UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

x          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 20162022

¨          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period __________ to __________

Commission File Number:333-198435000-56419

SAFE LANE SYSTEMS, Inc.EDGE DATA SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

1624 Market Street, Suite #202, Denver, Colorado 80202/ Phone (949) 825-6512(833)682-2428

(Address andRegistrant’s telephone number, of principal executive offices)including area code)

Paul D. Dickman, Chief Executive Officer, PresidentN/A

(Former name, former address and Chairmanformer fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the BoardAct:

1624 Market Street, Suite #202, Denver, Colorado 80202/ Phone (949) 825-6512

(Name, address and telephone number of agent for service)

COPIES OF ALL COMMUNICATIONS TO:

Michael A. Littman, Attorney at Law

7609 Ralston Road, Arvada, CO, 80002 phone 303-422-8127 / fax 303-431-1567

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. Yesx ☒ No ¨☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yesx ☒ No o☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

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. Yes ☐No ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐Nox ☒

As of November 21, 201614, 2022, there were outstanding 40,000,00011,658,832 shares of the issuer’sour common stock, par value $0.0001 per share, and 10,000,0007,000,000 shares of the issuer’s classCompany’s Class A Super Voting preferred stock, par value $0.0001$0.001 per share.share, and 7,000,000 shares of the Company’s Class C preferred stock, par value $0.001 per share

SAFE LANE SYSTEMS, INC.

EDGE DATA SOLUTIONS, INC.

FORM 10-Q for the Quarter Ended September 30, 20162022

INDEX

CAUTIONARY NOTE ABOUT FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future results of operations and financial position, business strategy and plans, and objectives for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “approximately,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” or the negative of these terms or other words of similar meaning in connection with a discussion of future events or future operating or financial performance, although the absence of these words does not necessarily mean that a statement is not forward-looking. Forward-looking statements are based upon our current assumptions, expectations and beliefs concerning future developments and their potential effect on our business. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may cause actual events or our actual results, performance or achievements to be materially different from the future events, results, performance or achievements expressed or implied by any forward-looking statements. There can be no assurance that future events, results, performance or achievements will be in accordance with our expectations or that the effect of future events, results, performance or achievements will be those anticipated by us.

Factors and risks that may cause or contribute to actual events, results, performance or achievements differing from these forward-looking statements include, but are not limited to, for example:

We operate in very competitive and rapidly changing markets. New risks emerge from time to time. It is not possible for our management to predict all risks, 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 we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

Stockholders and potential investors should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements in this Quarterly Report on Form 10-Q are reasonable, we cannot assure stockholders and potential investors that these plans, intentions or expectations will be achieved.

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. Considering these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements. All subsequent written and oral forward-looking statements concerning other matters addressed in this Quarterly Report on Form 10-Q and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Quarterly Report on Form 10-Q.

All forward-looking statements speak only as of the date of this this Quarterly Report on Form 10-Q. Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether because of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

PART I - FINANCIAL INFORMATION

Item 1.1 - Financial Statements

Safe Lane Systems,Edge Data Solutions, Inc.

Balance SheetA Delaware Corporation

Financial Statements

See accompanying notes to financial statements.

Safe Lane Systems, Inc.

StatementAs of Operations

ForSeptember 30, 2022 (Unaudited) and for the Three and Nine Monthsmonths Then Ended September 30, 2016 and 2015(Unaudited)

Edge Data Solutions, Inc.

TABLE OF CONTENTS

EDGE DATA SOLUTIONS, INC.

BALANCE SHEETS

See accompanying notes, towhich are an integral part of these financial statements.

EDGE DATA SOLUTIONS, INC.

STATEMENTS OF OPERATIONS

See accompanying notes, which are an integral part of these financial statements.

EDGE DATA SOLUTIONS, INC.

Safe Lane Systems, Inc.

Statement of Cash FlowSTATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30, 2016 and 2015

See accompanying notes, towhich are an integral part of these financial statements.

EDGE DATA SOLUTIONS, INC.

STATEMENT OF STOCKHOLDERS’ DEFICIENCY

As of and for the three and nine months ended September 30, 2021 (Unaudited)

See accompanying notes, which are an integral part of these financial statements.

EDGE DATA SOLUTIONS, INC.

STATEMENT OF STOCKHOLDERS’ EQUITY/(DEFICIENCY)

As of and for the three and nine months ended September 30, 2022 (Unaudited)

See accompanying notes, which are an integral part of these financial statements.

