Edgemode, Inc. 10-K
Table of Contents
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2024
OR
FOR THE TRANSITION PERIOD FROM __________________
TO __________________________
COMMISSION FILE NUMBER: 000-55647
Edgemode, Inc.
(Exact
name of registrant as specified in its charter)
(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. $64,345 on June 30, 2024.
Indicate the number of shares outstanding of each
of the registrant’s classes of common stock, as of the latest practicable date. 2,271,953,600 shares of common stock are issued
and outstanding as of April 30, 2025.
DOCUMENTS INCORPORATED BY REFERENCE
None.
TABLE OF CONTENTS
Page No.
Part I
Item 1. Business. 1
Item 1A. Risk Factors. 5
Item 1B. Unresolved Staff Comments. 5
Item 1C. Cybersecurity. 5
Item 2. Properties. 5
Item 3. Legal Proceedings. 5
Item 4. Mine Safety Disclosures. 5
Part II
Item 6. Reserved 6
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 22
Item 8. Financial Statements and Supplementary Data. 22
Item 9A. Controls and Procedures. 23
Item 9B. Other Information. 24
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. 24
Part III
Item 10. Directors, Executive Officers and Corporate Governance. 25
Item 11. Executive Compensation. 27
Item 14. Principal Accounting Fees and Services. 32
Part IV
Item 15. Exhibits, Financial Statement Schedules. 33
i
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
INFORMATION
This report contains forward-looking statements
that relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors
that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels
of activity, performance or achievements expressed or implied by these forward-looking statements. Words such as, but not limited to,
“believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,”
“targets,” “likely,” “aim,” “will,” “would,” “could,” and similar
expressions or phrases identify forward-looking statements. We have based these forward-looking statements largely on our current expectations
and future events and financial trends that we believe may affect our financial condition, results of operation, business strategy and
financial needs.
The results anticipated by any or all of these
forward-looking statements might not occur. Important factors, uncertainties and risks that may cause actual results to differ materially
from these forward-looking statements are discussed in the Risk Factors section of this report and include, without limitation, failure
to obtain the necessary financing to execute our business plan on favorable terms or at all, challenges we may face in attracting customers,
and our reliance on third-parties to provide the necessary services for the operation of our planned data centers. We undertake no obligation
to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise. For
more information regarding some of the ongoing risks and uncertainties of our business, see the “Risk Factors” section of
this report.
You should read thoroughly this report and the
documents that we refer to herein with the understanding that our actual future results may be materially different from and/or worse
than what we expect. We qualify all of our forward-looking statements by these cautionary statements including those made in our Risk
Factors appearing elsewhere in this report. Other sections of this report include additional factors which could adversely impact our
business and financial performance. New risk factors emerge from time to time and it is not possible for our management to predict all
risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors,
may cause actual results to differ materially from those contained in any forward-looking statements. Except for our ongoing obligations
to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any
forward-looking statements, to report events or to report the occurrence of unanticipated events. These forward-looking statements speak
only as of the date of this report, and you should not rely on these statements without also considering the risks and uncertainties associated
with these statements and our business.
ii
PART I
Item 1. Business.
Overview
Edgemode, Inc. was incorporated under the laws
of the State of Nevada in 2011. Our subsidiary, Edgemode Wyoming, was incorporated in the State of Wyoming in March 2020. Between 2021
and 2023, we attempted to become a key figure in Bitcoin mining but lacked the necessary funding to finance the purchase of Bitcoin mining
hardware and hosting contracts. As a result, since late 2023 and throughout 2024, our business activities primarily consisted of identifying
and evaluating suitable acquisition transaction candidates, which led to our now-planned strategic transition from cryptocurrency mining
to digital infrastructure colocation services and high-performance computing (“HPC”) hosting.
