BitRush Corp. — Audit Report / Information 2024

Apr 27, 2024

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Financial Statements

Years Ended December 31, 2023 and 2022 (Expressed in Canadian Dollars)

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INDEPENDENT AUDITORS’ REPORT

To the Shareholders and Directors of BitRush Corp.

Opinion

We have audited the financial statements of BitRush Corp. (the “Company”) which comprise:

• the statements of financial position as at December 31, 2023 and 2022;

• the statements of loss and comprehensive loss for the years ended December 31, 2023 and 2022;

• the statements of cash flows for the years ended December 31, 2023 and 2022;

• the statements of changes in shareholders’ deficiency for the years ended December 31, 2023 and 2022; and

• • the notes to the financial statements, including material accounting policy information and other explanatory information.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2023 and 2022, and its financial performance and its cash flows for the years then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the Company in accordance with the ethical requirements that are relevant to our audits of the financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements.

Material Uncertainty Related to Going Concern

We draw attention to Note 1 of the accompanying financial statements, which describes matters and conditions that indicate the existence of a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2023. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Except for the matter described in the Material Uncertainty Related to Going Concern section, we have determined that there are no other key audit matters to communicate in our report.

Other Information

Management is responsible for the other information. The other information comprises the Company’s Management Discussion and Analysis to be filed with the relevant Canadian securities commissions.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are, therefore, the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditors’ report is Waseem Javed.

/s/Manning Elliott LLP

CHARTERED PROFESSIONAL ACCOUNTANTS Vancouver, British Columbia April 26, 2024

BitRush Corp.

Statements of Financial Position As at December 31, 2023 and 2022 (Expressed in Canadian Dollars)

	2023 2022
	$ $ Assets Current Assets Cash 1,604 13,880 Amounts receivable (Note 4) 7,127 6,040 Prepaid expenses - 4,985
	Total Assets 8,731 24,905
	Liabilities Current Liabilities Accounts payable and accrued liabilities (Notes 5 and 10) 371,879 205,415 Loans payable (Note 6) 60,000 60,000
	Total Liabilities 431,879 265,415
	Shareholders’ Deficiency Share capital (Note 7) 4,883,249 4,883,249 Reserve for share-based payments (Note 8) 133,236 135,204 Contributed surplus 42,058 42,058 Accumulated deficit (5,481,691) (5,301,021)
	Total Shareholders’ Deficiency (423,148) (240,510)
	Total Liabilities and Shareholders’ Deficiency 8,731 24,905

Nature of operations and going concern (Note 1) Subsequent event (Note 14)

Approved on behalf of the Board of Directors:

“Karsten Arend” (signed) Director

“Harold Morgan” (signed) Director

The accompanying notes are an integral part of these financial statements.

4

BitRush Corp.

Statements of Loss and Comprehensive Loss For the Years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars)

	2023 2022
	$ $ Expenses Management fees (Note 10) 90,000 90,000 Professional fees (Note 10) 66,502 82,204 General and administrative 14,616 17,566 Filing fees 11,520 11,741 Stock-based compensation (Notes 8 and 10) 2,957 41,375
	Total Expenses (185,595) (242,886)
	Other Items Interest expense (Note 6) - (2,852) Other income - 2,872
	Total Other Items - 20
	Net Loss and Comprehensive Loss (185,595) (242,866)
	Weighted Average Number of Shares Outstanding Basic and diluted 99,848,607 99,848,607
	Net Loss per Share Basic and diluted $ (0.002) $ (0.002)

The accompanying notes are an integral part of these financial statements.

5

BitRush Corp.

Statements of Cash Flows For the Years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars)

	2023 2022
	$ $ Operating Activities Net loss for the year (185,595) (242,866) Adjustments for non-cash items: Interest on loans payable (Note 6) - 80 Stock-based compensation (Note 8) 2,957 41,375
	(182,638) (201,411) Changes in non-cash working capital: Amounts receivables (1,087) 43,139 Prepaid expenses 4,985 (146) Accounts payable and accrued liabilities 149,464 73,282
	Cash Flows used in Operating Activities (29,276) (85,136)
	Financing Activities Advance from related party (Note 10) 17,000 -
	Cash Flows provided by Financing Activities 17,000 -
	Decrease in cash (12,276) (85,136) Cash, beginning of year 13,880 99,016
	Cash, end of year 1,604 13,880

The accompanying notes are an integral part of these financial statements.

6

BitRush Corp.