SAFE LANES SYSTEMS,EDGE DATA SOLUTIONS, INC.

NOTES TO THE FINANCIAL STATEMENTS

As of September 30, 20162022 (Unaudited) and for the Three and Nine months Then Ended (Unaudited)

NOTE 1.  1: ORGANIZATION OPERATIONS AND NATURE OF OPERATIONS

Edge Data Solutions, Inc. (the “Company,” “EDGE”), a Delaware Corporation, believes it is poised to be an industry-leading edge data center, cryptocurrency mining and cloud infrastructure provider. EDGE’s unique Edge Performance Platform (EPP) brings sustainable immersion-cooled high-performance computing to where it is needed most.

EPP offers efficient immersion-cooled computing power for a variety of applications, including sustainable cryptocurrency mining, edge computing. Long-term, opting for EPP significantly reduces investment, and certain edge computing applications require less up-front investment.

Industries that EDGE believes will benefit from low-latency technology with a lower carbon footprint include cryptocurrency mining, public and private cloud providers, edge cloud providers, data centers, high-performance computing providers, virtual desktop infrastructure providers, telecom, cybersecurity and disaster recovery providers, streaming providers, artificial intelligence innovators, colleges, hospitals, governments, and enterprise blockchain infrastructure providers.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:POLICIES

SAFE LANES SYSTEMS, INC. (the “Company”), was incorporated in the StateManagement’s Representation of Colorado on September 10, 2013. The Company was formed to engage in the sale of traffic safety equipment. The Company may also engage in any other business permitted by law, as designated by the Board of Directors of the Company. During the second quarter of 2014 the Company secured a perpetual license to all of the intellectual property of Superior Traffic Control in exchange for the issuance of nonvoting convertible stock in the company. In the second quarter of 2016 the Company determined that license and related intellectual property should be written off as worthless due to problems with the engineering provided and the inability to obtain meaningful sales. The Company was redomiciled to become a Delaware Holding Corporation in September of 2016 and is currently pursuing new business opportunities.Interim Financial Statements

Basis of Presentation - The accompanying unaudited consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles inby the United States of America (“GAAP”) andCompany without audit pursuant to the rules and regulations of the Securities and Exchange Commission for interim financial(“SEC”). Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the instructionsUnited States (“U.S. GAAP”) have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to Form 10-Q and Article 10make the information presented not misleading. These unaudited consolidated financial statements include all of Regulation S-X. Inthe adjustments, which in the opinion of the Company’s management the information contained herein reflects all adjustmentsare necessary forto a fair presentation of the Company’s results of operations, financial position and cash flows.results of operations. All such adjustments are of a normal and recurring nature.

Reclassifications - Certain amounts in the prior period’s Interim results are not necessarily indicative of results for a full year. These unaudited consolidated financial statements have been reclassified to conform toshould be read in conjunction with the current quarter’s presentation and to correct prior period errors.

Cash and Cash Equivalents

Cash Flows - During the period ending September 30, 2016, the Company primarily utilized cash proceeds from an unsecured short term loan and proceeds from a convertible note payable to fund its operations.

Cash flows used by operations for the period ended September 30, 2016 and 2015 were $34,911 and $186,689 respectively.

The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents. As of September 30, 2016, the Company had cash and cash equivalents of $7,871 as compared to cash and cash equivalents of $15,282audited consolidated financial statements as of December 31, 2015.2021 and 2020, as presented in the Company’s 2021 Annual Report on Form 10-K, as filed on April 1, 2022 with the SEC.

ImpairmentBasis of Long-life AssetsPresentation

In accordance with ASC Topic 360,The accounting and reporting policies of the Company reviews its long-lived assets, including property, plant and equipment, for impairment whenever events or changesconform to accounting principles generally accepted in circumstances indicate that the carrying amountsUnited States of the assets may not be fully recoverable. If the total of the expected undiscounted future net cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and carrying amount of the asset. No impairment was deemed necessary as of September 30, 2016 and December 31, 2015.