Effective April 7, 2025 (the “Effective
Time” or “Closing Date”), Edgemode, Inc., Synthesis Analytics Production Ltd, an England and Wales private limited company
(“SAPL”), and Adler Capital Limited, a company registered in Hong Kong, and the sole shareholder of SAPL, (“ACL”)
closed on a Share Exchange Agreement dated April 7, 2025 (the “Share Exchange” or “Transaction”). In accordance
with the Share Exchange, SAPL agreed to transfer 100% of SAPL’s outstanding capital stock to Edgemode in exchange for 1,260,246,354
shares of Edgemode common stock, par value $0.001 per share, which represented approximately 55% of the Company’s outstanding common
stock at the Effective Time. The Company accounted for the acquisition as an asset acquisition under ASC 805 as SAPL did not meet the
definition of a business as it did not contain a full set of integrated inputs and outputs at the time of closing.
Following the closing of the Share Exchange, Edgemode,
through SAPL, its wholly owned subsidiary, is now designing, building, and operating digital infrastructure for HPC with the goal of becoming
a leading provider of digital colocation services. SAPL is an entity organized in 2022 under the laws of England and Wales. SAPL will
change its name to EdgeMode Europe Limited.
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.
The acquisition of SAPL will enable us to become
a premier provider and operator of dedicated, purpose-built data center facilities for our third-party customers. We believe that opportunities
for growth exist in various applications of our data centers, which is another factor as to why we decided to begin offering digital infrastructure
colocation services to third parties engaged in HPC.
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. Our intent is to focus our business on development and marketing efforts
to build data centers and expand our foundational HPC hosting customer base.
Business Strategy
Our business strategy is 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. We intend to strategically develop and to work to make operational the infrastructure necessary to support our contractual
commitments to our HPC customers and to support expected customer growth and additional demand by leveraging our data center expertise
and capabilities. We intend to seek additional opportunities and to engage additional customers in the HPC hosting market to expand our
business using our knowledge, expertise, and existing and future infrastructure where favorable market opportunities exist.
Our strategy is focused on hyperscale cloud-based
providers and enterprises, including potential customers that we believe have significant data center infrastructure needs that have not
yet been outsourced or will require additional data center space and power to support their growth and their increasing reliance on technology
infrastructure in their operations. We believe our capabilities for serving the needs of large hyperscale providers and enterprises will
continue to enable us to capitalize on the growing demand for outsourced data center facilities in our markets and in new markets where
our customers are located or plan to be located in the future. Our business strategy requires immediate funding of approximately $2,000,000
to enable us to commence our new operations and repay debt, as well as additional significant financing to develop and expand our new
operations. There are no assurances that we will raise sufficient capital to execute our business plan or satisfy our liabilities. See
“Risk Factors.”
Products and Services
High-Performance Computing Hosting
HPC is a technology that uses clusters of powerful
processors that work in parallel to process massive data sets and solve complex problems at extremely high speeds. The proliferation of
data, as well as data-intensive and AI enabled applications and use cases, is driving demand for the computing power of HPC. Traditionally,
HPC has involved an on-premises infrastructure, investing in supercomputers or computer clusters.
Our HPC hosting revenue will be generated by licensing
colocation data center space and related services to a licensee at our Marviken data center. These licensing agreements and orders include
lease components, non-lease components (such as power delivery, physical security, maintenance and other billable expenses), as well as
non-component elements such as taxes. Under these contracts, customers pay fixed payments (based on electric capacity) and variable payments
on a recurring basis. HPC colocation leases may include all or portions of a data center, where customers may also lease office space
to support their colocation operations where revenue is primarily based on power usage as well as square footage.
Competition and Market Conditions
The HPC market is highly competitive. In the HPC
market, we compete with numerous established data center providers, including Equinix, Inc., Digital Realty Trust, NTT, Switch, Inc.,
and Core Scientific, Inc., as well as private operators specializing in HPC or colocation services, and digital asset miners looking to
convert existing digital mining facilities into HPC colocation facilities. Many of these competitors are better established, have better
brand recognition, are well capitalized, and organized to take advantage of certain tax benefits for their investors, lowering their external
cost of capital. Many of our competitors seek to establish data centers in the same geographic regions as we do and compete for the same
sources of power, equipment, and customers as our Company. Competitors compete on price, facility location, reputation, and perceived
skill with respect to performance. We believe that our ability to take advantage of our recently acquired assets to rapidly deliver scalable,
purpose-built data centers, combined with cutting-edge, energy-efficient technologies, will enable us to compete favorably within the
HPC market.
