Edge Data Solutions, Inc. - Annual Report: 2020 (Form 10-K)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark one)

For the fiscal year ended December 31, 2020

OR

For the transition period __________ to ___________

Commission File Number: 333-198435

EDGE DATA SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

3550 Lenox Road NE. 21st Floor Atlanta GA 30326

Mr. Delray Wannemacher, CEO, (833) 682-2428

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [  ] No [X]

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 [X]

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 [X] 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). Yes [X] No [  ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part II of this Form 10-K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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. (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. [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

The aggregate market value of the registrant’s voting and non-voting common stock held by non-affiliates of the registrant on December 31, 2020, the last business day of the registrant’s most recently completed fiscal quarter, determined by the lack of an active market for the Company’s common stock, was approximately $0. This computation assumes that all executive officers, directors and persons known to the registrant to be the beneficial owners of more than ten percent of the registrant’s common stock are affiliates of the registrant. Such assumption should not be deemed conclusive for any other purpose.

As of May 21, 2021, there were outstanding 8,421,079 shares of our common stock, par value $0.0001 per share, 7,000,000 shares of the Company’s Class A Super Voting preferred stock, par value $0.001 per share, and 7,000,000 shares of the Company’s Class C preferred stock, par value $0.001 per share

Documents incorporated by reference: None

TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS

In addition to historical information, some of the information presented in this Annual Report on Form 10-K contains “forward- looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Although Edge Data Solutions, Inc. (“EDSI” or the “Company”, which may also be referred to as “we”, “us” or “our”) believes that its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations: there can be no assurance that actual results will not differ materially from our expectations. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Cautionary statements regarding the risks, uncertainties and other factors associated with these forward-looking statements are discussed under “Risk Factors” in this Form 10-K. You are urged to carefully consider these factors, as well as other information contained in this Form 10-K and in our other periodic reports and documents filed with the SEC.

PART I

ITEM 1. BUSINESS

Company History and Overview

History of Edge Data Solutions, Inc., a Delaware corporation

EDGE DATA SOLUTIONS, INC. (the “Company”), formerly Blockchain Holdings Capital Ventures, Inc. (formerly Southeastern Holdings, Inc., formerly Safe Lane Systems, Inc.) was incorporated in the State of Colorado on September 10, 2013. Safe Lane Systems, Inc. redomiciled to become a Delaware holding corporation in September of 2016. On September 22, 2016, Safe Lane Systems, Inc. formed two wholly owned subsidiaries, SLS Industrial, Inc and Southeastern Holdings, Inc. (both Delaware corporations) and on September 30, 2016 completed a merger and reorganization in which Southeastern Holdings, Inc. (now Edge Data Solutions, Inc.) became the holding company. On December 1, 2016, the Company spun off its wholly owned subsidiary, SLS Industrial, Inc., along with its assets and liabilities, leaving Southeastern Holdings, Inc. as the only surviving entity.

On August 23, 2018, the Company entered into a Bill of Sale and Assignment and Assumption Agreement with Blockchain Holdings, LLC (“Blockchain”) pursuant to which the Company purchased all of the assets of Blockchain which are used in the business of sourcing of blockchain mining equipment from various suppliers for their customers and also providing management of the equipment hosted, mining pools and tech work on such equipment. The Company issued 300,000,000 shares of its common stock, par value $.0001 valued at $300,000 to the members of Blockchain in exchange for the assets of Blockchain.

The Company has accounted for this transaction as a reverse recapitalization under ASC 805, under which the operating entity, Blockchain Holdings, LLC, adopted the assets, liabilities and equity structure of Edge Data Solutions, Inc. on August 23, 2018, while retaining its historical activity. The financial statements therefore present activity beginning with Blockchain Holdings, LLC’s inception date of February 5, 2018 through September 30, 2018.

On August 30, 2018 the Company changed its name to Blockchain Holdings Capital Ventures, Inc.

On January 13, 2020, the Company changed its name to Edge Data Solutions, Inc.

Edge Data Solutions, Inc is poised to be an industry-leading infrastructure provider. In an increasingly data-driven world, GPU computing is changing the way we create, learn, and play. Through strategic partners, the Company has assembled a full-stack solution to help businesses realize the potential of CPU/GPU computing, backed by a rapidly growing network of high-density modular data centers that place compute directly at the point of data collection, reducing latency, improving performance and security.

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. New business opportunities may never emerge, and we may not be able to sufficiently fund the pursuit of new business opportunities should they arise.

As of December 31, 2020, we had approximately $80,368 in cash on hand. Our current monthly cash burn rate is approximately $35,000, and it is expected that burn rate will continue and is not expected to increase until significant additional capital is raised, and our marketing plan is executed. Our trade creditors may call debts at any time, and our cash reserves would not be sufficient to satisfy all balances. We are currently dependent on loans, advances and other cash infusions from the Company’s Chairman and CEO Mr. Wannemacher, and President and Director, Daniel Wong. There is no guarantee that such cash infusions will continue to be made.

COMPANY BUSINESS OVERVIEW

Our Company, originally Safe Lane Systems, Inc., was formed to develop the marketing of, and contract the manufacturing of, certain products resulting from the development of IP in design and manufacturing by Superior Traffic Controls, Inc. We licensed certain IP under a Master License and a Sub License to capitalize the marketing and contract manufacturing of certain products.

After spinning off the assets and liabilities of our traffic safety division in December 2016, we no longer possess the aforementioned intellectual property or rights thereto and have implemented a new business model.

Edge Data Solutions, Inc. (EDSI) is poised to be an industry-leading edge data center and cloud infrastructure provider. EDSI’s proprietary Edge Performance Platform (EPP) allows us to deploy next-generation edge data centers where they are needed most. EDSI’s data centers provide next-generation immersion cooling technology that improves performance, reduces energy costs and latency. Key industries we serve more computing power are fintech, cloud gaming, telecom 5G, 3D/video/AI rendering, video streaming, remote desktop, IoT, autonomous vehicles. Centralized infrastructure facilities servicing multiple geographical areas encounter many issues with data latency, congestion and weak network connections. To address this, data processing is moving closer to the customer. EDSI offers green, low-cost, secure colocation and private data hosting to meet this demand for Edge data centers. EDSI plans to deploy to strategic locations based on demand for Tier 2 and Tier 3 cities outside the major metropolitans to underserved markets, supporting both edge customers and areas of projected growth. With the rise and proliferation of this technology adoption we plan to solidify our footprint by securing multiple locations across the US, while generating revenue from our operations. The modular design and ability to add additional data centers as needed, preserves up front capital allowing for rapid deployment and scalability as business demand increases.

Our Proposed Products:

GPU as a Service

This will be a steady and consistent revenue stream. It is a major growth area with companies choosing to rent processing power for high performance computing needs, including, artificial intelligence, rendering, data storage, cloud computing, data processing, and enterprise blockchain. EDSI will deploy and host servers, for customers looking to rent computing power or colocation for their own servers. EDSI will oversee real-time monitoring of these servers, with onsite IT and maintenance staff carrying out updates, preventative troubleshooting, and servicing to minimize any downtimes and ensure continuous processing power.

Next Generation Edge Data Center Solutions

EDSI offers the Pro- Edge Data Centers for powerful, flexible, fully redundant and scalable immersion cooled data centers in a box, that are hardware agnostic, enterprise ready and able to be deployed any environment. EDSI’s immersion cooling solution when compared to traditional air-cooled data centers saves up to 50% on CAPEX building savings, 95% on cooling OPEX, 90% on energy savings, reduces the carbon footprint, and up to 30% in increased hardware life span and performance.

EDSI also offers a next generation crypto mining solution specifically designed to allow increased hash rates per wattage and maximum density, while extending the life of hardware. The Arctic™ Tank line offers the same power as current crypto mining solutions without the redundancy built in to offer a more competitive price point to server GPU or ASIC mining needs.

EDSI has signed an exclusive master services agreement with SG Blocks, Inc. (NASDAQ: SGBX), a leading designer, fabricator and innovator of container-based structures, to own the data center channel globally. SG Blocks utilizes code-engineered cargo shipping containers to construct and provide safe, durable and environmentally-friendly modular structures. SG Blocks was the first container-based construction company recognized by the ICC (International Code Council) with an ESR number. Clients have included Starbucks, Marriott, Taco Bell, Aman, Equinox and several branches of the U.S. military.

EDSI’s agreement with SG Blocks calls for the design, customization and building of next generation Edge data centers that are weather resistant, cost effective, quick to install, and have mobility in case the market conditions are not optimal. As part of the portfolio of Edge data centers solutions, each container will be shipped to EDSI’s customers directly.

EDSI’s proprietary Edge data centers are specifically designed to fully enclose all power and cooling equipment and can be built in units from 320 – 5,000 square foot centers. The Edge data centers will utilize liquid immersion cooling technology through a strategic relationship with Midas Green Technologies. The robust nature of EDSI’s Edge data centers (hurricane resistance, security, decentralized disaster recovery options, flexibility, recyclability, IBC/ICC Building Code compliance), lets EDSI offer a robust competitive solution to static data centers, allowing companies to build as they grow.

Servers Designed and Optimized for Immersion Cooling

EDSI offers custom servers that are optimized and specifically designed for immersion cooling to deliver maximum compute power, density and lifespan of hardware. We have server designs to meet any HPC needs, whether that be Artificial Intelligence, Video Rendering, Machine Learning, Virtual Desktop, or any other Edge optimized needs.