Intangible Assets, Patents

During the second quarter of 2014 fiscal year the Company acquired the exclusive license rights and intellectual property for the patent of the Kone General device which expires July 2022. As payment for the license rights the company agreed to issue 22,768,273 shares of class B preferred, nonvoting shares to the shareholders of the original license holders “Superior Traffic Controls”America (GAAP). The Company accounts formaintains the calendar year as its patent sub-license in accordance with ASC 350-30-30 “Intangibles – goodwill and other” and 805-50-30 and 805-50-15 related to “Business Combinations” by recognizing the fair value to the amount paid by the company for the asset at the timebasis of purchase. Since Safe Lanes Systems has a limited operating history management determined to use par value as the value recognized for the transaction. Since the patent has a predetermined, finite life span, the cost of the asset will be recognized on a straight line basis over the remaining life of the patent.reporting.

At the conclusion of each reporting period the patent is evaluated for impairment. As of September 30, 2016 due to the lack of sales and determining that incomplete engineering plans were provided the Company determined it should impair the entire remaining value of the intangible asset and at that time the remaining value was of $1,683 was written off to impairment expense.

Amortization expense for the NINE-month period ended September 30, 2016 and 2015 was $149 and $29 respectively.

Accounts payable and accrued liabilities

Accounts payable consisted of $42,092 at September 30, 2016 and $1,080 at December 31, 2015 respectively. Accrued expense consisted of $11,308 at September 30, 2016 and $0 at December 31, 2015 respectively. Accrued interest consisted of $27,404 at September 30, 2016 and $14,942 at December 31, 2015 respectively.

Unsecured, short-term notes payable

The company obtained an unsecured, short-term note of $250,000 at 4% from the original holder of the license to the Kone-General patent in the second quarter of 2014. As of September 30, 2016 the Company had received funding of $250,000 on the note payable and an additional $165,000 under the same terms with a verbal agreement in place and had recognized $27,404 in accrued interest expense.

Convertible, long-term notes payable

The company obtained five unsecured, long-term notes totaling $7,500 in the third quarter of 2016. The notes do not bear interest until December 31, 2016, after which they will bear interest at 10% per year. The notes are due and payable December 31, 2017 but can be converted into the company’s common stock at the holders request at any time before they are due. Each note will convert into approximately 4% of the companies then outstanding common stock. The Notes are convertible into shares of the Company's common stock representing a value of $805 or $0.0009 per share. Since the stock price was determined to be below this at the time of signing, the notes were issued at a premium so no value is apportioned to the conversion feature when recording the issuance per ASC 470-20-05. The debt and its interest are reported as if it were a nonconvertible debt. Upon Conversion, the stock may be valued at either the book value or the market value at that time.

Stockholders’ Equity

At March 31, 2016 and December 31, 2015, the Company was authorized to issue 500,000,000 shares of common stock, $0.0001 par value per share. In addition, 10,000,000 shares of Class A preferred super majority voting stock, $.0001 par value and 50,000,000 shares of Class B preferred, $.0001 par value nonvoting convertible shares were authorized. All common stock shares have full dividend rights. However, it is not anticipated that the Company will be declaring distributions in the foreseeable future.

Upon formation, the Company sold the founder 2,000,000 shares of $0.0001 par value common stock for $1,000 cash. Also upon formation, the Company paid the founder stock based compensation for services rendered of 10,000,000 shares of $0.0001 par value class A preferred super majority voting stock. These preferred shares have a stated value of par value of $0.0001. The holder of the Class Stock shall have the right to vote on any matter with holders of Common Stock and may vote as required on any action, which Colorado law provides may or must be approved by vote or consent of the holders of the specific series of voting preferred shares and the holders of common shares. The Record Holders of the Class B Preferred Shares shall have that number of votes equal to that number of common shares which is not less than 60% of the vote required to approve any action, which Colorado law provides may or must be approved by vote or consent of the holders of other series of voting preferred shares and the holders of common shares or the holders of other securities entitled to vote, if any

Upon execution of a patent sublicense agreement the Company issued 22,768,273 shares of its class B preferred convertible stock to a trustee on behalf of shareholders of the original license agreement. These shares were converted into regular common stock upon the company registering the underlying shares with the SEC and distribution to stockholders which occurred in the 2015 fiscal year.

In the last quarter of 2015 the Company issued 350,000 shares of stock to two contractors for past work. As the Company has issued no stock for cash the Company valued the compensation based upon par value of $.0001 per share resulting in a compensation expense of $35 per share in the period the stock was issued.

In the third quarter of 2016 the Company issued 14,881,727 shares to the Company CEO as part of the reorganization into the Delaware Holding Corporation. As the Company has issued no stock for cash the Company valued the transaction based upon par value of $.0001 per share, resulting in general and administrative expense of $1,488 in the current period.