Dependence on Suppliers and Customers
Our hosting activities will compete with many
other hosting operations. Our success in our hosting operations depends on our ability to supply hosting space and power, our performance
with respect to installation, operation, and repair of customer equipment, our ability to obtain replacement parts, the value of our service
offering to our customers, and the availability of necessary equipment. To compete effectively as a hosting provider, we will market our
services to large-scale third-party HPC customers that value our ability to host at scale and who are willing to pay a premium-hosting
fee for our high up-time and operational expertise.
Suppliers and Development Efforts
Power Providers
Through SAPL, and the agreement dated December
27, 2024, as amended on February 20, 2025, between SAPL and Marviken ONE AB, a company organized in Sweden (“Marviken One”),
we have secured a 95MW power purchase agreement (the “Power Purchase Agreement”). We will continue to cultivate relationships
with power providers and work to leverage our operating capabilities to take advantage of any potential cost saving opportunities.
Facility Development
Through our acquisition of SAPL, and SAPL’s
agreement with Marviken One dated December 27, 2024, we acquired a 10-year lease on a 1,050 square meter (“sqm”) building
space and 28 sqm of office space located in Marviken, Sweden (the “Building Lease”). Our initial intent is to use the 1,050
sqm space to build a Tier 3 specification datacenter with a total of 16MW IT load capacity (a 20MW gross) (the “20MW Center”).
The estimated cost to complete the 20MW Center is $70 million, which necessitates the need to raise further equity and debt capital to
finance the build. Based on our acquisition, we have already secured our first client for an initial 1MW, which we plan to have operational
in April 2025, and we are negotiating with another client for use of the remaining 15MW IT capacity.
In addition to the acquisition of the Building
Lease, we also obtained a 20,000 sqm plot of land in Marviken, Sweden (the “Marviken Property”), via a property purchase agreement
entered into between SAPL and Marviken TWO AB, a company incorporated in Sweden (“Marviken Two”), on December 4, 2024 (the
“Property Purchase”). The property is located at Marviken Kraftverk, 610 27 Vikbolandet, Sweden and we plan to build an additional
datacenter with 75MW gross capacity (the “75MW Center”). The estimated cost to complete this development is between $400-470
million. The Company will have to raise further equity and debt capital to finance the development and construction, but we anticipate
that a significant amount of the cost will be borne by our clients. Regarding both the 20MW Center and the 75MW Center, we will not commence
building until the clients are secured.
We have also secured a cooling agreement (the
“Cooling Agreement”) via the agreement dated December 27, 2024 between SAPL and Marviken One. Marviken One has water rights
which provide access to the Baltic Sea. Through our relationship with Marviken One, we intend to supply power and cooling to the 20MW
Center and 75MW Center.
We also assumed a 5% promissory note in the principal
amount of $1,750,000 issued by SAPL to Marviken Two on December 4, 2024 (the “Note”), which represents part of the purchase
price for the Property Purchase. The Note, together with accrued interest, is due in full on or before December 3, 2027. In the event
SAPL raises any capital during 2025, a portion of the proceeds shall be used to pay down the Note. The Note is secured by the Marviken
Property. Marviken One and Marviken Two are entities beneficially owned and controlled by Dr. Adler.
Further, from our acquisition of SAPL, we also
received cooling systems, tanks, heat exchangers, dielectric fluids, and other necessary data center components. These components will
be used to build out our data center infrastructure throughout the spaces we have acquired.
For all facility development, we will rely heavily
on the expertise of third parties, focusing on sourcing, evaluating, designing, engineering, and developing the facilities where we will
host our customers’ HPC colocation needs.