Statements of Changes in Shareholders’ Deficiency For the Years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars)

	Number of	Share	Share-Based	Contributed	Accumulated
	Shares	Capital	Payments	Surplus	Deficit	Total
	#	$	$	$	$	$
Balance, December 31, 2021	99,848,607	4,883,249	93,829	42,058	(5,058,155)	(39,019)
Stock-based compensation (Note 8)	-	-	41,375	-	-	41,375
Net loss for the year	-	-	-	-	(242,866)	(242,866)
Balance, December 31, 2022	99,848,607	4,883,249	135,204	42,058	(5,301,021)	(240,510)
Stock-based compensation (Note 8)	-	-	2,957	-	-	2,957
Forfeiture of stock options (Note 8)	-	-	(4,925)	-	4,925	-
Net loss for the year	-	-	-	-	(185,595)	(185,595)
Balance, December 31, 2023	99,848,607	4,883,249	133,236	42,058	(5,481,691)	(423,148)

The accompanying notes are an integral part of these financial statements.

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Notes to the Financial Statements For the Years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars)

BitRush Corp.

1. Nature of Operations and Going Concern

BitRush Corp. (“BitRush”, or the “Company”) was incorporated under the laws of the Province of Ontario and is governed by the Business Corporations Act (Ontario). The Company is currently looking to adopt a new business plan or to make an acquisition. The Company’s common shares are listed on the Canadian Securities Exchange (the “CSE”) under the trading symbol “BRH” but are currently suspended from trading. The address of the Company’s registered office is located at 77 King Street West, Suite 2905, Toronto, Ontario, M5K 1H1, Canada.

For the year ended December 31, 2023, the Company incurred a net loss of $185,595 and negative cash flow from operations of $29,276, and as at December 31, 2023, the Company had an accumulated deficit of $5,481,691 (December 31, 2022 – deficit of $5,301,021). These financial statements have been prepared on the basis that the Company will continue as a going concern, which assumes the realization of assets and the settlement of liabilities in the normal course of business. The appropriateness of using the going concern basis is dependent upon, among other things, future profitable operations, the ability of the Company to obtain necessary financing, and to identify, evaluate, and negotiate an acquisition of assets or businesses. It is not possible to predict whether financing efforts will be successful or if the Company will attain profitable levels of operations. These conditions represent material uncertainties which may cast significant doubt on the Company’s ability to continue as a going concern.

These financial statements do not give effect to adjustments that would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and liquidate its liabilities and commitments in other than the normal course of business and at amounts different from those in the accompanying financial statements. Such adjustments could be material.

2. Basis of Presentation

2.1 Statement of Compliance

The Company’s financial statements, including comparatives, have been prepared in accordance with IFRS Accounting Standards (“IFRS”) as issued by the International Accounting Standards Board. The accounting policies set out below were consistently applied to all periods presented unless otherwise noted.

These financial statements were reviewed, approved and authorized for issuance by the Board of Directors (the “Board”) of the Company on April 26, 2024.

2.2 Basis of Measurement

These financial statements were prepared under the historical cost basis except for financial instruments which are measured at fair value. In addition, these financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

2.3 Functional Currency

Items included in these financial statements are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The functional currency of the Company is the Canadian Dollar (“$” or “CAD”), which is also the presentation currency of these financial statements, unless otherwise noted.

8

Notes to the Financial Statements For the Years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars)

BitRush Corp.

2. Basis of Presentation (continued)

2.4 Significant Accounting Judgments and Estimates

The preparation of these financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, revenue and expenses. On an ongoing basis, management evaluates its judgments and estimates in relation to assets, liabilities, revenue and expenses. Management uses historical experience and various other factors it believes to be reasonable under the given circumstances as the basis for its judgments and estimates. Actual outcomes may differ from these estimates under different assumptions and conditions. These estimates are reviewed periodically, and adjustments are made as appropriate in the period they become known.

Items for which actual results may differ materially from these estimates are described as follows:

Going concern

At each reporting period, management exercises judgment in assessing the Company’s ability to continue as a going concern by reviewing the Company’s performance, resources and future obligations. The conclusion that the Company will be able to continue as a going concern is subject to critical judgments of management with respect to assumptions surrounding the short and long-term operating budgets, expected profitability, investment and financing activities and management’s strategic planning. The assumptions used in management’s going concern assessment are derived from actual operating results along with industry and market trends. Management believes there is sufficient capital to meet the Company’s business obligations for at least the next 12 months, after taking into account expected cash flows, future financing and the Company’s cash position at year-end.