EDSI recently launched the Crypt Keeper™ Immersion Miner in a 2U up to 4U form factor holding up to 2 CPUs and up to 16 GPUs Crypt Keeper ™ is optimized to mine cryptocurrencies more efficiently and produce a faster return on investment. This is one of the first truly enterprise level crypto mining solutions in the market designed for immersion and combined with the Artic™ Tank, is one of the most flexible, energy efficient and powerful solutions in the market.

Server Colocation

EDSI offers colocation services with immersion-cooled tanks to host, manage and maintain client equipment, including servers, delivering a turnkey, energy efficient, and cost effective solution to customers.

Sales Strategy and Growth

The core strategic vision of EDSI is built around growing a network of next generation, decentralized edge data centers in support of the rapid growth driven by advanced computing technologies. EDSI offers low-cost, secure colocation and private data hosting in addition to a wide range of consulting and hardware services for a variety of data center designs. In addition, the modular Edge data centers will be sold directly to customers and provisioned to meet their needs with the ability to add units to scale with them as their demand increases. EDSI plans to hire and train a staff of sales representatives willing to search out potential tenants and clients in need Edge data center services. Ensuring competitive pricing, reliable power supply, processing uptime, flexible leasing agreements, and ongoing support and maintenance will help EDSI to develop its position within the Edge data center market and help it to attract long-term value customers. Large customers like Dish, Netflix, Amazon, AT&T, Version etc. will be able to use our locations to bring their content closer to the end users for a fraction of the cost.

Acquisitions

A facet of our business strategy includes acquiring complimentary businesses that are established where together we support the growth of both companies. These acquisitions will bring new technologies, customers bases, cash flow and asset growth.

Sales

We have in-house sales to reach out to new customers, open new markets and handle incoming customers from marketing efforts. We work with channel partners that introduce our products to their customer base as well as projects both parties can add value to. Co-marketing and partnering with other integrators, manufacturers and software companies allows EDSI to offer a total edge solution to meet any company’s needs.

Innovation and Next Generation Products

We are continually conducting market research to deliver innovative products and integrating the most powerful compute solutions available to set us apart from the competition. As new technologies continue to develop at a rapid pace with more powerful and hotter equipment, the infrastructure to support it is crucial to the success and ability to develop even more into the future.

Competitive Edge

EDSI is able to deliver high density and high compute for any application. Our solution future-proofs any data center cooling needs, delivering power to cool at a capacity of 200kW per 50U and 1200 times for efficient at removing heat than air. An optimal solution where there is limited space, cooling challenges, high cost of electricity or harsh environment. Some of the key benefits are listed here:

Primary Marketing Campaign Strategy

A strong marketing and promotional focus will be followed, with particular attention paid to networking and relationship building, as well as supporting the extensive connections of company leadership and advisor. This will be further supplemented by high-profile attendances at conferences, expos, and trade shows relating to digital growth areas including edge and cloud computing, AI, streaming, gaming and rendering. Additionally, EDSI is planning to launch a full spectrum of marketing and promotional activities using some of the following channels.

RELATIONSHIPS, COMPETITION, AND REGULATION

Strategic Relationships

EDSI provides an industry leading decentralized Edge Data Center/Cloud Infrastructure with several strategic advantages in the market. We offer one of the most cost effective, high-density, and profitable edge solutions on the market. EDSI has successfully secured agreements with leaders in the markets they serve.

Lenovo: EDSI has engaged Lenovo to supply top of the line enterprise servers for applications in video rendering, AI, HPC and other highly complicated computing jobs. Being able to offer customized solutions to fit the client’s needs with the support of Lenovo, gives EDSI the ability to offer first in class hardware solutions.

Midas Green Technologies: Midas Green Technologies and EDSI have partnered to utilize Midas Green Technologies’ next generation immersion Cooling solution to provide maximum density to EDSI’s Edge Data solutions with a minimal footprint. The challenge facing data centers today is that Cooling is a major cost and hardware continues to consume more power per device. Midas Green Technologies immersion tanks, through the use of dielectric fluid, is able to provide a 200+kw per 50U with a minimal footprint.

Rovisys : EDSI has partnered with, and signed a co-marketing agreement on March 17, 2021 with Rovisys, a leading independent provider of information management solutions, manufacturing automation solutions, control systems integration, building automation, discrete automation solutions and enterprise and industrial networks. Rovisys has built a reputation of quality and continuity, technical expertise, and attentive customer service. EDSI and Rovisys will work together to deliver solutions that drive productivity, improve product quality, increase asset utilization and integrate technology for the Chemical, Petrochemical, Life Science, Consumer Packaged Goods, Glass, Metals, Power & Energy, Data Center, Building Management, Water & Wastewater, Paper & Wood and Oil & Gas industries. Rovisys’ offices are located across North America, and in Singapore, Taiwan, and the Netherlands.

SG Blocks: SG Blocks is a global leader and innovator in the realm of modular and dynamic infrastructure. By repurposing traditional maritime containers through a combination of engineering efficiency and artistic design, they have created iconic, compact, and easily deployable structures that are specifically purposed for the client’s needs. With EDSI rolling out Edge data centers to give our clients maximum flexibility at much lower cost point, such creations are vital to our strategy. EDSIs proprietary Edge data centers are specify designed to fully enclose all power, Cooling equipment and can be built in units from 320 – 5,000 square foot centers. The robust nature of such Edge data centers (hurricane resistance, security, decentralized disaster recovery options, flexibility, recycled, IBC Certified), lets EDSI offer a robust completive solution to static data centers, allowing companies to build as they grow. As a global leader, SG Blocks has the experience and the capabilities to produce these Edge data centers not only to specification, but under traditional construction costs as well. Most notably, EDSI has signed an exclusive agreement with SG Blocks (NASDAQ: SGBX) for the Edge data center design and roll out program. Their patent on the interlocking design, ability to stack 9 modules high, and code compliance will allow for rapid deployment and scalability. Our data centers will be shipped approximately 90% complete and can be added to as needed to both fulfil demand and remain uniquely adaptable to our client’s needs.

Competition

Our competition lies in the modular edge data center markets. We see our direct competitors as the below listed companies in that they invest and offer similar products and services independently. There are other entities which may also compete with us in certain aspect in these markets.

Vapor IO: Vapor IO is developing a nationwide edge networking, colocation and exchange platform at the edge of the wireless and wireline networks. Serving carriers, operators, cloud providers, web-scale companies and other innovative enterprises, the company’s Kinetic Edge® platform combines multi-tenant colocation with software-defined interconnection and high-speed networking. The Kinetic Edge platform offers a flexible, highly-distributed infrastructure for delivering modern, low-latency applications, and the company has deployed its Kinetic Edge in Chicago, Atlanta, Dallas, and Pittsburgh. By the end of 2020, the company plans to have its Kinetic Edge live in 20 US metropolitan markets, furthering its goal to deploy over 100 data centers in 36 U.S. markets over the next two years.

EdgeConneX: Founded in 2009, EdgeConneX is focused on driving innovation and helping our customers define and deliver their own unique vision for the Edge, at any scale, in any market worldwide, for any requirement. We are building tomorrow’s data center infrastructure, today.

Delivering innovative and proximate data center solutions ranging from 40kW to 40MW or more, we work closely with our customers to provide the scalable capacity, power, and connectivity they need to meet the growing demands of their business and their end users. In turn, our customers’ content, applications, cloud services or any data requirement can be securely delivered with enhanced performance and lower latency to any device, anywhere.

Since late 2013, EdgeConneX has built over 40 data centers, including Edge Data centers® and a growing number of regional and hyperscale solutions across North America, Europe, and South America, creating a new Edge of the Internet. EdgeConneX continues to move the Internet to where it is most needed – into local markets across the country and around the globe. We recognize that insatiable demand for data, content, cloud services, and ubiquitous computing continues to swell each day and that quality delivery of this content requires an Internet of Everywhere capability.

Eaton Corporation: Eaton Corporation is company that was originally founded in the United States but finds its current operations stemming out of Ireland due to its transition into a multination business. Its reach has grown globally as well, and Eaton now conducts business in a majority of countries. They have a wide range of services and specialties, which hinge on their primary focus of electrical engineering and larger scale power operations. Their modular data centers are designed off of their own equipment, and marketed to be employed in unused or available space at the client’s site. Their centers are designed to have dimensions of up to 24” by 40”, and requires a facility connection with the selling point of it becoming a permanent addition. Eaton has the NYSE ticker of ETN, experienced a 26% stock gain in the 3 years leading up to 2019, and did approximately $21.3 billion in sales in 2019.

Active Power, Inc.: Active Power, Inc. is a power provider that specializes in flywheel-centric products, but has branched out to incorporate its technology and designs into modular data centers since its inception in 1992. Active Power’s mobile data center offering is advertised at taking 10 to 28 weeks to be designed, contracted, installed, and commissioned. It asserts that its mobile data center solution can reduce the cost that would be associated with a more traditional and static one by 25%, and has created and implemented over 200 of these products internationally. It is a division of Pillar Power Systems Inc., a part of Langley Holdings PLC.

Hewlett-Packard: The Hewlett-Packard Company in an American technology company that has its headquarters in California and is known for creating a multitude of both software and hardware products. Its branch, Hewlett Packard Enterprise, has begun to create modular data centers for the continuous computing needs in today’s market, and has broadcasted the idea that modular data centers are the future over traditional, larger static ones due to their adaptability and reachability. This has led them to offer a number of different modular options. Its NYSE ticker is HPE, and had a revenue of $30.85 billion in 2018.