Professional and contractor expenses

Professional and contractor expenses are comprised of the following in the nine-month period ended September 30, 2016:

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principlesGAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosuredisclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Stock BasedCash Equivalents and Concentration of Cash Balance

The Company considers all highly liquid securities with an original maturity of less than three months to be cash equivalents. The Company’s cash and cash equivalents in bank deposit accounts, at times, may exceed federally insured limits. As of September 30, 2022, and December 31, 2021, the Company’s cash balances exceeded federal insurance limits by $0 and $581,209, respectively.

EDGE DATA SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

As of September 30, 2022 (Unaudited) and for the Three and Nine months Then Ended (Unaudited)

Right of Use Assets and Lease Liabilities

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The standard requires lessees to recognize almost all leases on the balance sheet as a Right-of-Use (“ROU”) asset and a lease liability and requires leases to be classified as either an operating or a finance type lease. The standard excludes leases of intangible assets or inventory. The standard became effective for the Company beginning January 1, 2019. Since the Company had no leases in place prior to or during 2019, the Company has adopted ASC 842 prospectively and has applied it to its first lease agreement in 2020.

Under ASC 842, the Company determines if an arrangement is a lease at inception. ROU assets and liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As most of the Company’s leases do not provide an implicit rate, the Company estimated the incremental borrowing rate in determining the present value of lease payments. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. The Company’ lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options.

Deposits

From time to time, the Company makes payments to vendors, resulting in classification as deposits on the company’s balance sheets until the vendors have delivered the goods and services. As of September 30, 2022 and December 31, 2022, the company’s deposits with vendors totaled $347,528 and $2,161,683 and consisted of the following:

SCHEDULE OF DEPOSITS

Inventory

The Company values inventory at its original cost, adjusted to approximate the lower of actual cost or estimated net realizable value using assumptions about future demand and market conditions. In determining excess or obsolescence reserves for its products, the Company considers assumptions such as changes in business and economic conditions, other-than-temporary decreases in demand for its products, and changes in technology or customer requirements. In determining the lower of cost or net realizable value reserves, the Company considers assumptions such as recent historical sales activity and selling prices, as well as estimates of future selling prices. The Company fully reserves for inventories and non-cancellable purchase orders for inventory deemed obsolete. The Company performs periodic reviews of inventory items to identify excess inventories on hand by comparing on-hand balances and non-cancellable purchase orders to anticipated usage using recent historical activity as well as anticipated or forecasted demand. If estimates of customer demand diminish further or market conditions become less favorable than those projected by the Company, additional inventory carrying value adjustments may be required.

As of September 30, 2022 and December 31, 2021, the Company had $27,050 and $11,530 of inventory and had outstanding deposits of $240,125 and $2,161,683 with vendors for the purchase of equipment for resale to customers, all respectively. As of September 30, 2022 and December 31, 2021, respectively, these deposits consisted of:

As of September 30, 2022 and December 31, 2021, total remaining costs of equipment not yet shipped and services yet to be provided totaled $225,893 and $3,951,547, respectively. These costs are included in the Deposits item on the Company’s balance sheets. Terms with the Company’s vendors call for full payment prior to shipment when equipment is ready for shipment.

Property and Equipment

Property and equipment are stated at cost net of accumulated depreciation and amortization, and accumulated impairment, if any. Depreciation and amortization of property and equipment is provided using the straight-line method over estimated useful lives, which are all currently estimated at three years.

In September 2022, the facility holding the Company’s server equipment flooded, resulting in the impairment of $85,285 of server equipment. The Company recorded a net loss of $21,321 on impairment during the three months ended September 30, 2022. Additionally, the Company repurposed $9,199 of equipment for research and development purposes during the quarter.

As of September 30, 2022 and December 31, 2021, the Company’s property and equipment consisted of $8,278 and $84,133 of computing equipment, net of $1,610 and $37,872 of accumulated depreciation, all respectively. Depreciation expense for three and nine months ended September 30, 2022 and 2021 was $5,523 and $20,535 and $7,165 and $21,231, respectively.