Fair value of financial assets and financial liabilities

Fair value of financial assets and financial liabilities on the statements of financial position that cannot be derived from active markets, are determined using a variety of techniques including the use of valuation models. The inputs to these models are derived from observable market data where possible, but where observable market data are not available, judgment is required to establish fair values. The judgments include, but are not limited to, consideration of model inputs such as volatility, estimated life and discount rates.

Warrants and options

Warrants and options are initially recognized at fair value, based on the application of the Black-Scholes valuation model (“Black-Scholes”). This pricing model requires management to make various assumptions and estimates which are susceptible to uncertainty, including the expected volatility of the share price, expected forfeitures, expected dividend yield, expected term of the warrants or options, and expected risk-free interest rate.

Income taxes

Income taxes and tax exposures recognized in the financial statements reflect management’s best estimate of the outcome based on facts known at the reporting date. When the Company anticipates a future income tax payment based on its estimates, it recognizes a liability. The difference between the expected amount and the final tax outcome has an impact on current and deferred taxes when the Company becomes aware of this difference.

In addition, when the Company incurs losses that cannot be associated with current or past profits, it assesses the probability of taxable profits being available in the future based on its budgeted forecasts. These forecasts are adjusted to take account of certain non-taxable income and expenses and specific rules on the use of unused credits and tax losses. When the forecasts indicate the sufficient future taxable income will be available to deduct the temporary differences, a deferred tax asset is recognized for all deductible temporary differences.

9

BitRush Corp. Notes to the Financial Statements For the Years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars)

3. Summary of Material Accounting Policies

3.1 Financial Instruments

The Company classifies and measures financial instruments in accordance with IFRS 9 – Financial Instruments (“IFRS 9”). A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets and financial liabilities, including derivatives, are recognized on the statements of financial position when the Company becomes a party to the financial instrument or derivative contract.

Classification

The Company classifies its financial assets and financial liabilities in the following measurement categories: (a) those to be measured subsequently at fair value through profit or loss (“FVTPL”); (b) those to be measured subsequently at fair value through other comprehensive income (“FVTOCI”); and (c) those to be measured at amortized cost. The classification of financial assets depends on the business model for managing the financial assets and the contractual terms of the cash flows. Financial liabilities are classified as those to be measured at amortized cost unless they are designated as those to be measured subsequently at FVTPL (irrevocable election at the time of recognition). For assets and liabilities measured at fair value, gains and losses are recorded in profit or loss.

The Company reclassifies financial assets when its business model for managing those assets changes. Financial liabilities are not reclassified.

Fair value through profit or loss

This category includes derivative instruments as well as quoted equity instruments which the Company has not irrevocably elected, at initial recognition or transition, to classify at FVTOCI. This category would also include debt instruments whose cash flow characteristics fail the solely principal and interest (“SPPI”) criterion or are not held within a business model whose objective is either to collect contractual cash flows, or to both collect contractual cash flows and sell. Financial assets in this category are recorded at fair value with changes recognized in profit or loss.

Financial assets at fair value through other comprehensive income

Equity instruments that are not held-for-trading can be irrevocably designated to have their change in FVTOCI instead of through profit or loss. This election can be made on individual instruments and is not required to be made for the entire class of instruments. Attributable transaction costs are included in the carrying value of the instruments. Financial assets at FVTOCI are initially measured at fair value and changes therein are recognized in other comprehensive loss. As at December 31, 2023 and 2022, the Company did not have any financial assets at FVTOCI.

Amortized cost

This category includes financial assets that are held within a business model with the objective to hold the financial assets in order to collect contractual cash flows that meet the SPPI criterion. Financial assets classified in this category are measured at amortized cost using the effective interest method.

The Company’s classification of financial assets and financial liabilities is summarized below:

	Classification
Cash	FVTPL
Accounts payable	Amortized cost
Loanspayable	Amortized cost

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BitRush Corp. Notes to the Financial Statements For the Years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars)

3. Summary of Material Accounting Policies (continued)

3.1 Financial Instruments (continued)

Measurement

All financial instruments are required to be measured at fair value on initial recognition, plus, in the case of a financial asset or financial liability not at FVTPL, transaction costs that are directly attributable to the acquisition or issuance of the financial asset or financial liability. Transaction costs of financial assets and financial liabilities carried at FVTPL are expensed in profit or loss. Financial assets and financial liabilities with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.