Markets

The markets that we will be operating in are technology driven to provide edge data centers and cloud infrastructure largely supported by GPU based computing that supports, streaming, visualization and 3D rendering, AI, gaming, enterprise blockchain protocols, disaster recovery solutions, 5G, telecom, retail, architecture, building and construction, design and engineering, media and entertainment, healthcare and life sciences, academia, financial services, smart cities, self-driving cars, and remote work force.

Number of Persons Employed.

As of December 31, 2020, we have no employees, however, our officers are spending full-time in this business – up to 50 hours per week. We do have eight  independent consultants and advisors.

ITEM 1A. RISK FACTORS

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None

ITEM 2. DESCRIPTION OF PROPERTIES

Our mailing address is 3550 Lenox Road NE. 21st Floor Atlanta GA 30326. The Company does not hold any real property. The officers operate virtually via the internet.

ITEM 3. LEGAL PROCEEDINGS

To the best of our knowledge and belief, there is no pending legal action against the Company.

ITEM 4. MINE SAFETY DISCLOSURE.

Not Applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock’s trading symbol is “EDSI”. As of December 31, 2020, there have been no public sales transactions, and there is currently no active market for the Company’s common stock.

Holders. As of May 21, 2021, there were approximately 165  holders of record of the common stock.

Dividends. We have not paid or declared cash distributions or dividends on our common stock and do not intend to pay cash dividends in the foreseeable future due to our illiquidity and inability to support operations to support our operations without funding from our officers, directors and shareholders. Future cash dividends will be determined by our Board of Directors based upon our earnings, financial condition, capital requirements and other relevant factors. We cannot provide any assurances or guarantees that any agreement for financing will not provide for restrictions on any future dividend payments, though our existing promissory notes do not have any such provisions.

Recent Sales of Unregistered Securities

On May 10, 2019, the Company issued a convertible note to FNFC Profit Sharing Plan & Trust for total proceeds of $25,000. This note matures one year from execution and accrue interest at a rate of 10% per annum. Conversion terms call for conversion of principal and accrued interest at 70% of the stock price upon closing any offering resulting in aggregate financing of at least $1,000,000.

On May 13, 2019, the Company issued a convertible note to JMA Enterprises for total proceeds of $25,000. This note matures one year from execution and accrue interest at a rate of 10% per annum. Conversion terms call for conversion of principal and accrued interest at 70% of the stock price upon closing any offering resulting in aggregate financing of at least $1,000,000.

On November 26, 2019, the Company issued a convertible note to Clearvoyance Ventures for total proceeds of $100,000. This note matures one year from execution and accrue interest at a rate of 10% per annum. Conversion terms call for conversion of principal and accrued interest at 70% of the stock price upon closing any offering resulting in aggregate financing of at least $1,000,000.

On January 23, 2020, the Company entered into a Subscription Agreement and Conversion of Convertible Note with FNFC Profit Sharing Plan and Trust (“FNFC”) to issue 206,986 equity units, each consisting of one share of the Company’s common stock and one three-year warrant to purchase two shares of common stock for $0.50. In exchange for the equity units, FNFC converted $25,000 of outstanding principal, $1,747 of accrued interest and invested an additional $25,000.

On January 27, 2020, the Company entered into a Subscription Agreement and Conversion of Convertible Note with JMA Enterprises (“JMA”) to issue 420,876 equity units, each consisting of one share of the Company’s common stock and one three-year warrant to purchase two shares of common stock for $0.50. In exchange for the equity units, FNFC converted $75,000 of outstanding principal, $5,219 of accrued interest and invested an additional $25,000.

On February 15, 2019, the Company agreed to issue 125,000 shares of common stock to Fisher Herman Construction, LLC in exchange for execution of a 24-month service contract with the Company. The agreement calls for 375,000 future shares to be issued over the term of the contract, so long as the contract is in full force and effect, consisting of (i) 50,000 shares every 90 days and (ii) 75,000 shares due upon completion of the contract. On February 15, 2020, the Company issued 50,000 shares of common stock under this agreement. The Company generated no proceeds from this transaction.

On February 19, 2020, the Company issued a convertible note to Charles J Horak III and Ann Branan Horak for total proceeds of $100,000. This note matures one year from execution and accrues interest at a rate of 10% per annum. Conversion terms call for conversion of principal and accrued interest at 70% of the stock price upon closing any offering resulting in aggregate financing of at least $1,000,000.

On April 9, 2020, the Company issued a one-year convertible note to Chuck Ruhmann for proceeds of $50,000. This note matures one year from execution and accrues interest at a rate of 10% per annum. Conversion terms call for conversion of principal and accrued interest at 70% of the stock price upon closing any offering resulting in aggregate financing of at least $1,000,000.

On April 22, 2020, the Company entered into a convertible promissory note with Zoran Stojkov for proceeds of $50,000. The note matures in one year, bears 12% interest per annum and is convertible at a 30% discount in the event of a $1,000,000 or greater financing.

On April 22, 2020, the Company entered into a convertible promissory note with Charles Horak for proceeds of $50,000. The note matures in one year, bears 12% interest per annum and is convertible at a 30% discount in the event of a $1,000,000 or greater financing.

On May 6, 2020, the Company agreed to issue 60,000 shares of common stock to Paul Manos in exchange for professional services rendered.

On June 5, 2020, the Company entered into a one-year convertible promissory note with Chuck Ruhmann for proceeds of $50,000. The note bears 12% interest per annum and is convertible at a 30% discount in the event of a $1,000,000 or greater financing.

On June 19, 2020, the Company’s Board of Directors approved the issuance of 250,000 common shares to Delray Wannemacher, Chief Executive Officer and Director, as compensation for services rendered.

On June 19, 2020, the Company’s Board of Directors approved the issuance of 250,000 common shares to Daniel Wong President and Director, as compensation for services rendered.

On June 19, 2020, the Company’s Board of Directors approved the issuance of 250,000 common shares to Austin Bosarge, Director, as compensation for services rendered.

On July 7, 2020, the Company’s Board of Directors approved the issuance of 500,000 common shares to Delray Wannemacher, Chief Executive Officer and Director, as compensation for services rendered.

On July 7, 2020, the Company’s Board of Directors approved the issuance of 500,000 common shares to Daniel Wong President and Director, as compensation for services rendered.

On July 19, 2020, the Company entered into a convertible promissory note with Zoran Stojkov for proceeds of $25,000. The note matures in one year, bears 10% interest per annum and is convertible at a 15% discount in the event of a $1,000,000 or greater financing.

On August 7, 2020, the Company entered into a convertible promissory note with Intecon, LLC for proceeds of $100,000. The note matures in one year, bears 10% interest per annum and is convertible at a 15% discount in the event of a $1,000,000 or greater financing.

On August 28, 2020, the Company entered into a convertible promissory note with Dave Ellicott for proceeds of $50,000. The note matures in one year, bears 10% interest per annum and is convertible at the lesser of (i) a 30% discount of (ii) $0.50 per share, in the event of a $1,000,000 or greater financing.

On August 31, 2020, the Company entered into a convertible promissory note with Charles Horak for proceeds of $25,000. The note matures in one year, bears 10% interest per annum and is convertible at the lesser of (i) a 30% discount of (ii) $0.50 per share, in the event of a $1,000,000 or greater financing.

On September 15, 2020, the Company issued 50,000 common shares to Levi Volk as compensation for services rendered.

On September 16, 2020, the Company approved the issuance of 100,000 common shares to Joshua Holmes as compensation for services rendered and subsequently issued the shares on November 2, 2020.

Pursuant to a service agreement entered on January 25, 2021, the Company issued 100,000 common shares to OHGODACOMPANY, LLC in exchange for advisory services rendered.

The sales described in the preceding paragraphs were made in private placement transactions, pursuant to the exemption provided by Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated under the Securities Act (“Regulation D”), as a sale to “accredited investors,” as defined in Rule 501(a) of the Regulation D. The issuances did not involve any public offering; no general solicitation or general advertising was used in connection with the offering. The Company intends to use the proceeds from these transactions to fund its operations.

ITEM 6. SELECTED FINANCIAL AND OPERATING DATA

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our audited financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or on our behalf. We disclaim any obligation to update forward-looking statements.

The independent registered public accounting firm’s report on the Company’s consolidated financial statements as of December 31, 2020 and 2019, and for the years ended December 31, 2020 and 2019, includes a “going concern” explanatory paragraph, that describes substantial doubt about the Company’s ability to continue as a going concern.

General

EDGE DATA SOLUTIONS, INC. (the “Company”), formerly Blockchain Holdings Capital Ventures, Inc. (formerly Southeastern Holdings, Inc., formerly Safe Lane Systems, Inc.) was incorporated in the State of Colorado on September 10, 2013. Safe Lane Systems, Inc. redomiciled to become a Delaware holding corporation in September of 2016. On September 22, 2016, Safe Lane Systems, Inc. formed two wholly owned subsidiaries, SLS Industrial, Inc and Southeastern Holdings, Inc. (both Delaware corporations) and on September 30, 2016 completed a merger and reorganization in which Southeastern Holdings, Inc. (now Edge Data Solutions, Inc.) became the holding company. On December 1, 2016, the Company spun off its wholly owned subsidiary, SLS Industrial, Inc., along with its assets and liabilities, leaving Southeastern Holdings, Inc. as the only surviving entity.

On August 23, 2018, the Company entered into a Bill of Sale and Assignment and Assumption Agreement with Blockchain Holdings, LLC (“Blockchain”), pursuant to which the Company purchased all of the assets of Blockchain which are used in the business of sourcing of blockchain mining equipment from various suppliers for their customers and also providing management of the equipment hosted, mining pools and tech work on such equipment. The Company issued 300,000,000 (equivalent to 3,000,000 after the reverse split) shares of its common stock, par value $.0001 to the members of Blockchain in exchange for the assets of Blockchain.