Revenues
Our HPC hosting operations will generate revenue
by providing colocation, cloud, and connectivity services to customers in exchange for a fee. The HPC hosting operation provides colocation,
facilities operations, security, and other services to third-party HPC customers to support workloads for machine learning and artificial
intelligence. Through the acquisition of SAPL we have secured approximately 95MW of contracted power capacity and operational capacity
of approximately 68 MW IT Load.
Intellectual Property
We have acquired the intellectual property (“IP”)
consisting of trade secrets associated with the SAPL brand, as well as SAPL’s immersion cooling technology and heat exchange technology
through an intellectual property and trade secrets agreement originally entered into between SAPL and ACL on August 31, 2024 (the “IP
Agreement”). This IP may be used in the future to build and provide services to data center clients, however there is no immediate
use planned. There is potential to provide heated water to local utility companies from the residual heat created by our data centers
using the heat exchange technology and IP that we are acquiring.
Regulation
The regulatory landscape surrounding HPC services,
AI, and cloud computing is evolving rapidly, and we anticipate increased scrutiny and potential regulation in the near and long term.
These developments may significantly affect our business and operations in ways that are difficult to predict. In the realm of cloud computing,
there are growing concerns about the ethical implications and potential misuse of these technologies, particularly in association with
AI and machine learning. Governments and regulatory bodies are considering measures to ensure the responsible development and deployment
of AI systems, including transparency, accountability, and fairness guidelines. As a company whose customers will be operating in this
space, we closely monitor these developments and attempt to adhere to any forthcoming regulations or industry best practices.
Environmental
The effects of human activity on global climate
change have attracted considerable public and scientific attention, as well as the attention of the United States and other foreign governments.
In general, efforts are being made by government regulators and others to reduce greenhouse gas emissions, particularly those from coal
combustion power plants. Some of these plants may be those our operations rely upon for power. In addition, there are increasing concerns
over the quantity of energy, particularly from non-renewable sources, used for bitcoin mining and its effects on the environment.
While the nature or effect on the Company of any
environmental regulatory changes by federal, state, local or foreign governments or self-regulatory agencies is impossible to predict,
the added cost of any environmental taxes, charges, assessments, or penalties levied on power plants we rely upon could be passed on to
us, increasing the cost to run our facilities. If environmental laws or regulations or industry standards are either changed or adopted
and impose significant operational restrictions and compliance requirements on our operations, our business, capital expenditures, results
of operations, financial condition, and competitive position could be materially adversely impacted.
Human Capital/Employees
As of April 7, 2025, we had 2 full-time employees,
including 2 of our executive officers, and 1 part time employee including one of our executive officers. We also intend to engage consultants
and contractors to supplement our permanent workforce on an as needed basis. None of our employees are represented by a labor union or
covered by collective bargaining agreements, and we have not experienced any work stoppages.
Corporate Information
Our principal executive offices and telephone
number are listed on the cover page of this report and our website address is www.Edgemode.io. We have not incorporated by reference into
this report the information that can be accessed through our website and you should not consider such information to be part of this report.
Item 1A. Risk Factors.
Not applicable to small reporting companies. However,
our principal risk factors are described under “Management’s Discussions and Analysis of Financial Condition and Results of
Operations.”
Item 1B. Unresolved Staff Comments.
None.
Item 1C. Cybersecurity.
Risk
Management and Strategy
During 2024 we were a “blank check”
company with no business operations and our sole business activity has been identifying and evaluating suitable acquisition transaction
candidates. Therefore, we did not consider that we face significant cybersecurity risk and have not adopted any cybersecurity risk management
program or formal processes for assessing cybersecurity risk. Our board of directors is generally responsible for the oversight of risks
from cybersecurity threats, if any. Our management will use its best efforts to adopt a cybersecurity risk management program and formal
processes for assessing cybersecurity risk as we develop our HPC operations.
Item 2. Properties.
