The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements, and the notes thereto, and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and the annual financial statements of EdgeMode, a Wyoming corporation and our wholly owned subsidiary, filed with the SEC on Form 8-K. The following discussion and analysis compares our consolidated results of operations for the three months ended June 30, 2022 (the "2022 Quarter") with those for the three months ended June 30, 2021 (the "2021 Quarter"). Additionally, the six months ending June 30, 2022 and six months ending June 30, 2021 are referred to as the "2022 Period" and "2021 Period") respectively.

Cautionary Note Regarding Forward-Looking Statements

This report contains "forward-looking statements", as such term is used within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, among other things, statements regarding expanding our business and our liquidity as well as other statements regarding our future operations, financial condition and prospects, and business strategies. Forward-looking statements generally can be identified by words such as "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "projects," "will be," "will continue," "will likely result," and similar expressions. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially and adversely from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, our ability to raise capital to buy the machines we have commitments to purchase and those discussed under the caption "Risk Factors" in our Form 10-K for the year ended December 31, 2021 and those discussed in other documents we file with the SEC. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.





Business Overview

We are an early-stage cryptocurrency mining Company. Although Edgemode, our new wholly-owned subsidiary, has historically mined Ethereum, we are now focused on expanding the operations by mining Bitcoin which we anticipate to begin in the second half of 2022. Due to the imminent change of Ethereum (ETH) from Proof of Work (POW) to Proof of stake (POS), the Company has terminated all rental agreements and future purchase orders related to Ethereum mining operations.

Critical Accounting Policies and Estimates

We discuss the material accounting policies that are critical in making the estimates and judgments in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, under the caption "Management's Discussion and Analysis-Critical Accounting Policies and Estimates". There has been no material change in critical accounting policies or estimates during the period covered by this report.

Recent Accounting Pronouncements

For information on recent accounting pronouncements and impacts, see Note 1 to the unaudited condensed consolidated financial statements.









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RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2022 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2021

Our revenues for the 2022 Quarter was $165,118 compared to $500,692 for the 2021 Quarter. The reason for the decrease was the decline in the price of Ethereum during the 2022 Quarter compared to prices during the 2021 Quarter. Also the Company experienced power outages at our data center in Rouses Point. As we have terminated our rental agreements as referenced above, we do not anticipate power outages in the future materially effecting our operations.

Our cost of revenues for the 2022 Quarter was $382,908 compared to $401,629 for the 2021 Quarter. The reason for the decrease was a decrease in hosting fees incurred as a result of the power outages and lower revenues.

Our operating expenses for the 2022 Quarter was $2,874,473 compared to $218,942 for the 2021 Quarter. In the 2022 Quarter, the Company incurred stock-based compensation expense of $1,878,264 compared to $0 for the 2021 Quarter. In addition, the company began initial operations in 2021 versus having full operations during 2022.

Our other expenses for the 2022 Quarter was $109,363 compared to $148,065 for the 2021 Quarter. The reason for the decrease was a decrease in interest expense from additional loans as well as a decreased loss on cryptocurrencies due to decreased transactions and changes in market prices.

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2022 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2021

Our revenues for the 2022 Period was $436,237 compared to $569,068 for the 2021 Period. The reason for the decrease was the decline in the price of Ethereum during the 2022 Period compared to prices during the 2021 Period, in addition to the power outages at our data center in disclosed above.

Our cost of revenues for the 2022 Period was $806,678 compared to $479,110 for the 2021 Period. The primary reason for the increase was the Company began operations in March of 2021 versus having a full six months of operations for the 2022 Year.

Our operating expenses for the 2022 Period was $26,836,972 compared to $304,944 for the 2021 Period. In the 2022 Period, the Company incurred stock-based compensation expense of $24,264,181 compared to $6,750 for the 2021 Period. In addition, the Company began operations in March of 2021 for initial operations versus having a full six months of operations for the 2022 Period.

Our other expenses for the 2022 Period was $237,740 compared to $160,696 for the 2021 Period. The reason for the increase was an increase in interest expense from additional loans as well as an increased loss on cryptocurrencies due to increased transactions and changes in market prices.

LIQUIDITY AND CAPITAL RESOURCES

As of August 22, 2022, the Company had approximately $7,000 of cash. Our liquidity is primarily derived from selling the crypto that we mine, and debt and equity investments from accredited investors. To grow the business and help fund operations for the next 12 months, the Company is seeking to raise $60 million in equity capital through private placements. The Company has signed a non-binding term sheet for a $400 million debt facility. We can provide no assurances that any such financings will be completed or successful, nor will they be on terms that we can agree on.







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The Company has signed $66 million in hardware purchase orders. Assuming we close on the $400 million debt facility, the debt facility will be used in order to make payments on these purchase orders. There are no assurances the purchase will be completed.

If we fail to raise sufficient additional funds, we will be required to suspend or cease our operations.

The Company has terminated the agreements for approximately $2.2 million of debt for equipment that the Company was using for mining and is negotiating the return of the equipment to the vendor to settle the outstanding liabilities. Additionally, we have a significant amount funds committed to the purchase of new Bitcoin miners. We can provide no assurance that we will have the ability to meet these payment requirements or that we will be successful raising capital to meet our working capital requirements.

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