On August 30, 2018 the Company changed its name to Blockchain Holdings Capital Ventures, Inc.

On January 13, 2020, the Company changed its name to Edge Data Solutions, Inc.

Edge Data Solutions, Inc. (EDSI) is poised to be an industry-leading edge data center and cloud infrastructure provider. EDSI’s proprietary Edge Performance Platform (EPP) allows us to deploy next-generation edge data centers where they are needed most. EDSI’s data centers provide next-generation immersion Cooling technology that improves performance, reduces energy costs and latency. Key industries we serve more computing power are fintech, cloud gaming, telecom 5G, 3D/video/AI rendering, video streaming, remote desktop, IoT, autonomous vehicles. Centralized infrastructure facilities servicing multiple geographical areas encounter many issues with data latency, congestion and weak network connections. To address this, data processing is moving closer to the customer. EDSI offers green, low-cost, secure colocation and private data hosting to meet this demand for Edge data centers. EDSI plans to deploy to strategic locations based on demand for Tier 2 and Tier 3 cities outside the major metropolitans to underserved markets, supporting both edge customers and areas of projected growth. With the rise and proliferation of this technology adoption we plan to solidify our footprint by securing multiple locations across the US, while generating revenue from our operations. The modular design and ability to add additional data centers as needed, preserves up front capital allowing for rapid deployment and scalability as business demand increases.

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. New business opportunities may never emerge, and we may not be able to sufficiently fund the pursuit of new business opportunities should they arise.

As of December 31, 2020, we had $80,368 in cash on hand. Our current monthly cash burn rate is approximately $35,000, and it is expected that burn rate will continue and is expected to continue at $35,000 until significant additional capital is raised and our marketing plan is executed. Our trade creditors may call debts at any time, and our cash reserves would not be sufficient to satisfy all balances. We are currently dependent on minimal expenses to be covered by a loan or other cash infusion from the Company’s CEO and Director Mr. Wannamaker, and President and Director, Daniel Wong. There is no guarantee that this cash infusion will continue to be made.

PLAN OF OPERATIONS

During 2020, we generated limited revenues from customers’ usage of our data center resources. We generated a net loss and have negative capital and no intangible assets. We are illiquid and need cash infusions from investors or shareholders to provide capital, or loans from any sources, none of which have been committed nor assured.

We are currently seeking to grow our customer base and to increase our current customers’ reliance on and usage of our resources. Further, we are seeking to expand into the sale and resale of modular data centers and related equipment. While our efforts have generated limited revenue and gross margins, there can be no assurances that these efforts will be successful or produce sufficient income or cash inflows from operations. As a result, we are dependent upon capital from investors to finance our operations and continue as a going concern.

Our goals for the next year are as follows:

Future Milestones

APPLICATION OF FUNDS (1)

(1) These items are variable and no commitment has been obtained from any source.

The Company may change any or all of the budget categories in the execution of its business model. None of the line items are to be considered fixed or unchangeable. The Company may need substantial additional capital to support its budget.

OFF BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements. Our Budget for operations in next year is as follows:

(1) These items are variable and no commitment has been obtained from any source.

We will need substantial additional capital to support our future operations. We have no revenues and have no committed source for any funds as of the date hereof. No representation is made that any funds will be available when needed. In the event funds cannot be raised when needed, we may not be able to carry out our business plan, may never achieve sales or royalty income, and could fail in business as a result of these uncertainties. If our initial prospect appears uneconomical after evaluation we will seek other prospects it the area to acquire or farm into.

We may also consider a private placement or public offering of our common stock, if the market conditions allow at the time. No price, schedule or terms for such an offering has been determined at this time. We expect to expend funds on a quarterly basis, as follows:

Results of Operations for the Years Ended December 31, 2020 and 2019

During the years ended December 31, 2020 and 2019, the Company generated revenues of $34,670 and $0 and incurred associated costs of $24,092 and $0, for gross margins of $10,578 and $0, all respectively, representing increases of $34,670 (100%), $24,092 (100%) and $10,578 (100%), all respectively, due to generation of revenue in 2020. While the Company generated revenue in 2020, the customer base is heavily concentrated, volume is limited, and there can be no guarantee of future revenue growth.

During the years ended December 31, 2020 and 2019, the Company incurred $1,059 and $13,401, respectively, of sales and marketing expenses and $221,942 and $197,554, respectively, of general and administrative costs, including consulting fees, professional services fees and other administrative costs. Sales and marketing costs decreased by $12,342, or 92%, due to the focus on developing the Company’s data center and use of relationships to acquire initial customers. General and administrative costs increased by $24,388, or 12%, as a result of new costs associated with operations.

During the years ended December 31, 2020 and 2019, the Company incurred depreciation expense of $17,519 and $0, respectively, with the increase being a result of new equipment being acquired and placed in service during 2020.

During 2020 and 2019, the Company recognized $381,900 and $127 of stock-based compensation expense, respectively, from the issuance of its common shares to consultants and advisors. The Company also paid compensation of $90,000 to the CEO and $84,040 to the President in 2020, as compared to $27,000 and $44,000, respectively in 2019, for increases of $63,000 and $40,040, respectively.

During the year ended December 31, 2020, the Company recognized $66,135 of interest expense, as compared to $19,668 for the year ended December 31, 2019. The increase of $46,467 or 236%, is primarily attributable to the accrual of interest on significant new convertible debt issuances in late 2019 and throughout 2020 and also includes interest incurred by related parties who paid expenses on behalf of the Company.

Aside from interest expense, during the years ended December 31, 2020 and 2019, the Company recognized net other income of $2,306 and $0, respectively, for an increase of $2,306 or 100%. The change was a result of $23,000 of acquisition deposits written off after termination of a prospective acquisition, $12,250 of debt forgiveness from a vendor, and a $1,000 grant from the United States Small Business Administration, $4,847 of cryptocurrency mining income, gains of $1,018 on disposal of crypto assets, and a gain of $4,965 from the sale of certain equipment from its data center in September 2020.

As a result, the Company incurred net operating losses of $850,936 and $301,750 for years ended December 31, 2020 and 2019, respectively, for an increase of $549,186, or 182%, to net losses. This change was primarily a result of increased stock-based compensation and increases in executive compensation.

Liquidity and Capital Resources

During 2019, the Company sold 266,667 shares (equivalent to 2,667 post-split) of common stock to its former CEO for proceeds of $40,000.

In May 2019, the Company issued $100,000 of convertible debt to two individuals. The debt bears annual interest of 10% and was scheduled to mature in May 2020. In January 2020, the noteholders agreed to convert $100,000 of principal and $6,966 of accrued interest into 427,862 equity units, each consisting of one share of the Company’s common stock and a three-year warrant to purchase two shares at $0.50 per share. These conversions occurred in connection with two subscriptions totaling $50,000, or $25,000 each, from the same noteholders in January 2020, in which the noteholders received 200,000 additional units similar to those previously described. The total number of units issued in connection with the conversions and subscriptions was 627,862.

In November 2019, the Company issued a convertible note to an individual for proceeds of $100,000. The note bears 10% interest per annum, matures in November 2020 and is convertible at a 30% discount in the event of an equity financing exceeding $1,000,000.

In January 2020, the Company issued 627,862 equity units, each consisting of three-year warrant to purchase two shares of the Company’s common stock for $0.50 each and one share of the Company’s common stock, to two individuals in exchange for conversion of $100,000 of convertible notes and $6,966 of accrued interest and an additional $50,000 of cash.

In February 2020, the Company issued two one-year convertible notes for total proceeds of $110,000, each bearing interest at 10% annually and calling for conversion at a 30% discount in the event of a financing event exceeding $1,000,000.

In April 2020, the Company issued three one-year convertible notes for total proceeds of $150,000, bearing interest at rates ranging from 10-12% per annum and calling for conversion at a 30% discount in the event of a financing event exceeding $1,000,000.

In June 2020, the Company issued a one-year convertible note for total proceeds of $50,000, bearing interest at 12% per annum and calling for conversion at a 30% discount in the event of a financing event exceeding $1,000,000.

In July 2020, the Company issued a one-year convertible note for total proceeds of $25,000, bearing interest at 10% per annum and calling for conversion at a 30% discount in the event of a financing event exceeding $1,000,000.

In August 2020, the Company issued three one-year convertible notes for total proceeds of $175,000, each bearing interest at 10% per annum and calling for conversion at a 30% discount in the event of a financing event exceeding $1,000,000.

In December 2020, the Company issued five one-year convertible notes for total proceeds of $110,000, each bearing interest at 15% per annum and calling for conversion at a 30% discount in the event of a financing event exceeding $1,000,000.

During the twelve months ending December 31, 2021, the Company estimates it will need approximately $420,000 to pursue business opportunities. The Company currently generates limited revenues from its edge computing offerings, but the industry has many competitors, and is seeking to expand into the data center hardware business. There can be no assurances that the Company will be successful in its efforts to generate new revenue or grow its existing revenue streams. Furthermore, while the Company has generated income from the use of idle resources to mine cryptocurrency, the availability and cost of using resources for such purposes and the volatile cryptocurrency markets may impede the Company’s ability to generate additional cash inflows. Other than the foregoing, the Company does not know of any trends, events or uncertainties that have had, or are reasonably expected to have, a material impact on sales, revenues or income from continuing operations, or liquidity and capital resources.

