The accompanying notes are an integral part of these
unaudited financial statements.
The accompanying notes are an integral part of these
unaudited financial statements.
The accompanying notes are an integral part of these
unaudited financial statements.
The accompanying notes are an integral part of these
unaudited financial statements.
Notes to the Consolidated Financial Statements
September 30, 2022
(Unaudited)
Note 1. Basis of Presentation
The accompanying unaudited interim financial statements
of EdgeMode, Inc. (formerly known as Fourth Wave Energy, Inc.) (“we”, “our”, or the “Company”) have
been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities
and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto
contained in the Company’s Annual Report filed with the SEC on Form 10-K and the annual financial statements of Edgemode filed with
the SEC on Form 8-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation
of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations
for our interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements
that would substantially duplicate the disclosure contained in the audited financial statements for fiscal 2021, as reported in the Form
10-K and Form 8-K of the Company, have been omitted.
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.
In connection with the acquisition of FWI in March
2020, the Company entered into consulting agreements with certain founders of FWI. The consulting agreements require the Company to collectively
pay $379,850 in consulting fees during the terms of the consulting agreements. In March 2021 the Company agreed to sell the FWI technologies
and its business plan to GeoSolar Technologies, Inc. a Colorado corporation (“GST”) in exchange for 10,000,000 shares of GST
common stock (the “GST Shares”), such GST Shares distributable to the Company’s shareholders. As a part of this transaction,
the consultants agreed to release the Company from any liability for any consulting fees owed to them by the Company and return a portion
of the Company’s common stock held by such consultants. During the year ended December 31, 2021, 4,700,000 shares of the Company's
common stock were returned to the Company and cancelled. The technology granted to GST was carried on our balance sheet at zero value
and the shares received were also recorded at no value. FWI was voluntarily dissolved on December 8, 2021. The ex-dividend date, record
date and distribution date for the registered distribution of the GST Shares to the Company's shareholders, subject to FINRA clearance,
is the following:
Ex-Dividend Date: 12/06/2021
Record Date: 12/07/2021
Distribution Date: 12/14/2021
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 Wyoming”) closed an 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
Wyoming (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 Wyoming
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 owed by Joe Isaacs to perform services for total value of $240,000. Charlie Faulkner and Simon Wajcenberg, the
principals of EdgeMode Wyoming, were appointed as directors and executive officers.
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. 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
Wyoming.
The merger was accounted for as a reverse merger,
whereby EdgeMode Wyoming 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 Wyoming 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 – Summary of significant Accounting
Policies
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.
Principals of consolidation
The accompanying consolidated financial statements
include the accounts of Fourth Wave Energy, Inc. and the accounts of its 100% owned subsidiary, EdgeMode. All intercompany transactions
and balances have been eliminated in consolidation.
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 Company has no assets or liabilities valued using
level 1, level 2, or level 3 inputs as of September 30, 2022.
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
fractional share of the fixed cryptocurrency award the mining pool operator receives (less digital asset transaction fees to the mining
pool operator which are recorded as a component of cost of revenues), for successfully adding a block to the blockchain. The terms of
the agreement provides that neither party can dispute settlement terms after thirty-five days following settlement. The Company’s
fractional 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 consideration is constrained until the mining
pool operator successfully places a block (by being the first to solve an algorithm) and the Company receives confirmation of the consideration
it will receive, 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 closing price of the related cryptocurrency on the day of receipt. There is currently no specific definitive guidance
under GAAP or alternative accounting framework for the accounting for cryptocurrencies recognized as revenue or held, and management has
exercised significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is enacted by
the FASB, the Company may be required to change its policies, which could have an effect on the Company’s consolidated financial
position and results from operations.
Reclassification of Comparative Period Presentation
The Company is reclassifying its financial statements
for the nine-month period ended September 30, 2021. These financial statements represent a reclassification of certain prior year account
classifications and footnotes.
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.
