | | 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. |
| (2) | | Management contract or compensatory agreement plan or arrangement. |
| (3) | | This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K. |
Copies of this report (including the financial statements) and any of the exhibits referred to above will be furnished at no cost to our stockholders who make a written request to EdgeMode, Inc., 110 E. Broward Blvd., Suite 1700, Ft. Lauderdale, FL 33301, Attention: Corporate Secretary.
| Item 16. | Form 10-K Summary. |
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on April 16, 2024.
| | | EDGEMODE, INC. |
| | | |
| Date: | February 21, 2025 | /s/ Charlie Faulkner |
| | | Charlie Faulkner |
| | | Chief Executive Officer (Principal Executive Officer) |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Edgemode, Inc. and in the capacities and on the dates indicated.
| Signature | | Title | | Date |
| | | | | |
| /s/ Charlie Faulkner | | Chief Executive Officer | | February 21, 2025 |
| Charlie Faulkner | | (Principal Executive Officer) and Director | | |
| | | | | |
| /s/ Simon Wajcenberg | | Chief Financial Officer | | February 21, 2025 |
| Simon Wajcenberg | | (Principal Financial Officer)(Principal Accounting Officer) and Director | | |