Short Term

On a short-term basis, we anticipate continued generation of edge computing revenues and the use of idle capacity to mine cryptocurrency. Based on prior history, we anticipate that short-term revenues and other cryptocurrency-related income will be insufficient to satisfy current and future liabilities as we continue to pursue expansion of our current customer base and expand into the hardware business.

No commitments to provide additional funds have been made by our management or other stockholders. Accordingly, there can be no assurance that any additional funds will be available to us to allow it to cover our expenses as they may be incurred.

Capital Resources

Our capital resources currently consist of cash, advances from and expenses paid on the Company’s behalf by the CEO and President, convertible debt financing, and the sale of equity units.

Need for Additional Financing

We do not have sufficient capital to meet our cash needs. Nor do we have sufficient capital to meet our short-term trade and debt obligations. We plan to seek loans or equity placements to cover such cash needs. Once full business operations commence, our needs for additional financing will likely face substantial increases.

Within the next twelve months we will need to secure an additional $5,000,000 in financing to fully implement our plan of operations. After the twelve-month period we do not see a need to raise additional capital unless we identify other assets to purchase.

No commitments have been made to provide additional funding by our management or other stockholders. Accordingly, there can be no assurance that any additional funds will be available to us to allow it to cover our expenses as they may be incurred.

Critical Accounting Policies

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents.

Impairment of Long-life Assets

In accordance with ASC Topic 360, the Company reviews its long-lived assets, including property, plant and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amounts 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.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure 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.

Income Tax

The Company accounts for income taxes under ASC 740, “Income Taxes.” Under ASC 740, deferred taxes are provided on a liability method whereby 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 differences between the reported amounts of assets and liabilities and their tax bases. 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 for the effects of changes 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 warrants, 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.

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.

Stock-Based Compensation

The Company adopted the provisions of and accounts for stock-based compensation using an estimate of value in accordance with the fair value method. Under the fair value recognition provisions of this statement, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense on a straight-line basis over the requisite service period, which generally is the vesting period. The Company elected the modified-prospective method, under which prior periods are not revised for comparative purposes. The valuation method applies to new grants and to grants that were outstanding as of the effective date and are subsequently modified.

Fair Value of Financial Instruments

The carrying amount of accounts payable is considered to be representative of respective fair values because of the short-term nature of these financial instruments.

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 current and anticipated revenue streams consist of:

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Edge Data Solutions, Inc.

(Formerly Blockchain Holdings Capital Ventures, Inc.)

A Delaware Corporation

Financial Statements and Report of Independent Registered Accounting Firm

As of December 31, 2020 and December 31, 2019 and for the
Years Ended December 31, 2020 and 2019

Edge Data Solutions, Inc. (Formerly Blockchain Holdings Capital Ventures, Inc.)

TABLE OF CONTENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Edge Data Solutions, Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Edge Data Solutions, Inc. (the “Company”) as of December 31, 2020 and 2019 and the related statements of operations, changes in stockholders’ deficiency and cash flows for the years ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for the year ended, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph – Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses since inception and has a working capital deficiency both of which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Turner, Stone & Company, L.L.P.

Dallas, Texas

May 21, 2021

We have served as the Company’s auditor since 2019.

EDGE DATA SOLUTIONS, INC. (Formerly Blockchain Holdings Capital Ventures, Inc.)

BALANCE SHEETS

As of December 31, 2020 and 2019

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

EDGE DATA SOLUTIONS, INC. (Formerly Blockchain Holdings Capital Ventures, Inc.)

STATEMENT OF OPERATIONS

For the Years Ended December 31, 2020 and 2019

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

EDGE DATA SOLUTIONS, INC. (Formerly Blockchain Holdings Capital Ventures, Inc.)

STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICICIENCY

For the Years Ended December 31, 2020 and 2019

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

EDGE DATA SOLUTIONS, INC. (Formerly Blockchain Holdings Capital Ventures, Inc.)

STATEMENT OF CASH FLOWS

For the Years Ended December 31, 2020 and 2019

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

EDGE DATA SOLUTIONS, INC. (Formerly Blockchain Holdings Capital Ventures, Inc.)

NOTES TO FINANCIAL STATEMENTS

As of December 31, 2020 and 2019 and for the Years then Ended

NOTE 1: ORGANIZATION AND NATURE OF OPERATIONS

EDGE DATA SOLUTIONS, INC. (the “Company”), formerly Blockchain Holdings Capital Ventures, Inc. (formerly Southeastern Holdings, Inc., formerly Safe Lane Systems, Inc.) was incorporated in the State of Colorado on September 10, 2013. Safe Lane Systems, Inc. redomiciled to become a Delaware holding corporation in September of 2016. On September 22, 2016, Safe Lane Systems, Inc. formed two wholly owned subsidiaries, SLS Industrial, Inc and Southeastern Holdings, Inc. (both Delaware corporations) and on September 30, 2016 completed a merger and reorganization in which Southeastern Holdings, Inc. (now Edge Data Solutions, Inc.) became the holding company. On December 1, 2016, the Company spun off its wholly owned subsidiary, SLS Industrial, Inc., along with its assets and liabilities, leaving Southeastern Holdings, Inc. as the only surviving entity.

On August 23, 2018, the Company entered into a Bill of Sale and Assignment and Assumption Agreement with Blockchain Holdings, LLC (“Blockchain”), pursuant to which the Company purchased all of the assets of Blockchain which are used in the business of sourcing of blockchain mining equipment from various suppliers for their customers and also providing management of the equipment hosted, mining pools and tech work on such equipment. The Company issued 300,000,000 (equivalent to 3,000,000 after the reverse split) shares of its common stock, par value $.0001 to the members of Blockchain in exchange for the assets of Blockchain.

On August 30, 2018, the Company changed its name to Blockchain Holdings Capital Ventures, Inc.

On January 13, 2020, the Company changed its name to Edge Data Solutions, Inc.

Business description

Edge Data Solutions, Inc. (EDSI) is poised to be an industry-leading edge data center and cloud infrastructure provider. EDSI’s proprietary Edge Performance Platform (EPP) allows us to deploy next-generation edge data centers where they are needed most. EDSI’s data centers provide next-generation immersion cooling technology that improves performance, reduces energy costs and latency. Key industries we serve more computing power are fintech, cloud gaming, telecom 5G, 3D/video/AI rendering, video streaming, remote desktop, IoT, autonomous vehicles. Centralized infrastructure facilities servicing multiple geographical areas encounter many issues with data latency, congestion and weak network connections. To address this, data processing is moving closer to the customer. EDSI offers green, low-cost, secure colocation and private data hosting to meet this demand for Edge data centers. EDSI plans to deploy to strategic locations based on demand for Tier 2 and Tier 3 cities outside the major metropolitans to underserved markets, supporting both edge customers and areas of projected growth. With the rise and proliferation of this technology adoption we should solidify our footprint by securing multiple locations across the US, while generating immediate revenue from our operations. The modular design and ability to add additional data centers as needed, preserves up front capital allowing for rapid deployment and scalability as business demand increases.

EDGE DATA SOLUTIONS, INC. (Formerly Blockchain Holdings Capital Ventures, Inc.)

NOTES TO FINANCIAL STATEMENTS

As of December 31, 2020 and 2019 and for the Years then Ended

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (GAAP). The Company maintains the calendar year as its basis of reporting.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures 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.

Cash 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 December 31, 2020 and 2019, the Company’s cash balances did not exceed federally insured limits.

EDGE DATA SOLUTIONS, INC. (Formerly Blockchain Holdings Capital Ventures, Inc.)

NOTES TO FINANCIAL STATEMENTS

As of December 31, 2020 and 2019 and for the Years then Ended

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.

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 December 31, 2020, the Company’s had no inventory and made deposits of $46,122 with a vendor for an inventory purchase.

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.

As of December 31, 2020, the Company’s property and equipment consisted of $70,786 of data center equipment and $13,347 of capitalized labor associated with readying the equipment for service, net of $16,641 of accumulated depreciation. Depreciation expense for year ended December 31, 2020 was $17,519.

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 December 31, 2020, the Company determined that its long-lived assets have not been impaired.

Deferred Offering Costs

The Company accumulates costs incurred directly in connection with its unclosed securities offering, as announced on October 13, 2020, as deferred offering costs. In the event the offering is successful, the Company will record all related costs as an offset to additional paid-in capital. In the even the Company terminates the offering or management deems the offering will not likely be successful, the Company will charge these costs to expense in the period in which such a determination is made. During the year ended December 31, 2020, the Company incurred $21,000 of costs related to this offering. In March 2021, the Company terminated the offering and wrote off the $21,000 of deferred offering costs to general and administrative expense in 2020.

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 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.

EDGE DATA SOLUTIONS, INC. (Formerly Blockchain Holdings Capital Ventures, Inc.)

NOTES TO FINANCIAL STATEMENTS

As of December 31, 2020 and 2019 and for the Years then Ended

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 current and anticipated revenue streams consist of:

During the year ended December 31, 2020, the Company recognized $34,670 of revenue from its customers’ usage of data center credits. The Company further recognized a deferred revenue liability of $1,035 for prepaid usage credits not yet used by its customers as of December 31, 2020 and accrued revenue for used and unpaid credits totaling $651 as of December 31, 2020. While the Company generated limited revenue in 2020, there can be no assurances that edge computing services will generate satisfactory revenue or continue to generate revenue.

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 expense in the consolidated statements of operations. The Company assigns costs to transactions on a first-in, first-out basis.

As of December 31, 2020 and 2019, the carrying value of crypto assets held by the Company was $1,197 and $0, respectively.

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. During the year ended December 31, 2020, the Company recognized $4,847 of cryptocurrency mining income and gains of $1,018 on the sale of cryptocurrency.