Intangible Assets – Website Development Costs

The Company accounts for its website development costs in accordance with FASB Accounting Standards Codification ASC 350-40, Intangibles-Goodwill and Other, Internal-Use Software, and ASC 350-50, Intangibles-Goodwill and Other, Website Development Costs. During the infrastructure development stage of its website, the Company capitalizes development and other costs associated with preparing the website for use. When the website or an individual module of the website is ready for its internal use, amortization will begin on a straight-line basis over its estimated useful life. The Company estimates that the website’s estimated useful life will be approximately three years, after taking into account the effects of obsolescence, technology, competition and other economic factors.

During the nine months ended September 30, 2022, the Company capitalized $56,600 of web development costs pertaining to a new website. In August 2022, the Company terminated its relationship with the original website developers, resulting in loss of the in-progress website. Accordingly, the Company expensed $40,000 of capitalized costs to sales and marketing expenses during the three and nine months ended September 30, 2022. The remaining $16,600 of capitalized website costs as of September 30, 2022 consisted of payments to a new website developer for a new in-progress website. The website was not yet fully in service as of September 30, 2022, and the Company therefore recognized no amortization expense for the three and nine months ended September 30, 2022.

Long-Lived Assets

The Company evaluates the recoverability of its long-lived assets whenever events or changes in circumstances have indicated that an asset may not be recoverable. Long-lived assets are grouped with other assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. If the sum of the projected undiscounted cash flows is less than the carrying value of the assets, the assets are written down to the estimated fair value. As of September 30, 2022, the Company determined that its long-lived assets have not been impaired.

Accounts Payable and Accrued Liabilities

Accounts payable consisted of $26,424 and $74,434 of liabilities incurred by the issuer prior to the merger as of September 30, 2022 and December 31, 2021, respectively. The remaining accounts payable consisted of amounts due to vendors for delivered product, professional services and various other general and administrative expenses incurred after the acquisition.

As of September 30, 2022 and December 31, 2021, accrued liabilities consisted of the following:

SCHEDULE OF ACCRUED LIABILITIES

EDGE DATA SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

As of September 30, 2022 (Unaudited) and for the Three and Nine months Then Ended (Unaudited)

Fair Value of Financial Instruments

Financial Accounting Standards Board (“FASB”) guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities.

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities in inactive markets, or quoted prices for identical or similar assets or liabilities in markets that are not active).

Level 3 – Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable.

The carrying amounts reported in the balance sheets approximate their fair value.

Revenue Recognition

The Company recognizes revenue under ASC 606, using the following five-step model, which requires that the Company: (1) identify a contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to performance obligations and (5) recognize revenue as performance obligations are satisfied. The Company’s revenue activities consist of:

During the three and nine months ended September 30, 2022 and 2021, the Company recognized $0 and $0 and $0 and $29,483 of revenue from its customers’ usage of computing credits, with associated costs of $0 and $5,378 and $0 and $9,506, all respectively. The Company further recognized a deferred revenue liability of $9,478 and $9,478, respectively for prepaid usage credits not yet used by its customers as of September 30, 2022 and December 31, 2021, respectively.

As of September 30, 2022 and December 31, 2021, the Company recognized $540,028 and $3,197,990, in deposits representing cash paid by customers for data center infrastructure products to be delivered in subsequent periods and had corresponding deposits with vendors of $240,125 and $2,161,683 for product to be delivered, all respectively.

EDGE DATA SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

As of September 30, 2022 (Unaudited) and for the Three and Nine months Then Ended (Unaudited)

Crypto Assets Held

The crypto assets held by the Company, with no qualifying fair value hedge, are accounted for as intangible assets with indefinite useful lives and are initially measured at cost. Crypto assets accounted for as intangible assets are not amortized, but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the crypto asset at the time its fair value is being measured. Impairment expense is reflected in other operating expenses in the consolidated statements of operations. The Company assigns costs to transactions on a first-in, first-out basis.

As of September 30, 2022 and December 31, 2021, the carrying value of crypto assets held by the Company was $3,940 and $3,940, respectively. During the three months ended September 30, 2022, the Company recognized a loss of $1,976 related to the collection and immediate liquidation of cryptocurrency as payment for a customer order.

Cryptocurrency Income

The Company records cryptocurrency generated, net of fees and valuation adjustments, as other income and classifies the cryptocurrency as crypto assets held at cost in its balance sheets. When the Company sells its cryptocurrencies, it recognizes a gain or loss for the difference between original cost and the selling price, net of fees. The Company generated no cryptocurrency income and did not record an impairment loss during the three and nine months ended September 30, 2022.