We maintain our corporate offices at 110 East
Broward Blvd, Fort Lauderdale, Florida. We lease these premises under a monthly rental agreement at a nominal cost. On the Closing date
we have also acquired a lease on 1,050 sqm of building space and 28 sqm of office space in Marviken, Sweden at a cost of approximately
$30,000 per month. The lease expires December 31, 2034. We have also obtained a 20,000 sqm Freehold plot of land located at Marviken Kraftverk,
610 27 Vikbolandet, Sweden. at a cost of approximately $1,750,000 USD
Item 3. Legal Proceedings.
See “Note 11. Commitments and Contingencies”
to the Financial Statements included in this report.
Item 4. Mine Safety Disclosures.
Not applicable.
PART II
Market Information and Holders
Our common stock is quoted on the OTC Pink Markets
under the symbol “EDGM”. As of April 30, 2025, the last reported sale price of our common stock as reported by the OTC Markets
was $0.0035 per share. Any over the counter market quotation reflects inter-dealer prices, without retail mark-up, mark-down or commission
and may not necessarily represent actual transactions. As of April 30, 2025, there were approximately 200 shareholders of record. This
number does not include beneficial owners whose shares are held in the names of various securities brokers, dealers and registered clearing
agencies.
Dividends
The Company has not paid dividends on its common
stock to date and does not intend to pay cash dividends in the foreseeable future. The payment of cash dividends in the future will be
dependent upon the terms of agreements restricting our ability to pay dividends, revenues and earnings, if any, capital requirements and
general financial condition and the discretion of the Company’s Board of Directors. It is the present intention of the Company’s
Board of Directors to retain all earnings, if any, for use in the Company’s business operations and, accordingly, the Board of Directors
does not anticipate declaring any dividends in the foreseeable future.
Recent Sales of Unregistered Securities
None.
Item 6. [Reserved]
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
Following the closing of the Share Exchange, Edgemode,
through SAPL, its wholly owned subsidiary, is now designing, building, and operating digital infrastructure for HPC with the goal of becoming
a leading provider of digital colocation services. 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.
The acquisition of SAPL will enable us to become
a premier provider and operator of dedicated, purpose-built data center facilities for our third-party customers. We believe that opportunities
for growth exist in various applications of our data centers, which is another factor as to why we have decided to begin offering digital
infrastructure colocation services to third parties engaged in HPC.
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. Our intent is to focus our business on development and marketing efforts
to build data centers and expand our foundational HPC hosting customer base.
We are currently engaged with one customer, Cudo
Ventures Ltd (“Cudo”) who will initially account for 100% of our HPC Hosting segment revenue. Our success in the HPC Hosting
segment is highly dependent on the success of our master services agreement with Cudo Ventures and the fulfillment by it of its obligations
under the master services agreement.
12 Months Ended December 31, 2024 (“2024
Period”) Compared to the 12 Months Ended December 31, 2023 (“2023 Period”).
Results of operations
Our operating expenses for the 2024 Period were
$1,408,528 compared to $3,362,714, for the 2023 Period. In the 2024 Period, the Company incurred stock-based compensation expense of $0
compared to $1,465,522 for the 2023 Period. The stock-based compensation for the 2023 Period was related to the amendment of options to
the officers of the Company and new options issued to a consultant.
Our other expense for the 2024 Period was $181,531
compared to other income of $347,933 for the 2023 Period. Other expense in the 2024 period was comprised of $56,488 in interest expense
and $1,795,664 for the loss on the change in fair value of derivative liabilities offset by income of $425,000 on the refund of an equipment
deposit and settlement of outstanding liabilities of $1,245,621. Other income for the 2023 period was comprised of $346,162 in interest
expense, $51,859 in prepayment penalties on the preferred B shares, loss on legal settlement of $9,975 and $780 in other expenses, offset
by income of $700,000 in deposits from equipment refunds, a gain of $50,000 on the settlement of liabilities and $6,709 for the gain on
the change in fair value of derivative liabilities.
Liquidity and Capital Resources
As of April 30, 2025, the Company had approximately
$100,000 of cash on hand. We did not receive any funding or financing during the 2024 Period. Our liquidity was historically primarily
derived from debt and equity investments from accredited investors and also from selling the crypto that we mined through September 2022.