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 when stock or options are awarded for previous or current service without further recourse.

Income Taxes

The Company is subject to taxation in various jurisdictions and may be subject to examination by various authorities.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial 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.

The Company recognizes the amount of taxes payable or refundable for the current year and recognizes deferred tax liabilities and assets for the expected future tax consequences of events and transactions that have been recognized in the Company’s financial statements or tax returns.

EDGE DATA SOLUTIONS, INC. (Formerly Blockchain Holdings Capital Ventures, Inc.)

NOTES TO FINANCIAL STATEMENTS

As of December 31, 2020 and 2019 and for the Years then Ended

NOTE 3: GOING CONCERN

As shown in the accompanying financial statements as of December 31, 2020, the Company had $80,368 of cash and $137,415 of current assets, as compared to total current liabilities of $987,404, has incurred substantial operating losses, and had an accumulated deficit of $1,410,634. Furthermore, the Company’s revenue history has been limited and unstable, and there can be no assurances of future revenues.

Given these factors, the Company is dependent on 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 continue as a going concern. The financial statements do not include any adjustments 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’ DEFICIENCY

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 vote 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 its 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 its CEO and President (formerly COO) as stock-based compensation for services rendered.

The Company has not currently authorized a Class B designation of Preferred 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”). Each share of Class C shall be convertible into one (1) shares of common stock. 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 restricts the CEO and President from converting the 7,000,000 shares into common stock for 36 months from the issuance date.

As of December 31, 2020, the Company was 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 declaring dividends in the foreseeable future.

Financing Activities

On January 20, 2020, the Company purchased data center equipment components for 32,000 shares of common stock and capitalized $6,083 based on the estimated value of surrounding equity transactions.

In January 2020, the Company issued 627,862 equity units at $0.25 to two individuals in exchange for conversion of $100,000 of convertible notes and $6,966 of accrued interest and an additional $50,000 of cash. Each equity unit consists of one three-year warrant to purchase two shares of the Company’s common stock for $0.50 each, and one share of the Company’s common stock. The Company may call the warrants in the event its common stock trades for $1.00 or more per share for ten out of fifteen consecutive trading days. In connection with these transactions, the Company assigned $119,665 of value to the common stock and $37,301 to the warrants using the Black-Scholes model with the following inputs:

The following table sets forth the Company’s warrant activity through December 31, 2020:

Stock-Based Compensation

On February 18, 2020, the Company issued 50,000 shares of common stock to an advisor and recorded $9,500 of stock-based compensation expense.

On May 6, 2020, the Company agreed to issue 60,000 shares of common stock to a consultant for services rendered, resulting in stock-based compensation expense of $11,400.

On June 19, 2020, the Board of Directors approved the issuance of 750,000 fully vested common shares to its board members and officers as compensation for services rendered, consisting of 250,000 shares to Delray Wannemacher, CEO and Director, 250,000 shares to Daniel Wong, President and Director, and 250,000 shares to Austin Bosarge, Director. In connection with this issuance, the Board further approved the issuance of 375,000 common shares on July 1, 2021 and 375,000 common shares on July 1, 2022. Each of these future issuances will result in the issuance of 125,000 common shares to each director and officer. The Company recorded stock-based compensation expense of $142,500 upon approving issuance of the first 750,000 shares.

On July 7, 2020, the Company issued a total of 1,000,000 common shares, consisting of 500,000 to Delray Wannemacher, CEO and Director, and 500,000 to Daniel Wong, President and Director, as compensation for services rendered, resulting in stock compensation expense of $190,000.

On September 15, 2020, the Company granted 50,000 common shares to a consultant in exchange for services rendered, resulting in $9,500 of stock compensation expense. Under the advisory agreement, the Company will issue an additional 50,000 common shares to the advisor over the next two years.

On September 16, 2020, the Company granted 100,000 common shares to an advisor in exchange for services rendered, resulting in $19,000 of stock compensation expense. Under the advisory agreement, the Company will issue an additional 100,000 common shares to the advisor over the next two years.

During 2020, the Company issued a total of 1,150,000 common shares and 1,910,000 common shares to management, board members and consultants for services rendered, resulting in stock-based compensation expense of $381,900 for the year ended December 31, 2020.

Outstanding Shares

As of December 31, 2020, the Company had 8,321,079 common shares outstanding.

As of December 31, 2020, 7,000,000 shares of Class A Preferred Stock and 7,000,000 shares of Class C Preferred Stock were issued and outstanding.

EDGE DATA SOLUTIONS, INC. (Formerly Blockchain Holdings Capital Ventures, Inc.)

NOTES TO FINANCIAL STATEMENTS

As of December 31, 2020 and 2019 and for the Years then Ended

NOTE 5: ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable consisted of $74,434 of liabilities incurred by the issuer prior to the merger as of each December 31, 2020 and 2019. The remaining accounts payable of $44,174 and $88,926 as of December 31, 2020 and 2019, respectively, consisted of amounts due for professional services and various other general and administrative expenses incurred after the acquisition.

As of December 31, 2019, accrued expenses consisted of $1,811 of state and local taxes payable, $1,903 of accrued interest due to a vendor and $7,266 of accrued interest on convertible debt. As of December 31, 2020, accrued expenses consisted of $1,811 of state and local taxes payable and $43,737 of accrued interest on convertible debt.

As of December 31, 2019, accrued liabilities included $41,000 of accrued consulting fees payable to entities owned by the CEO and President ($22,000 and $19,000, respectively). During the year ended December 31, 2020, the Company paid out the $41,000 of accrued compensation and accrued an additional $5,000 and $30,000 of compensation to its CEO and its President, respectively, for $35,000 of accrued related party compensation as of December 31, 2020.

NOTE 6: RELATED PARTY TRANSACTIONS

During year ended December 31, 2020, the Company paid out previously accrued consulting fees payable to the CEO and President of $22,000 and $19,000, respectively, recognized $90,000 and $84,039 of current compensation expense, and paid $6,600 and $3,909 in health insurance premiums for the CEO and President, all respectively. The Company does not currently have consulting or employment agreements with these individuals, and as a result, these fees may fluctuate from time to time. While the Company believes these individuals were appropriately classified as contractors and has accordingly neither paid nor accrued payroll taxes, these payments may result in future tax liabilities should the Internal Revenue Service deem these individuals to be employees. As of December 31, 2020, the Company owed $5,000 and $30,000 of outstanding compensation to the CEO and President, respectively.

During the year ended December 31, 2020, the Company’s CEO and President paid expenses on behalf of the Company totaling $112,922 and $61,648, and the Company repaid $120,652 and $90,838 of related party advances, respectively. As of December 31, 2020 and 2019, the Company was indebted to the CEO for $51,510 and $59,240 and to the President for $0 and $29,189, all respectively, for expenses paid on behalf of the company.

In June 2020, Austin Bosarge joined the Company’s Board of Directors. In connection with his appointment to the Board of Directors, he forgave $33,000 of outstanding fees due to his company for previous professional services rendered, resulting in a deemed contribution of $33,000 for the year ended December 31, 2020.

EDGE DATA SOLUTIONS, INC. (Formerly Blockchain Holdings Capital Ventures, Inc.)

NOTES TO FINANCIAL STATEMENTS

As of December 31, 2020 and 2019 and for the Years then Ended

NOTE 7: CONVERTIBLE NOTES

In May 2019, the Company issued short-term convertible notes for total proceeds of $100,000 and issued another convertible note in November 2019 for an additional $100,000. These notes mature one year from execution and accrue interest at a rate of 10% per annum. Conversion terms call for conversion of principal and accrued interest at 70% of the stock price upon closing any offering resulting in aggregate financing of at least $1,000,000.

As discussed in Note 4, in January, two individuals converted a total of $100,000 of outstanding principal and $6,966 of accrued interest into 427,862 equity units, each consisting of one common share and a three-year warrant to purchase two shares of common stock at $0.50 per share, in connection with additional subscriptions totaling $50,000 to purchase 200,000 of these equity units.

In February 2020, the Company issued two short-term convertible notes for total proceeds of $110,000. These notes mature one year from execution and accrue interest at a rate of 10% per annum. Conversion terms call for conversion of principal and accrued interest at 70% of the stock price upon closing any offering resulting in aggregate financing of at least $1,000,000.

In April 2020, the Company issued three short-term convertible notes for total proceeds of $150,000. These notes mature one year from execution and accrue interest at rates ranging from 10-12% per annum. Conversion terms call for conversion of principal and accrued interest at 70% of the stock price upon closing any offering resulting in aggregate financing of at least $1,000,000.

In June 2020, the Company issued another short-term convertible note for total proceeds of $50,000. This note matures one year from execution and accrues interest at 12% per annum. Conversion terms call for conversion of principal and accrued interest at 70% of the stock price upon closing any offering resulting in aggregate financing of at least $1,000,000.

In July 2020, the Company issued a short-term convertible note for total proceeds of $25,000. This note matures one year from execution and accrues interest at 10% per annum. Conversion terms call for conversion of principal and accrued interest at 85% of the stock price upon closing any offering resulting in aggregate financing of at least $1,000,000.

In August 2020, the Company issued a short-term convertible note for total proceeds of $100,000. This note matures one year from execution and accrues interest at 10% per annum. Conversion terms call for conversion of principal and accrued interest at 85% of the stock price upon closing any offering resulting in aggregate financing of at least $1,000,000.

In August 2020, the Company issued two short-term convertible notes totaling $75,000. The notes mature one year from execution and accrue interest at 10% per annum. Conversion terms call for conversion of principal and accrued interest at the lesser of (i) 70% of the stock price or (ii) $0.50 per share, upon closing any offering resulting in aggregate financing of at least $1,000,000.