Stock-Based Compensation

The Company accounts for share-based payments pursuant to ASC 718, “Stock Compensation” and, accordingly, the Company records compensation expense for share-based awards based upon an assessment of the grant date fair value for stock options and restricted stock awards using the Black-Scholes option pricing model.

Stock compensation expense for stock options is recognized over the vesting period of the award or expensed immediately under ASC 718 and EITF 96-18 when stock or options are givenawarded for previous or current service without further recourse. The Company issued stock options

Net (Loss) per Common Share

Basic net loss per common share is calculated by dividing the net loss attributable to contractors that had been providing services tocommon stockholders by the Company upon their terminationweighted average number of services. Under ASC 718 and EITF 96-18 these options were recognized as expense incommon shares outstanding for the period, issued because theywithout consideration for common stock equivalents.

For the three and nine months ended September 30, 2022, certain potentially dilutive securities and derivatives were givenexcluded from the computation of diluted loss per share as a form of compensationthe effect would be to reduce the net loss per common share. Therefore, the weighted-average common stock outstanding used to calculate both basic and diluted net loss per share is the same for services already rendered with no recourse.

these loss periods. The following table summarizes  share-based compensation expense recorded in selling, generalsets forth the net loss per common share computation for the three and administrative expenses during each period presented:nine months ended September 30, 2022:

SCHEDULE OF NET INCOME (LOSS) PER SHARE

In the last quarter of 2015 the Company issued 350,000 shares of stock to two contractors for past work. As the Company has issued no stock for cash the Company valued the compensation based upon par value of $.001 per share resulting in a compensation expense of $35 per share in the period the stock was issued.

Stock option activity was as follows:

The following table presents information regarding options outstanding and exercisable asEDGE DATA SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

As of September 30, 2016:2022 (Unaudited) and for the Three and Nine months Then Ended (Unaudited)

The fair value of each option granted is estimated on the date of the grant using the Black-Scholes option pricing model with weighted average assumptions for grants as follows:Income Taxes

Income Tax

The Company accounts for income taxes under Statement of Financial Accounting Standards No. 109 (“SFAS 109”).  Under SFAS 109 deferred taxes are provided on a liability method whereby deferredis subject to taxation in various jurisdictions and may be subject to examination by various authorities.

Deferred tax assets are recognized for deductible temporary differences and operating loss carry-forwards and deferred tax liabilities are recognized for taxable temporary differences.  Temporary differences are the future tax consequences attributable to differences between the reportedfinancial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carryforwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted

The Company recognizes the amount of taxes payable or refundable for the effectscurrent year and recognizes deferred tax liabilities and assets for the expected future tax consequences of changesevents and transactions that have been recognized in tax laws and rates on the date of enactment.

Fiscal year

The Company employs a fiscal year ending December 31.

Net Income (Loss) per share

The net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common outstanding. Warrants, stock options, and common stock issuable upon the conversion of the Company’s preferred stock (if any), are not included in the computation if the effect would be anti-dilutive and would increase the earnings or decrease loss per share.

Revenue Recognition

The Company is currently in the Development stage and has very limited revenues. Revenue will be recognized on an accrual basis as earned once operations commence.

Financial Instruments

The carrying value of the Company’s financial instruments, including cash and cash equivalents, as reported in the accompanying balance sheet, are stated at fair value.statements or tax returns.

Going Concern and Managements’ PlansNOTE 3: GOING CONCERN

As shown in the accompanying financial statements for the period endedas of September 30, 2016,2022, the Company had $67,592 of cash, has incurred substantial historical operating losses, and had an accumulated deficit of $731,590. Furthermore, the Company’s revenue history is limited, the Company is currently not on a limited operating history.trajectory to meet originally anticipated revenues for 2022, and there can be no assurances of future revenues or sufficient profits to fund operations.

Given these factors, the Company may require financing from outside parties, and management intends to pursue outside capital through debt and equity vehicles. There is no assurance that these efforts will materialize or be successful or sufficient to fund operations and meet obligations as they come due.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, however, the above conditions raise substantial doubt about the Company’s ability to do so.continue as a going concern. The financial statements do not include any adjustmentadjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

NOTE 4: STOCKHOLDERS’ EQUITY/(DEFICIENCY)

Class A Preferred Super Majority Voting Stock

The Company has designated ten million (10,000,000) shares of its preferred stock, par value $0.001 as Class A Preferred Super Majority Voting Stock (“Class A”). The Class A shares have the right to vote upon matters submitted to the holders of common stock, par value $0.0001 of the Company. Class A shares have a planvote equal to the number of shares of common stock of the Company which would give the holders of the Class A shares a vote equal to sixty percent (60%) of the common stock. This vote shall be exercised pro-rata by the holders of the Class A. The Company shall have the right to redeem, in placeits sole and absolute discretion, at any time one (1) year after the date of issuance of such Class A shares, all or any portion of the shares of Class A at a price of one cent ($0.01) per share. On October 4, 2018, the Company issued a total of 7,000,000 Class A shares to remove this threat throughits CEO and President (formerly COO) as stock-based compensation for services rendered.

