The following discussion should be read in conjunction with our unaudited financial statements and notes thereto included herein.





General

EDGE DATA SOLUTIONS, INC. (the "Company"), formerly Blockchain Holdings Capital Ventures, Inc. (formerly Southeastern Holdings, Inc., formerly Safe Lane Systems, Inc.) was incorporated in the State of Colorado on September 10, 2013. Safe Lane Systems, Inc. redomiciled to become a Delaware holding corporation in September of 2016. On September 22, 2016, Safe Lane Systems, Inc. formed two wholly owned subsidiaries, SLS Industrial, Inc and Southeastern Holdings, Inc. (both Delaware corporations) and on September 30, 2016 completed a merger and reorganization in which Southeastern Holdings, Inc. (now Edge Data Solutions, Inc.) became the holding company. On December 1, 2016, the Company spun off its wholly owned subsidiary, SLS Industrial, Inc., along with its assets and liabilities, leaving Southeastern Holdings, Inc. as the only surviving entity.

On August 23, 2018, the Company entered into a Bill of Sale and Assignment and Assumption Agreement with Blockchain Holdings, LLC ("Blockchain"), pursuant to which the Company purchased all of the assets of Blockchain which are used in the business of sourcing of blockchain mining equipment from various suppliers for their customers and also providing management of the equipment hosted, mining pools and tech work on such equipment. The Company issued 300,000,000 (equivalent to 3,000,000 after the reverse split) shares of its common stock, par value $.0001 to the members of Blockchain in exchange for the assets of Blockchain.

On August 30, 2018 the Company changed its name to Blockchain Holdings Capital Ventures, Inc.

On January 13, 2020, the Company changed its name to Edge Data Solutions, Inc.

Edge Data Solutions, Inc. (EDSI) is poised to be an industry-leading edge data center and cloud infrastructure provider. EDSI's proprietary Edge Performance Platform (EPP) allows us to deploy next-generation edge data centers where they are needed most. EDSI's data centers provide next-generation immersion Cooling technology that improves performance, reduces energy costs and latency. Key industries we serve more computing power are fintech, cloud gaming, telecom 5G, 3D/video/AI rendering, video streaming, remote desktop, IoT, autonomous vehicles. Centralized infrastructure facilities servicing multiple geographical areas encounter many issues with data latency, congestion and weak network connections. To address this, data processing is moving closer to the customer. EDSI offers green, low-cost, secure colocation and private data hosting to meet this demand for Edge data centers. EDSI plans to deploy to strategic locations based on demand for Tier 2 and Tier 3 cities outside the major metropolitans to underserved markets, supporting both edge customers and areas of projected growth. With the rise and proliferation of this technology adoption we plan to solidify our footprint by securing multiple locations across the US, while generating revenue from our operations. The modular design and ability to add additional data centers as needed, preserves up front capital allowing for rapid deployment and scalability as business demand increases.





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The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. However, the above conditions raise substantial doubt about the Company's ability to do so. New business opportunities may never emerge, and we may not be able to sufficiently fund the pursuit of new business opportunities should they arise.

As of March 31, 2021, we had approximately $490,724 of cash on hand. Our current monthly cash burn rate is approximately $35,000, and it is expected that burn rate will continue and is expected to continue at $35,000 until significant additional capital is raised and our marketing plan is executed. Our trade creditors may call debts at any time, and our cash reserves would not be sufficient to satisfy all balances. We are currently dependent on minimal expenses to be covered by a loan or other cash infusion from the Company's CEO and Director Delray Wannamaker, and President and Director, Daniel Wong. There is no guarantee that this cash infusion will continue to be made.

Operating results for the three months ended March 31, 2021 and 2020:

During the three months ended March 31, 2021, the Company generated revenues of $50,843 from operations, compared to $0 for the three months ended March 31, 2020, an increase of $50,843 or 100%. This increase is a result of (i) customers purchasing and consuming datacenter credits for use of the Company's computing equipment and (ii) the sale of datacenter hardware solutions. The Company anticipates future revenue from its current efforts, but there can be no assurances that such efforts will be successful.

For the three months ended March 31, 2021, costs of net revenues were $36,935, compared to $0 for the three months ended March 31, 2020, for an increase of 100%. The change is a result of direct costs associated with the Company's revenue streams.

As a result of the changes in revenues and cost of net revenues discussed above, the Company's gross margin was $13,908 and $0 for the three months ended March 31, 2021 and 2020, respectively.

For the three months ended March 31, 2021, selling, general and administrative expenses were $447,699, compared to $77,201 during the three months ended March 31, 2020, a decrease of $29,502, or 38%. The decrease in these expenses are attributable to decreased legal, accounting and other professional fees and a general streamlining of costs.

The Company recognized stock-based compensation expense of $19,000 for the three months ended March 31, 2021, as compared to $9,500 for the three months ended March 31, 2020, for an increase of $9,500, or 100%. This increase was attributable to an issuance to a consultant for support of operations in 2021.