In December 2020, the Company issued five short-term convertible notes totaling $110,000. The notes mature one year from execution and accrue interest at 15% per annum. Conversion terms call for conversion of principal and accrued interest at the lesser of (i) 70% of the stock price or (ii) $0.50 per share, upon closing any offering resulting in aggregate financing of at least $1,000,000.

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.

During the years ended December 31, 2020 and 2019, the Company recognized $43,437 and $7,266 of interest expense on convertible debt, respectively. As of December 31, 2020 and 2019, accrued interest on convertible debt was $43,737 and $7,266, net of converted interest of $6,966 and $0 during the years then ended, respectively.

The Company evaluated the convertible notes in light of ASC 470 and determined that a beneficial conversion feature exists, due to the fixed discount on conversion established in the notes. However, given the lack of a market for the Company’s stock and no imminent conversion events, the Company concluded that such a feature would be trivial in value and allocated the full principal amount to the convertible note liability.

Furthermore, the Company evaluated whether the features in these notes constitute embedded derivatives and should therefore be accounted for under ASC 815 – Derivatives and Hedging and has determined that there are no embedded derivatives.

EDGE DATA SOLUTIONS, INC. (Formerly Blockchain Holdings Capital Ventures, Inc.)

NOTES TO FINANCIAL STATEMENTS

As of December 31, 2020 and 2019 and for the Years then Ended

NOTE 8: INCOME TAX

The Company recorded no deferred income tax provision or benefit for the years ended December 31, 2020 or 2019, because the Company believes it is more likely than not that net operating loss carryforwards will not be utilized in the near future due to net losses. The Company has generated no taxable income. The income tax provision (benefit) differs from the amount computed by applying the U.S. Federal income tax rate of 21% plus applicable state rates to the loss before income taxes due to the unrecognized benefit resulting from the Company’s valuation allowance, as well as due to nondeductible expenses. The Company’s blended tax rate of 21% currently consists of 21% for U.S. Federal income tax and 0% for Delaware state income taxes. The following tables set forth the Company’s analysis of its deferred tax assets and related valuation allowances:

Income Tax Valuation Allowance

Components of Deferred Income Tax Assets

NOTE 9: CONCENTRATIONS, COMMITMENTS AND CONTINGENCIES

During the year ended December 31, 2020, one customer comprised 91% of revenue, and the loss of this customer would be detrimental to the Company’s recently formed revenue stream. Management has determined that no other significant concentrations, commitments, or contingencies existed as of December 31, 2020.

EDGE DATA SOLUTIONS, INC. (Formerly Blockchain Holdings Capital Ventures, Inc.)

NOTES TO FINANCIAL STATEMENTS

As of December 31, 2020 and 2019 and for the Years then Ended

NOTE 10: RECENT ACCOUNTING PRONOUNCEMENTS

Management does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.

NOTE 11: SMALL BUSINESS ADMINISTRATION GRANT

During the year ended December 31, 2020, the Company applied for a United States Small Business Administration loan under the March 27, 2020 Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. In connection with this application, the Company received a one-time grant of $1,000 and included it in other income.

NOTE 12: DEBT FORGIVENESS

On May 5, 2020, a vendor forgave $12,250 of outstanding balances due from the Company pertaining to professional services previously provided, resulting in a $12,250 gain for the year ended December 31, 2020.

NOTE 13: SIGNIFICANT AGREEMENTS

On March 11, 2019, the Company entered into a Master Services Agreement with SG Building Blocks, Inc. (“SG”), under which SG will provide certain systems, and perform the various design, engineering, fabrication, delivery and installation servics pertaining to those systems. The Company has not yet realized any financial impacts from this agreement.

On January 29, 2020, the Company entered into a master service agreement with Charter Trading Corporation (“Charter”), a Texas company, under which Charter will provide Ballistics materials for hardened Edge Data centers, for use by military contractors.

On June 24, 2020, the Company entered into a reseller agreement with Midas Green Technologies, LLC, a Texas-based technology company under which it can purchase and resell data center-related equipment. The Company has not yet realized any financial impacts.

On August 31, 2020, the Company engaged CIM Securities, LLC (“CIM”) as a financial advisor and its exclusive lead placement agent for the securities offering announced on October 13, 2020. The agreement calls for cash advisory fees of $15,000 and the reimbursement of expenses and up to $5,000 in legal fees. In addition to the engagement fees and expenses, the agreement sets forth contingent fees, based on successful closing of various transaction types:

On November 2, 2020, the Company entered into a reseller agreement with Lambda Labs, Inc., a provider of GPU-driven computing equipment and cloud services. The Company has not yet realized any financial impacts from this agreement.

NOTE 14: FINANCE LEASE

On March 27, 2020, the Company entered into a 36-month lease for data center equipment. Terms of the lease call for 36 monthly payments of $1,292, with the first payment due at inception, together with a $7,753 security deposit, $3,140 of sales tax and a $500 origination fee, for a total of $12,685 due up front. The Company paid the $12,685 on March 27, 2020.

The Company evaluated the lease in light of ASC 842 and determined that it was a long-term finance lease, since (a) the lease term is for the major part of the remaining economic life of the underlying asset and (b) the present value of the sum of lease payments equals or substantially exceeds the fair value of the underlying asset. At lease inception, the Company recognized a right of use asset for $38,895, prepaid tax of $3,140 and a lease liability of $38,895. The Company will ratably amortize the right of use asset and prepaid tax to lease expense over the lease’s life. Based on the present value, term and payment schedule, the Company determined the lease’s implicit rate to be 12.55% and will record interest expense accordingly over the life of the lease.

During the year ended December 31, 2020, the Company paid a total of $9,718, including $6,463 of principal and $3,255 of interest, to the lessor and recognized $10,247 of lease expense for the year ended December 31, 2020. The Company recognized $6,744 of this lease expense as direct costs of revenue and $3,503 as general and administrative expense for the year ended December 31, 2020.

EDGE DATA SOLUTIONS, INC. (Formerly Blockchain Holdings Capital Ventures, Inc.)

NOTES TO FINANCIAL STATEMENTS

As of December 31, 2020 and 2019 and for the Years then Ended

As of December 31, 2020, lease-related assets and liabilities consisted of:

Future maturities of the lease liability are as follows:

NOTE 15: ACQUISITION DEPOSITS

During the year ended December 31, 2020, the Company issued $25,000 of payments in anticipation of an acquisition of the assets of Blockchain Resources Corp. On June 26, 2020, the parties terminated the agreement. In connection with these payments, a contractor received $2,000 for services directly pertaining to the buildout of the Company’s data center equipment. As a result, the Company capitalized the $2,000 and wrote off the remaining $23,000 as unrecoverable losses.

NOTE 16: RECLASSIFICATION

Certain amounts have been reclassified to confirm with the current year presentation.

NOTE 17: SUBSEQUENT EVENTS

On January 25, 2021, the Company entered into an independent service agreement with OHGODACOMPANY LLC, a Washington Limited Liability Company (“Service Provider”), under which the Service Provider will join the advisory board and assist the Company with projects related to data centers. As compensation for services rendered, the Company agreed to issue 100,000 shares of its common stock within 30 days of execution, 50,000 common shares one year from the agreement date, and 50,000 additional common shares two years from the date of the agreement. All shares issued as compensation are fully vested.

On February 3, 2021, the Company extended its convertible note for $100,000 with Clearvoyance Ventures. The original note matured on November 26, 2020 and bore interest at 10%. According to the amended terms, the note will mature on February 3, 2022 and accrue interest at 15%. The note continues to have a conversion feature, under which principal and accrued interest would convert at 70% of the stock price upon closing any offering resulting in aggregate financing of at least $1,000,000.

In March 2021, the Company terminated the offering and wrote off the $21,000 of deferred offering costs to general and administrative expense in 2020.

Management has evaluated all significant events through the date the financial statements were available to be issued, noting no further subsequent events requiring disclosure.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not Applicable.

ITEM 9A. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

An evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and President  , of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report on Form 10-K. Disclosure controls and procedures are procedures designed with the objective of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, such as this Form 10-K, is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and is communicated to our management, including our Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, our management concluded that, as of December 31, 2020, our disclosure controls and procedures were not effective.

Management’s Annual Report On Internal Control Over Financial Reporting

Our management, including the Chief Executive Officer and President, is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f), is a process designed by, or under the supervision of, our principal executive and principal financial officers, or persons performing similar functions, as appropriate and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2020. Based on this assessment, management believes that as of December 31, 2020, our internal control over financial reporting is not effective based on those criteria.

Specifically, management’s evaluation identified the following material weaknesses, which existed as of December 31, 2020:

We believe that our weaknesses in internal control over financial reporting and our disclosure controls relate in part to the fact that we are a small reporting business with limited personnel. Management and the Board of Directors believe that the Company would need to allocate additional human and financial resources to address these matters, which at this time the Company does not have the financial capability to remediate. Management can give no assurances that it will ever be able to remediate such material weaknesses.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC to provide only management’s report in this annual report.

Changes in Internal Control Over Financial Reporting

During our most recent fiscal quarter, there has been no change in our internal control over financial reporting (as defined in Rule 13a- 15(f) or 15d-15(f) under the Securities Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE DIRECTORS AND EXECUTIVE OFFICERS

BOARD OF DIRECTORS AND EXECUTIVE OFFICERS

Our officers are elected by the board of directors at the first meeting after each annual meeting of our stockholders and hold office until their successors are duly elected and qualified under our bylaws.