Subsequent to the period covered by this report, in February 2025, we received an initial payment of approximately $303,000 for colocation
services to be provide by the Company. In addition, in April 2025 we sold 38,510,911 shares of restricted common stock to an accredited
investor in consideration of $300,000. On April 7, 2025, we executed the Share Exchange with SAPL and we are seeking to raise at least
$2,000,000 to commence our HPC Hosting operations and generate revenue. We require significant funding to develop our HPC operations.
Subject to receiving funding, we expect that our operating expenses will increase as we attempt to develop our new HPC 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.
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.
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 matured 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, 2024, the principal balance
on the April 11, 2023 notes is $106,701. 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, 2024,
the balance on the note was $60,000 and the note was past due. On April 14, 2025, the note and accrued interest were converted in full
into 31,500,000 shares of common stock.
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, 2024, the balance on the note was $57,502 and the Note was past due. On April 14, 2025, the note and accrued
interest were converted in full into 30,188,550 shares of common stock.
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, 2024,
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 $257,151, 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
Net cash provided by (used in) operating activities $ 17,680 $ 42,237
Net cash provided by (used in) investing activities $ (4,600 ) $ 34,100
Net cash provided by (used in) financing activities $ (13,275 ) $ (76,109 )
Critical accounting policies
See Note 2 to the December 31, 2024 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.
Risk Factors
Summary Risk Factors
Any investment in our securities involves a high
degree of risk. Investors should carefully consider the risks described below and all of the information contained in this filing before
deciding whether to purchase our securities. Our business, financial condition, and results of operations could be materially adversely
affected by these risks if any of them actually occur. This filing also contains forward-looking statements that involve risks and uncertainties.
Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors,
including the risks we face as described below and elsewhere in this report.
Risks Relating to Our Business Operations
· Our business depends upon the demand for data centers.
· At the outset, our HPC business will be highly dependent on a single customer.
Risks Related to Our Limited Operating History
and Transition
Risks of Regulatory Laws, Regulatory Frameworks,
and Legal Action
Risks Related to Ownership of Our Common Stock
· We are a former shell company.
There are numerous and varied risks, known and
unknown, that may prevent us from achieving our goals. If any of these risks actually occur, our business, financial condition, or results
of operation may be materially adversely affected. In such case, the trading price of our common stock could decline and investors could
lose all or part of their investment.
Risks Related to Our Business and Operations
We require significant capital to fund our
operations and we may have difficulty raising capital, which could deprive us of necessary revenues.
SAPL has not generated any revenues to date and,
subject to the availability of sufficient capital, does not expect to generate revenues until mid-2025 or later. We also require funding
or revenues to satisfy outstanding debt. We require funding of approximately $70,000,000 to develop our operations. In order to support
our initiatives, we will need to raise additional funds through public or private debt or equity financing, collaborative relationships,
or other arrangements with well-capitalized companies. Our ability to raise additional financing depends on many factors beyond our control,
including the current volatility in the capital markets, risks associated with investing in a pre-revenue company with no assurances our
products can be commercialized, the lack of a public market for our common stock, and the development or prospects for development of
competitive technology by others. Sufficient additional financing may not be available to us or may be available only on terms that would
result in further dilution to the current owners of our common stock. If we are unsuccessful in raising additional capital, or the terms
of raising such capital are unacceptable, we may never be able to effectively monetize our SAPL assets and/or we may default on the SAPL
note. In that event, we may have to modify our business plan and/or significantly curtail our planned activities and other operations.
Our business depends upon the demand for data
centers.
We are venturing into the business of owning,
acquiring, developing, and operating data centers. A reduction in the demand for data center space, power or connectivity would have a
greater adverse effect on our business and financial condition than if we owned a portfolio with a less specialized use. Our substantial
development activities make us particularly susceptible to general economic slowdowns as well as adverse developments in the data center,
Internet and data communications and broader technology industries. Any such slowdown or adverse development could lead to reduced corporate
IT spending, reduced demand for HPC hosting applications, such as cloud computing, machine learning, and AI, and overall reduced demand
for data center space. Changes in industry practice or in technology could also reduce demand for the physical data center space we provide.