During the three months ended March 31, 2021, the Company recognized $6,978 of depreciation expense, as compared to $81, for an increase of $6,897 or 8,515%, during the three months ended March 31, 2020, as a result of added equipment during the later periods of 2020 and during the first quarter of 2021.

During the three months ended March 31, 2021, the Company recognized $27,085 of interest expense, as compared to $8,937 for the three months ended March 31, 2020. The increase of $18,148, or 203%, is primarily attributable to the accrual of interest on significant new convertible debt issuances to fund operations throughout 2020.

The Company also generated cryptocurrency mining income of $4,747 and a loss of $59 on the sale of cryptocurrency during the three months ended March 31, 2021, as compared to $0 and $0, respectively during the three months ended March 31, 2020. The change was a result of the use of excess datacenter capacity after the Company built out its datacenters during 2020.

As a result of the changes in operating expenses and other expenses, the Company incurred a net loss of $122,871 for the three months ended March 31, 2021, compared to a net loss of $95,719 for the three months ended March 31, 2020, a change of $27,152, or 28%.

The future trends of all expenses are expected to be primarily driven by the Company's ability to execute its business plans. Furthermore, the Company's ability to continue to fund operating expenses will depend on its ability to raise capital, continue to generate revenue and experience revenue growth. There can be no assurance that the Company will be successful in doing so.





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Liquidity and Capital Resources

The Company's cash position at March 31, 2021 increased by $410,356 to $490,724, as compared to a balance of $80,368, as of December 31, 2020. The increase in cash for the three months ended March 31, 2021 was attributable to net cash provided by operating activities of $449,486, $1,152 of net cash used in investing activities, and net cash used in financing activities of $37,978.

As of March 31, 2021, the Company had a deficit in working capital of $948,179, compared to a deficit in working capital of $849,989 at December 31, 2020, representing a decrease in working capital of $98,190, largely attributable to the use of cash in operations, amortization of prepaid expenses, customer deposits, finance lease-related liabilities, deferred revenue and short-term convertible debt.





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Net cash provided by operating activities of $449,486 during the three months ended March 31, 2021, as compared to net cash of $134,010 used in operating activities for the three months ended March 31, 2020, was primarily attributable to a significant net loss, which was offset by customer deposits, stock-based compensation, write-off of acquisition deposits and decreases in accounts payable and increased by payment of accrued liabilities.

Net cash used by investing activities was $1,152 for the three months ended March 31, 2021 decreased by $35,886 from $37,038 of cash used by investing activities for the three months ended March 31, 2020. This is attributable to the Company acquiring less datacenter equipment in 2021 and advancing funds pertaining to a prospective acquisition in the prior period.

Net cash used in financing activities was $37,978 during the three months ended March 31, 2021, as compared to net cash provided by financing activities of $157,074 during the three months ended March 31, 2020. The difference was a result of changes in finance lease assets and liabilities, net repayments of related party advances, and no new convertible debt issued in 2021.

As reported in the accompanying consolidated financial statements, for the three months ended March 31, 2021 and 2020, the Company incurred net losses of $122,871 and $95,719, respectively. The Company produced limited revenues during the three months ended March 31, 2021 and no revenue during the three months ended March 31, 2020. The Company's ability to continue as a going concern is dependent upon its ability to generate revenue, reach consistent profitability and raise additional capital. To date, the Company has raised funds from related party advances, convertible debt, subscriptions to equity units, and the sale of common stock to its former CEO. It intends to finance its future operating activities and its near-term working capital needs through the sale of datacenter hardware solutions and future convertible debt financings or stock subscriptions. The sale of equity and entry into other future financing arrangements may result in dilution to stockholders and those securities may have rights senior to those of common shares. If the Company raises additional funds through the issuance of convertible notes or other debt financing, these activities or other debt could contain covenants that would restrict the Company's operations. Any other third-party funding arrangements could require the Company to relinquish valuable rights. The Company will require additional capital beyond its currently anticipated needs. Additional capital, if available, may not be available on reasonable terms or at all.

While the Company has generated revenues, it has not generated substantial revenues or profits from its current operations. The Company expects to continue to incur operating losses as it incurs professional fees and other expenses related to implementing its business plan. The future trends of all expenses are expected to be primarily driven by the Company's ability to execute its business plans and continue to generate revenue. Furthermore, the Company's ability to continue to fund operating expenses will depend on its ability to raise capital and generate sufficient revenues. There can be no assurance that the Company will be successful in doing so.





Financial Condition

The Company's total assets as of March 31, 2021 and December 31, 2020 were $654,223 and $241,831, respectively, representing an increase of $412,392, or 171%. Total liabilities as of March 31, 2021 and December 31, 2020 were $1,520,397 and $1,004,134, respectively, for an increase of $516,263, or 51%. The significant change in the Company's financial condition is attributable to revenue generation, customer deposits on hardware, commencement of a finance lease arrangement, cash burn from operations and increases in accounts payable and repayment of accrued expenses. As a result of these transactions, the Company's cash position increased from $80,368 to $490,724 during the three months ended March 31, 2021.

Off-Balance Sheet Arrangements

We have made no 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 is material to investors.

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