NOTE 3 - Going Concern
These financial statements are prepared on a going
concern basis. The Company began operations in 2020 and incurred a cumulative loss since inception. The Company’s ability to continue
is dependent upon management’s plan to raise additional funds and achieve profitable operations. These matters raise substantial
doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might
be necessary if the Company is not able to continue as a going concern.
NOTE 4 – 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 has
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 5 – 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 was paid
in advance. As of September 30, 2022, $7,500 amount of services are left to be performed.
During the nine months ended September 30, 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.
During the nine months ended September 30, 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.
As of September 30, 2022 the Company owed the executive
officers of the Company $331,125 in accrued payroll for services performed.
NOTE 6 - 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 September 30, 2022 the company has prepaid a total of $1,586,297
which the company expects to begin using during the first quarter of 2023 which has been delayed from original expectations due to delays
in obtaining the equipment to be hosted.
NOTE 7 – Fixed Assets
Fixed assets are stated at cost and depreciated using
the straight-line method over their estimated useful lives. When retired or otherwise disposed, the carrying value and accumulated depreciation
of the fixed asset is removed from its respective accounts and the net difference less any amount realized from disposition, is reflected
in earnings. Expenditures for maintenance and repairs which do not extend the useful lives of the related assets are expensed as incurred.
As of September 30, 2022 and 2021 fixed assets were
made up of the following:
Schedule of fixed assets | |
| | |
| | | |
| | |
| |
Estimated | | |
| | |
| |
| |
Useful | | |
| | |
| |
| |
Life | | |
September 30, | | |
December 31, | |
| |
(years) | | |
2022 | | |
2021 | |
Cryptomining equipment | |
2-5 years | | |
$ | 2,262,576 | | |
$ | 2,615,721 | |
Cryptomining equipment - not in service | |
| | |
| 1,610,139 | | |
| 1,737,186 | |
| |
| | |
| 3,872,715 | | |
| 4,352,907 | |
Accumulated depreciation | |
| | |
| (1,420,236 | ) | |
| (832,464 | ) |
Net book value | |
| | |
$ | 2,452,479 | | |
$ | 3,520,443 | |
Total depreciation expense for the nine months ended
September 30, 2022 and 2021, was $630,670 and $522,282 respectively.
As of September 30, 2022 the Company had $1,610,139
of equipment that is not yet in service. During the nine months ended September 30, 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 is expected
to be delivered and placed in service during the second quarter of 2023.
During the nine months ended September 30, 2022 the
Company recorded an impairment to cryptomining equipment in the amount of $748,269 as a result of the Company determining the future cash
flows were less than the remaining payments on the equipment notes. Of the total impairment, $131,232 relates to assets the company disposed
of due to the switch away from Etherium mining, $357,036 was related to mining equipment purchased with the Equipment Notes Payable discussed
below in Note 9. The company is currently in negotiations with the manufacturer of the equipment to settle the remainder of the notes
by returning the equipment, and offsetting the down payments of the future equipment against the remaining outstanding payable balances.
As such the company has impaired the value of the assets down to the salvage value, which was determined to be the remaining principle
payments owed. 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 nine months ended September 30, 2022.
NOTE 8 – Equity
The Company has authorized 950,000,000 shares of common
stock, par value of $0.001, and as of September 30, 2022 has issued 390,437,459 shares of common stock. All of the common shares have
the same voting rights and liquidation preferences.
Preferred shares
Series A
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. In connection with the Transaction, the only outstanding preferred
stock was converted into common stock. As of the date of this report, there are no outstanding shares of preferred stock.
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 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 10% 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 nine months ended September 30,
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 September
30, 2022, the Company owes $1,905 in accrued dividends, reflected as interest expense, and the carrying value of the Series B Preferred
stock was $202,390, net of unamortized discount of $10,110.
Common shares
On March 30, 2022 the Company increased its authorized
common shares from 500,000,000 to 950,000,000.
During the nine months ended September 30, 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 1,230,000 shares of common stock with an exercise price of $0.50, which expire five years from the date of
grant.
