10-Q: Edgemode Inc. Reports Q1 2025 Results, Completes Acquisition of Synthesis Analytics Production Ltd.

Edgemode Inc. announces its Q1 2025 financial results, highlighting a significant net loss and the completion of the Synthesis Analytics Production Ltd. acquisition, marking a shift towards digital infrastructure colocation services.

Summary

• Edgemode Inc. reported a net loss of $20,872,081 for the three months ended March 31, 2025, compared to a net loss of $451,204 for the same period in 2024.
• Operating expenses increased significantly to $22,115,141, primarily due to stock-based compensation expenses of $21,679,711 related to option amendments for company officers.
• The company completed the acquisition of Synthesis Analytics Production Ltd. (SAPL) on April 7, 2025, issuing 1,260,246,354 shares of Edgemode common stock in exchange for 100% of SAPL's outstanding capital stock.
• This acquisition marks a strategic shift from cryptocurrency mining to digital infrastructure colocation services and HPC hosting.
• Edgemode is seeking to raise at least $2,000,000 to commence HPC hosting operations and repay debt.
• As of March 31, 2025, the company had cash of $182,061 and total assets of $378,259, while total liabilities amounted to $4,293,644.
• The company's ability to continue as a going concern is dependent on its ability to generate future profitable operations and/or obtain necessary financing.

Sentiment

Score: 3

Explanation: The sentiment is low due to the significant net loss, ineffective disclosure controls, and dependence on raising additional capital. While the acquisition of SAPL and the shift to HPC hosting offer potential, the company faces significant challenges.

Positives

• The acquisition of SAPL provides Edgemode with existing infrastructure and expertise to enter the HPC hosting market.
• The company secured a Master Services Agreement with Cudo Ventures Ltd. for Tier 3 data center hosting infrastructure and colocation services, potentially generating revenue.
• The company received $300,000 in cash proceeds from the sale of common shares during the quarter.
• The company is actively seeking to raise capital to fund its new HPC operations.

Negatives

• The company reported a substantial net loss of $20,872,081 for Q1 2025.
• Operating expenses significantly increased due to stock-based compensation.
• The company's disclosure controls and procedures were deemed ineffective due to material weaknesses in internal control over financial reporting.
• The company has a significant accumulated deficit of $61,357,049 as of March 31, 2025.
• The company's auditors identified material weaknesses in internal controls.

Risks

• The company's ability to continue as a going concern is dependent on securing additional financing and achieving profitable operations.
• The company's disclosure controls and procedures are ineffective due to material weaknesses in internal control over financial reporting.
• The company faces risks associated with developing and expanding its new HPC operations.
• The company's business strategy requires immediate funding of approximately $2,000,000 to enable it to commence its new operations and repay debt, as well as additional significant financing to develop and expand its new operations.
• There are no assurances that the company will raise sufficient capital to execute its business plan or satisfy its liabilities.

Future Outlook

Edgemode intends to generate revenue and achieve profitability by building large-scale data center infrastructure configured for specialized computers performing specific, high-value applications such as cloud computing, machine learning, and artificial intelligence and maximizing the use of assets acquired in the SAPL acquisition. The company is seeking to raise at least $2,000,000 to commence its new operations and repay debt, as well as additional significant financing to develop and expand its new operations.

Management Comments

• The acquisition of SAPL has positioned us to enter the rapidly evolving HPC hosting market in an efficient and effective manner.
• The acquisition has enabled us to plan to leverage SAPL's existing infrastructure and expertise to meet the growing demand for data center facilities for third-party customers focused on cloud computing as well as machine learning and artificial intelligence.
• Our goal is to utilize the assets we have acquired via the purchase of SAPL for HPC hosting operations, which will provide consistent dollar-based revenue and which represent substantially less risk than our historical digital asset self-mining operations.

Industry Context

Edgemode's shift to HPC hosting aligns with the increasing demand for data center facilities to support cloud computing, machine learning, and artificial intelligence applications. The company aims to capitalize on the growing need for outsourced data center facilities by hyperscale cloud-based providers and enterprises.

Comparison to Industry Standards

• It is difficult to compare Edgemode's results to industry standards due to its transition from cryptocurrency mining to HPC hosting.
• Key competitors in the HPC hosting market include companies like Digital Realty, Equinix, and CyrusOne, which have established data center infrastructure and a strong customer base.
• Edgemode's success will depend on its ability to effectively leverage SAPL's infrastructure, secure additional funding, and attract customers in the competitive HPC hosting market.
• The company's focus on specialized computers performing specific, high-value applications such as cloud computing, machine learning, and artificial intelligence may provide a competitive advantage.

Management Changes

Legal Proceedings

• 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.

Related Party Transactions

• During the three months ended March 31, 2025, in satisfaction of $ 769,989 of the accrued salary for each of Mr. Faulkner and Mr. Wajcenberg, the Company (1) agreed to issue to each of Charles Faulkner and Simon Wajcenberg 256,660,163 shares of restricted common stock at a conversion price and (2) amended options held by each of Mr. Faulkner and Mr. Wajcenberg to eliminate the vesting requirements of the 2022 Options and 2023 options.
• As of March 31, 2025 and December 31, 2024 the Company owed the executive officers of the Company $ 1,817,951 and $ 1,616,090 in accrued payroll for services performed.
• As of March 31, 2025 and December 31, 2024, the Company owed the executive officers $ 22,825 and $ 32,725 , respectively, for working capital advances.
• Furthermore, the Company entered into a consultancy agreement with AI Capital Mineco Limited, an affiliate of Adler, and agreed to pay the consultant a fee of $300,000, subject to the Company receiving financing in excess of $2,000,000.
• Pursuant to the Share Exchange, Mr. Faulkner and Mr. Wajcenberg entered into amendments to their Executive Employment Agreements, to increase their base salary to $400,000 per annum and a quarterly bonus of up to $150,000 at the discretion of the Board.
• Additionally, the Board approved the following stock option grants to Mr. Faulkner, Mr. Wajcenberg, and Dmitry Strukov, a consultant to the Company.

Stakeholder Impact

• Shareholders face significant dilution due to the issuance of shares for the SAPL acquisition and debt conversions.
• Employees may experience changes in roles and responsibilities due to the company's strategic shift.
• Customers in the HPC market may benefit from Edgemode's new focus on data center infrastructure and colocation services.
• Creditors face uncertainty regarding the company's ability to repay its debts due to its financial condition.

Next Steps

• The company intends to strategically develop and to work to make operational the infrastructure necessary to support its contractual commitments to its HPC customers and to support expected customer growth and additional demand by leveraging its data center expertise and capabilities.
• The company intends to seek additional opportunities and to engage additional customers in the HPC hosting market to expand its business using its knowledge, expertise, and existing and future infrastructure where favorable market opportunities exist.

Key Dates

Keywords

HPC hosting, data center, colocation, SAPL acquisition, financial results, Edgemode, cryptocurrency, mining, loss, financing