As of September 30, 2022, 7,000,000shares of Class A Preferred Stock were issued and outstanding.

The Company has not currently authorized a Class B designation of Preferred Stock.

EDGE DATA SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

As of September 30, 2022 (Unaudited) and for the Three and Nine months Then Ended (Unaudited)

Class C Preferred Non-Voting Stock

The Company has designated ten million (10,000,000) shares of its preferred stock, par value $0.001 as Class C Convertible Preferred Non-Voting Stock (“Class C”). As amended and filed with the State of Delaware on December 17, 2020, each share of Class C would have been convertible into one (1) share of common stock. In mid-2021, the State of Delaware rejected the December 17, 2020 amendment, as filed. On April 13, 2022, the Company elected to not adjust or re-file the amendment, resulting in the Class C Preferred shares retaining the original conversion rate of five (5) common shares per Class C share. Although the change was never deemed effective by the State of Delaware, the Company previously accrued the change on the filing date for US GAAP accounting purposes and has deemed the subsequent termination of efforts as a separate transaction solely for US GAAP accounting purposes. Therefore, for accounting purposes, the Company presented the change as a deemed dividend of $3,781,868, based on the price of recent private transactions of the Company’s common stock and adjusted for dilutive effects.

The holders of Class C shall be entitled to receive the same dividend as the holders of the common stock and such dividend shall be paid pro rata per share on a fully converted basis. The holders of Class C shall have piggyback registration rights. The Company shall have the right to redeem, in its sole and absolute discretion, at any time after five (5) years, all or any portion of the shares of Class C at a price of five dollars ($5.00) per share. The Class C shares shall be considered to have a junior liquidation preference to Class A shares and a senior dividend preference to Class A shares. On October 4, 2018, the Company issued a total of 7,000,000 Class C shares to its CEO and President (formerly COO) as stock-based compensation for services rendered. Subsequently, in April 2019, the Company filed an amended and restated certificate of designation, which restricted the CEO and President from converting the 7,000,000 shares into common stock for 36 months from the issuance of notes payable and common stocks offerings. If the Offering raises at least $250,000, then the Company’s estimated expenses related to the Offeringdate. After October 2021, this restriction expired, and the expenses relatedCEO and President are free to initial projected operating costsconvert these shares.

As of September 30, 2022, 7,000,000 shares of Class C Preferred Stock were issued and outstanding.

Common Stock

The Company is authorized to issue 150,000,000 shares of common stock. All common stock shares have full dividend and voting rights. However, it is not anticipated that the Company will be covered.declaring dividends in the foreseeable future.

In April 2022, the Company agreed to issue 50,000 fully vested common shares to an employee and 100,000 fully vested common shares to an advisor for services rendered.

In July 2022, the Company issued 375,000 fully vested common shares, or 125,000 shares each, to its board members as compensation for services rendered. Furthermore, the Company issued 100,000 common shares to an advisory group for services rendered and 50,000 common shares to a newly appointed board member.

As of September 30, 2022, the Company had 11,658,832 common shares outstanding.

Warrants

The following table sets forth the Company’s warrant activity through September 30, 2022:

SCHEDULE OF WARRANTS ACTIVITY

On February 28, 2022, convertible noteholders converted $638,660, consisting of $549,500 of outstanding principal and $89,160 of accrued interest, into 1,824,751 equity units, each consisting of (1) one share of the Company’s common stock and (1) Class B Warrant to purchase one share of common stock for $1.00 up to three years from the issuance date. The Company assigned a value of $456,188, based on a recent private transaction at $0.25 per share, to the common stock and the remaining value of $182,472 to the warrants, using the following Black-Scholes inputs:

Stock Options

The Company has reserved 446,054 shares for its options pool.