In addition, our customers may choose to develop
new data centers or expand their own existing data centers or consolidate into data centers that we do not own or operate, which could
reduce demand for our newly developed data centers or result in the loss of one or more key customers. If any of our key customers were
to do so, it could result in a loss of business to us or put pressure on our pricing. Mergers or consolidations of technology companies
could reduce further the number of our customers and potential customers and make us more dependent on a more limited number of customers.
If our customers merge with or are acquired by other entities that are not our customers, they may discontinue or reduce the use of our
data centers in the future. Our financial condition, results of operations, cash flow, cash available for distribution, and ability to
satisfy our debt service obligations could be materially adversely affected as a result of any or all of these factors.
Our new focus on HPC hosting may not be successful
and depends on the continuing development and resource and computational requirements of HPC hosting applications such as cloud computing,
machine learning and AI, and the continuing need for the infrastructure and services we provide.
If our target customer markets, which are new
and still developing, do not grow or develop as expected or in a manner consistent with our current business model, our business, financial
condition, and results of operation would be adversely affected. Further, increases in power costs could negatively impact our hosting
customers’ demand for services, harm our growth prospects, and could have a material adverse effect on our business, financial condition,
and results of operations.
Our success also depends in large part on our
ability to attract additional customers and retain our existing customer for our HPC hosting capabilities in a profitable manner, which
we may not be able to do if:
· we are unable to strengthen awareness of our brand; or
We face significant competition, which may
adversely affect the occupancy and rental rates of our data centers.
We will compete with numerous data center providers
globally, many of whom own or operate properties similar to ours, as well as private operators specializing in HPC hosting or colocation
services, and digital asset miners seeking to convert existing mining facilities into HPC colocation facilities. In addition, we may in
the future face competition from new entrants into the data center market, including new entrants who may acquire our current competitors.
Some of our competitors and potential competitors have significant advantages over us, including greater name recognition, longer operating
histories, pre-existing relationships with current or potential customers, significantly greater financial, marketing, and other resources
and more ready access to capital which allow them to respond more quickly to new or changing opportunities.
If our competitors offer space that our customers
or potential customers perceive to be superior to ours based on factors such as available power, security, location, or connectivity,
or if they offer rental rates below current market rates, or below the rental rates we are offering, we may lose customers or potential
customers or be required to incur costs to improve our data centers or reduce our rental rates. In addition, many of our competitors have
developed and continue to develop additional data center space. If the supply of data center space continues to increase as a result of
these activities or otherwise, rental rates may be reduced or we may face delays in leasing or be unable to lease our vacant space, including
space that we develop. Further, if customers or potential customers desire services that we do not offer, we may not be able to lease
our space to those customers. Our financial condition, results of operations, cash flow, cash available for distribution, and ability
to satisfy our debt service obligations could be materially adversely affected as a result of any or all of these factors.
We have limited resources which may affect
our abilities to develop our SAPL operations.
With the limited resources we have available,
we may experience difficulties in developing our SAPL operations, including, but not limited to, our colocation data center, services,
and colocation to commence generating revenues and compete in the HPC hosting industry. Competition from existing and future competitors,
particularly those better capitalized, could result in our inability to secure acquisitions and partnerships that we may need to expand
our business in the future. This competition from other entities with greater resources, experience, and reputations may result in our
failure to maintain or expand our business, as we may never be able to successfully execute our business plan. If we are unable to develop,
expand, and remain competitive, our business could be negatively affected, which would have an adverse effect on the trading price of
our ordinary shares, which would harm our investors.
We have no operating history, require significant
capital to develop our business, expect negative cash flows from our operations to continue for the foreseeable future, and we expect
that our net losses will continue for the foreseeable future as we seek to develop and increase the efficiency of our operations and find
new colocation customers.