During the nine months ended September 30, 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 September 30, 2022, $0 of unrecognized expense remains to be amortized.
During the nine months ended September 30, 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.
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 November 14, 2022, 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 has been recorded as deferred offering costs which will be offset against the
future proceeds.
Stock Options
During the nine months ended September 30, 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.
During the nine months ended September 30, 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.
The Company used the black-scholes option
pricing model to value the options and expensed $24,219,306
during the nine months ended September 30, 2022. As of September 30, 2022, the Company has $17,715,672 of value remaining to be
expensed based upon completions of milestones, of which $16,865,676 is contingently subject to expense recognition based on the
timing of when the Company is able to up-list the shares as described above as this does not meet the definition of probable under ASC 450, and $0 of remaining amortization to expensed pursuant
to the vesting terms.
The following table summarizes the stock option activity
for the nine months ended September 30, 2022:
Schedule of 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, September 30, 2022 | |
| 239,284,669 | | |
$ | 0.21 | |
As of September 30, 2022, the Company had 85,907,990
stock options that were exercisable and 137,473 that are in dispute. The weighted average remaining life of all outstanding stock options
was 4.73 years as of September 30, 2022. 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 September
30, 2022, the intrinsic value for the options vested and outstanding was $0 and $8,248, respectively.
Stock Warrants
The following table summarizes the stock warrant
activity for the nine months ended September 30, 2022:
Schedule of warrant activity | |
| | |
| |
| |
Warrants | | |
Weighted-Average Exercise Price Per Share | |
| |
| | |
| |
Outstanding, December 31, 2021 | |
| 9,442,857 | | |
$ | 0.44 | |
Granted | |
| 1,230,000 | | |
| 0.50 | |
Exercised | |
| – | | |
| – | |
Forfeited | |
| – | | |
| – | |
Expired | |
| – | | |
| – | |
Outstanding, September 30, 2022 | |
| 10,672,857 | | |
$ | 0.45 | |
NOTE 9 - 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
Equipment Notes Payable
In February 2021, the Company entered into a financing
agreement whereby the company agreed to purchase assets related to its crypto mining operations. The financing agreement required a down
payment of $199,800 and 24 equal monthly payments of $32,760. The Company used a 15% discount rate to determine the net present value
of the loan value of $871,519. The balance of the loan as September 30, 2022 is $336,266. The Company is currently in negotiations with
the lender to terminate the remainder of the agreement and return the equipment
In May 2021, the Company entered into a financing
agreement whereby the Company agreed to purchase assets related to its crypto mining operations. The financing agreement required a down
payment of $299,808, the first month payment of $79,056 and 23 equal monthly payments of $39,528. The Company used a 15% discount rate
to determine the net present value of the loan value of $1,148,237. The balance of the loan as of September 30, 2022 is $507,663. The
Company is currently in negotiations with the lender to terminate the remainder of the agreement and return the equipment
In July 2021, the Company entered into a financing
agreement whereby the company agreed to purchase assets related to its crypto mining operations. The financing agreement required a down
payment of $100,800 and 24 equal monthly payments of $15,660. The Company used a 15% discount rate to determine the net present value
of the loan value of $421,835. The balance of the loan as of September 30, 2022 is $240,117. The Company is currently in negotiations
with the lender to terminate the remainder of the agreement and return the equipment
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 | |
2022 | |
$ | 724,122 | |
2023 | |
| 359,924 | |
2024 | |
| – | |
2025 | |
| – | |
2026 | |
| – | |
Remaining | |
| – | |
Total | |
$ | 1,084,046 | |
NOTE 10 – 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 nine months ended September 30, 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 | |
Proceeds from sale of cryptocurrencies | |
| (509,997 | ) |
Cryptocurrency used for officer compensation | |
| (91,898 | ) |
Realized gain on sale/exchange of cryptocurrencies | |
| (186,716 | ) |
| |
| | |
Cryptocurrency at September 30, 2022 | |
$ | 2,630 | |
NOTE 11 – 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.