The directors named above will serve until the next annual meeting of our stockholders. Thereafter, directors will be elected for one- year terms at the annual stockholders’ meeting. Officers will hold their positions at the pleasure of the board of directors absent any employment agreement. There is no arrangement or understanding between our directors and officers and any other person pursuant to which any director or officer was or is to be selected as a director or officer.

BIOGRAPHICAL INFORMATION

DELRAY WANNEMACHER, CHIEF EXECUTIVE OFFICER AND DIRECTOR SINCE AUGUST 23, 2018

Delray Wannemacher, CEO, sets the strategic vision for the national and global operations of the Company. Mr. Wannemacher has more than 25 years of experience in building successful exits for investors, and his efforts have helped to raise hundreds of millions of dollars for a variety of public and private companies. He has extensive experience working with shifting regulatory environments, fintech and engineering trends, and possesses a global vision on how to leverage both technology and physical assets in tandem to maximize growth while minimizing risk. He has had the opportunity to work with emerging growth companies from a wide array of sectors, including the fields of real estate, energy, solar projects, blockchain, resources, biotech, fintech, media, internet, software, finance, crowdfunding portals, communications, international investments, and trade.

Mr. Wannemacher has successfully built and sold two private companies of his own and has helped to take another public. He has an extensive background in technology and applied science, holding over a dozen certifications with Cisco, AT&T, and various others. Most of these were acquired while working for MCI, Internet Communications, and HSA, where he was an integration engineer and managed over 174 locations. He gained extensive knowledge in WAN (Cloud) and LAN infrastructure, as well as a deep familiarity with designing, implementing and maintaining network operation centers (NOC), data centers, disaster recovery solutions, storage solutions, security solutions, cloud solutions, and other related matters.

In addition to championing the vision for the Company, Mr. Wannemacher holds several board seats including one with The World Trade Center of Atlanta and ChineseInvestors.com, Inc. Mr. Wannemacher also holds an executive position as VP of Corporate Development with The World Trade Center of Atlanta.

DANIEL WONG, CHIEF OPERATION OFFICER AND DIRECTOR SINCE AUGUST 23, 2018

Daniel Wong, President, brings his diverse business experience to drive the company and build long term shareholder value. He spent his early in the telecom space helping expand Verizon’s footprint across the Southern California area before broadening his skills in the capital markets and founding companies of his own. Mr. Wong launched a capital markets consulting firm where he worked with companies in the biotech, telecom, blockchain, fintech, entertainment, and resources industries. He assisted publicly traded micro-cap companies to expand their market reach by creating solid business structures and effective communication with their clients and investors.

In 2018, he co-founded Blockchain Holdings, LLC that was soon after acquired by Edge Data Solutions, Inc. As President and Board Member for EDSI, Mr. Wong’s primary focus is to grow the company’s marketplace share using his expertise in blockchain technology, digital asset management, investment growth strategies, and customer and investor relations. His experience in launching multiple companies and assisting a variety of client companies to expand their market reach gives Mr. Wong the unique ability to make EDSI a leader in an emerging industry with unlimited potential.

AUSTIN BOSARGE, DIRECTOR SINCE JUNE 19, 2020

Austin Bosarge is an attorney focusing on corporate and intellectual property law, and real estate. He graduated cum laude from Suffolk University Law School in Boston and is licensed to practice in California. He is a licensed patent attorney and a California-licensed Real Estate Broker. Austin has his own law firm, Turning Point Law, has practiced law with The Corporate Law Group in Burlingame, and is the former President and CEO of MagicHome, a Sausalito- based mortgage technology firm. Prior to MagicHome he held sales, marketing and business development positions with technology and entertainment related companies, including an executive role with Indiqu, Inc., a venture funded developer of mobile entertainment networks. Austin also owns a residential real estate brokerage firm, a commercial brokerage firm, and a commercial development company. Austin was a computer engineer in Boston for Prime Computer where he was a member of a 5 person team tasked with the design and development of a multiprocessor minicomputer. In addition to his law degree, Austin holds a Bachelor of Electrical Engineering from Georgia Tech where he was a walk-on member of the Yellow Jacket football team.

CONFLICTS OF INTEREST – GENERAL.

Our directors and officers are, or may become, in their individual capacities, officers, directors, controlling shareholder and/or partners of other entities engaged in a variety of businesses. Thus, there exist potential conflicts of interest including, among other things, time, efforts and corporation opportunity, involved in participation with such other business entities. While the officers and directors of our business are engaged full time in our business activities, the amount of time they devote to other business may be up to approximately 10 hours per week.

CONFLICTS OF INTEREST – CORPORATE OPPORTUNITIES

Certain of our officers and directors may be directors and/or principal stockholders of other companies and, therefore, could face conflicts of interest with respect to potential acquisitions. In addition, our officers and directors may in the future participate in business ventures, which could be deemed to compete directly with us. Additional conflicts of interest and non-arms length transactions may also arise in the future in the event our officers or directors are involved in the management of any firm with which we transact business. Our Board of Directors currently has no policy in place to address such possibilities.

Our officers and directors may actively negotiate or otherwise consent to the purchase of a portion of their common stock as a condition to, or in connection with, a proposed merger or acquisition transaction. It is anticipated that a substantial premium over the initial cost of such shares may be paid by the purchaser in conjunction with any sale of shares by our officers and directors which is made as a condition to, or in connection with, a proposed merger or acquisition transaction. The fact that a substantial premium may be paid to our officers and directors to acquire their shares creates a potential conflict of interest for them in satisfying their fiduciary duties to us and our other stockholders. Even though such a sale could result in a substantial profit to them, they would be legally required to make the decision based upon the best interests of us and our other stockholders, rather than their own personal pecuniary benefit.

CODE OF ETHICS

Due to the limited scope of our current operations, we have not adopted a corporate code of ethics that applies to our principal executive officer, principal accounting officer, or persons performing similar function.

ITEM 11. EXECUTIVE COMPENSATION

EMPLOYMENT AND CONSULTING AGREEMENTS

There is no current compensation arrangement with our key officers.

Employment Contracts and Termination of Employment and Change-in-Control Arrangements

There are currently no employment contracts, compensatory plans or arrangements, including payments to be received from us, with respect to any of our directors or executive officers which would in any way result in payments to any such person because of his or her resignation, retirement or other termination of employment with us. The aforementioned consulting agreements do not provide for payments to be made as a result of any change in control of us, or a change in the person’s responsibilities following such a change in control.

DIRECTOR COMPENSATION

All of the Company’s officers and/or directors will continue to be active in other companies. All officers and directors have retained the right to conduct their own independent business interests.

The Company does not pay any Directors fees for meeting attendance.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

There were no outstanding equity awards held by the Chief Executive Officer or the Company’s most highly compensated executive officers as of December 31, 2020 (the “Named Executive Officers”).

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS

The following tables set forth certain information regarding beneficial ownership of our common stock, as of May 20, 2020.

Shares of common stock not outstanding but deemed beneficially owned by virtue of the right of an individual to acquire the shares of common stock within 60 days are treated as outstanding only when determining the amount and percentage of common stock owned by such individual. Except as noted below the table, each person has sole voting and investment power with respect to the shares of common stock shown.

OFFICERS AND DIRECTORS

GREATER THAN 5% STOCKHOLDERS

Rule 13d-3 under the Securities Exchange Act of 1934 governs the determination of beneficial ownership of securities. That rule provides that a beneficial owner of a security includes any person who directly or indirectly has or shares voting power and/or investment power with respect to such security. Rule 13d-3 also provides that a beneficial owner of a security includes any person who has the right to acquire beneficial ownership of such security within sixty days, including through the exercise of any option, warrant or conversion of a security. Any securities not outstanding which are subject to such warrants or conversion privileges are deemed to be outstanding for the purpose of computing the percentage of outstanding securities of the class owned by such person. Those securities are not deemed to be outstanding for the purpose of computing the percentage of the class owned by any other person.

No shareholder meetings were held in the last fiscal year.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Other than the stock transactions discussed above, we have not entered into any transaction nor are there any proposed transactions in which any founder, director, executive officer, significant shareholder of our Company or any member of the immediate family of any of the foregoing had or is to have a direct or indirect material interest.

There is no current compensation arrangement with our key officers.

Director Independence

Our board of directors undertook its annual review of the independence of the directors and considered whether any director had a material relationship with us or our management that could compromise his ability to exercise independent judgment in carrying out his responsibilities. As a result of this review, the board of directors determined that the directors are not independent, as such term is used under the rules and regulations of the Securities and Exchange Commission. Delray Wannemacher, as Chief Executive Officer of the Company, and Daniel Wong, as President, are not considered to be “independent.”

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

GENERAL. TURNER, STONE & COMPANY, L.L.P. (“TURNER, STONE & COMPANY”) is the Company’s independent registered public accounting firm. The Company’s Board of Directors has considered whether the provisions of audit services are compatible with maintaining TURNER, STONE & COMPANY’s independence. The engagement of our independent registered public accounting firm was approved by our board of directors functioning as our audit committee prior to the start of the audit of our consolidated financial statements for the year ended December 31, 2020.

The following table represents aggregate fees billed to the Company for the years ended December 31, 2020 and 2019.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENTS

The following is a complete list of exhibits filed as part of this Form 10-K. Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of Regulation S-K.

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

In accordance with the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Supplemental Information to be Furnished With Reports Filed Pursuant to Section 15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to Section 12 of the Act

Our financials are set forth herein and access is given to all shareholders to our filing via our website. No other annual report has been sent to shareholders and no proxy statements have been sent to 10 or more security holders in the past fiscal year.