At the outset, our HPC business will be highly
dependent on a single customer.
One customer, Cudo Ventures Ltd (“Cudo Ventures”),
will initially account for 100% of our HPC Hosting segment revenue. Our success in the HPC Hosting segment is highly dependent on the
success of our master services agreement with Cudo Ventures and the fulfillment by it of its obligations under the master services agreement.
Any failure to meet Cudo Ventures’ expectations, including, but not limited to, failure to fulfill our contractual obligations,
could result in cancellation or non-renewal of our business relationship, or harm to our business relationship that could impact our future
growth and which could have a material adverse effect on our business, financial condition, and results of operations.
Any failure of our physical or IT or operational
technology infrastructure or services could lead to significant costs and disruptions.
Our business will depend on providing customers
with highly reliable services, including, but not limited to, power supply, physical security, cybersecurity, maintenance of environmental
conditions, and other mission-critical infrastructure services. We may fail to provide such services because our operations are vulnerable
to, among other things, mechanical or telecommunications failure, power outage, human error, physical or electronic security breaches,
cyberattacks, war, terrorism, fire, earthquake, pandemics, hurricane, flood and other natural disasters, sabotage, and vandalism.
Our customer agreements will include terms requiring
us to meet certain service level commitments. A failure to meet these or other commitments or equipment damage in our data centers could
subject us to contractual liability, including service level credits against customer rent payments, legal liability and monetary damages,
regulatory sanctions, or, in certain cases of repeated failures, the right by the customer to terminate the agreement. Service interruptions,
equipment failures, or security breaches could also materially impact our brand and reputation globally and lead to customer contract
terminations or non-renewals and an inability to attract customers in the future.
We and our third-party providers are vulnerable
to cyberattacks and security breaches that could materially disrupt or compromise our operations, data, and results.
We will rely on computer systems, hardware, software,
online sites and networks, as well as physical, digital, and operational technology infrastructure to support our internal and external
operations (collectively, “Information Systems”). We will own, operate, and manage complex, global Information Systems and
also rely on third-party providers for a range of Information Systems and other products and services, such as cloud computing. As a result,
we face evolving risks that threaten the confidentiality, integrity, and availability of Information Systems and data, including from
state-sponsored espionage actors, financially motivated hackers, hacktivists and insiders, as well as through diverse attack vectors,
such as social engineering/phishing, malware (including ransomware), human or technological error, or due to “bugs,” misconfigurations
and known and unknown vulnerabilities in hardware, software, systems and processes that support our business.
Unauthorized access to our or our customers’
physical assets or Information Systems, misappropriation of our or our customers’ sensitive or proprietary information, or disruptions
to our or our customers’ operations as a result of attacks, breaches or disruptions to our, or any providers’ or our customers’,
Information Systems or controls could lead to material breaches of legal and regulatory (e.g., privacy laws such as GDPR) or contractual
obligations, and/or other operational and business impacts. The foregoing could expose us to material lawsuits, regulatory actions, penalties
or fines, monetary damages, loss of existing or potential customers, harm to our reputation, and significant increases in our security
and insurance costs, and other adverse effects on our business and results.
Our contracts with our current or future customers
could subject us to significant liability.
In the ordinary course of business, we will enter
into agreements with our customers pursuant to which we provide data center space, power, environmental controls, physical security and
connectivity products to our customers. These contracts typically contain indemnification and liability provisions, in addition to service
level commitments, which could potentially impose a significant cost on us in the event of losses arising out of certain breaches of such
agreements, services to be provided by us or our subcontractors, or from third-party claims. Customers increasingly are looking to pass
through their regulatory obligations and other liabilities to their outsourced data center providers and we may not be able to limit our
liability or damages in an event of loss suffered by such customers whether as a result of our breach of an agreement or otherwise. Further,
liabilities and standards for damages and enforcement actions, including the regulatory framework applicable to different types of losses,
vary by jurisdiction, and we may be subject to greater liability for certain losses in certain jurisdictions.