In April 2022, the Company agreed to issue 200,000 options to an employee for services rendered. The options expire in 10 years, have a strike price of $1.00, and vest ratably over 24 months, beginning in May 2022.

On July 18, 2022, the Board appointed a new director, who received 200,000 options to purchase common stock at a strike price of $1.00 per share. The options have a rolling expiration of three years from each date of vesting, and 100,000 options vest on June 30, 2023 and the remaining 100,000 options vest on June 30, 2024.

Using the following inputs, the Company estimated the aggregate value of the grants to be $55,999 based on the following inputs:

The following tables set forth the Company’s options activity through September 30, 2022 and options attributes as of September 30, 2022:

SCHEDULE OF OPTIONS ACTIVITY

NOTE 5: RELATED PARTY TRANSACTIONS

During the three and nine months ended September 30, 2022, the Company recognized compensation expense totaling $96,250 and $478,750 to its CEO, $77,500 and $460,501 to its President, $34,500 and $101,000 to Synergia CPA, LLC and $3,000 and $9,000 to Synergia Technology Services, LLC, both entities fully owned and controlled by the CFO, for contract CFO and various accounting and IT services furnished to EDGE. The Company further paid $10,000 of compensation to a board member during the three and nine months ended September 30, 2022.

During the nine months ended September 30, 2022, the Company’s CEO, President and CFO paid expenses on behalf of the Company totaling $67,264, $41,075 and $15,404, and the Company repaid $70,422, $31,085 and $16,700 of related party advances, including previous amounts advanced to the company, all respectively. Of amounts repaid, $1,296 pertained to accounts payable due to Synergia Technology Services, LLC. As of September 30, 2022, the Company was indebted to the CEO for $0, the President for $18,800 and the CFO for $0, all respectively, for expenses paid on behalf of the company. As of September 30, 2022, the Company did not owe accrued compensation to the CEO, President and CFO.

EDGE DATA SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

As of September 30, 2022 (Unaudited) and for the Three and Nine months Then Ended (Unaudited)

NOTE 6: CONVERTIBLE NOTES

On February 15, 2022, the Company repaid the entire outstanding balance of $118,725 on a convertible note, consisting of $100,000 original principal and $18,725 of accrued interest.

On February 28, 2022, convertible debtholders converted a total of $638,660, consisting of $549,500 of amended principal and $89,160 of accrued interest, into 1,824,751 equity units at a rate of $0.35 per unit. Each unit consists of one (1) share of Common Stock and one (1) Class B Warrant. Holders of Class B Warrants are entitled to purchase one (1) share of Common Stock at a strike price of $1.00 within three years of the issuance date.

The Company evaluated the convertible notes in light of ASC 470 and determined that a beneficial conversion feature exists. However, given the contingent nature of the holder’s option and the lack of a market for the Company’s stock, the Company concluded that such a feature is not currently ascertainable and allocated the full principal amount to the convertible note liability.

As of September 30, 2022 and December 31, 2021, the Company owed $100,000 and $749,500 in outstanding principal on convertible notes, respectively. The Company is currently in default on the $100,000 note, but it is working with the noteholder to resolve the default.

During the three and nine months ended September 30, 2022, the Company recognized $3,781 and $11,219 of interest expense on convertible debt, respectively. As of September 30, 2022 and December 31, 2021, outstanding accrued interest on convertible debt totaled $39,084 and $149,389, respectively.

NOTE 7: CONCENTRATIONS, COMMITMENTS AND CONTINGENCIES

During the three months ended September 30, 2022, the following customer concentrations existed in the Company’s data center solutions revenues:

During the three months ended September 30, 2022, the following vendors represented significant concentrations in the Company’s costs of data center solutions provided to customers:

The loss of or disruption to the Company’s relationships with these customers or vendors may be detrimental to the Company’s operations.

On July 27, 2022, the Company terminated its relationship with Midas Green Technologies, LLC, a major supplier of its immersion cooling tanks. While the Company has engaged a new manufacturer for its new tank line, unforeseen circumstances, such as materials availability, manufacturing issues or otherwise may hinder the Company’s ability to sell and deliver products to its customers, which may result in lost revenues and other losses. Furthermore, the Company may sustain legal costs in the event legal action arises from the termination.

Management has determined that no other significant concentrations, commitments, or contingencies existed as of September 30, 2022.

EDGE DATA SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

As of September 30, 2022 (Unaudited) and for the Three and Nine months Then Ended (Unaudited)