Financial assets that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortized cost at the end of the subsequent accounting periods. All other financial assets including equity investments are measured at their fair values at the end of subsequent accounting periods, with any changes taken through profit and loss or other comprehensive loss (irrevocable election at the time of recognition). For financial liabilities measured subsequently at FVTPL, changes in fair value due to credit risk are recorded in other comprehensive loss.

Expected credit loss impairment model

IFRS 9 introduced a single expected credit loss impairment model, which is based on changes in credit quality since initial application. The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due. The Company considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to the Company in full or when the financial asset is more than 90 days past due.

The carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts.

Derecognition

The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all the associated risks and rewards of ownership to another entity. Gains and losses on derecognition are generally recognized in the statements of loss and comprehensive loss.

The Company derecognizes financial liabilities only when its obligation under the financial liabilities is discharged, cancelled or expired. The difference between the carrying amount of the financial liability derecognized and the consideration paid or payable, including any non-cash assets transferred or liabilities assumed, is recognized in the statements of loss and comprehensive loss.

3.2 Provisions

A provision is recognized when the Company has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the obligation can be reliably estimated. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

A provision for onerous contracts is recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract.

As at December 31, 2023 and 2022, the Company had no material provisions.

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Notes to the Financial Statements For the Years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars)

BitRush Corp.

3. Summary of Material Accounting Policies (continued)

3.3 Government Loans

The benefit of a government loan at a below-market interest rate is generally accounted for as a government grant under IAS 20 – Accounting for Government Grants and Disclosure of Government Assistance. The Company accounts for government loans at below-market interest rates in accordance with IFRS 9. The benefit that is the government grant is measured as the difference between the fair value of the loan on initial recognition and the amount received.

Grants are recognized at their fair value where there is reasonable assurance that the grant will be received, and the Company will comply with all the attached conditions. Fair value signifies the amount received in cash.

3.4 Income Taxes

Income tax expense comprises current and deferred tax expense. Current and deferred tax are recognized in profit or loss, except to the extent that it relates to items recognized directly in equity or in other comprehensive loss.

Current tax

Current tax is recognized and measured at the amount expected to be recovered from or payable to the taxation authorities based on the income tax rates enacted or substantively enacted at the end of the reporting period and includes any adjustment to taxes payable in respect of previous years.

Deferred tax

Deferred tax is recognized on any temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable earnings.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized, and the liability is settled. The effect of a change in the enacted or substantively enacted tax rates is recognized in net earnings and comprehensive income or in equity depending on the item to which the adjustment relates.

Deferred tax assets are recognized to the extent that future recovery is probable. At the end of each reporting period, deferred tax assets are reduced to the extent that it is no longer probable that sufficient taxable earnings will be available to allow all or part of the assets to be recovered.

3.5 Share Capital

In situations where the Company issues units (“Units”), the value of Units is bifurcated and the value of warrants is included as a separate reserve of the Company’s equity, using the residual method, where the difference between the unit subscription price and the Company’s closing share price on the date of closing of the private placement, is allocated to warrants reserves. In cases where there is no difference between the unit subscription price and the closing share price, the entire amount is allocated to share capital. On expiry, the fair value of the warrants is transferred to share capital.

3.6 Share Issuance Costs

Costs incurred in connection with the issuance of share capital are netted against the proceeds received. Costs related to the issuance of share capital and incurred prior to issuance are recorded as deferred share issuance costs and subsequently netted against proceeds when they are received.

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BitRush Corp. Notes to the Financial Statements For the Years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars)

3. Summary of Material Accounting Policies (continued)

3.7 Loss per Share

Basic loss per share is computed by dividing the net loss available to common shareholders by the weighted average number of common shares outstanding during the period. The computation of diluted income (loss) per share assumes exercise or contingent issuance of options, warrants and securities only when such exercise or issuance would have a dilutive effect on income (loss) per share. For the years ended December 31, 2023 and 2022, no potential shares are included in the computation as they are anti-dilutive.

3.8 Share-Based Payments

Equity-settled share-based payments to directors and officers, consultants and employees are measured at the fair value of the equity instruments at the grant date. The fair value is measured at grant date and each tranche is recognized on a graded-vesting basis over the period in which the options vest. The offset to the recorded cost is to reserve for share-based payments.

At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized on the statements of (loss) such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to reserve for share-based payments.

Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.

On expiry, the recorded fair value of the options is transferred to accumulated deficit.

3.9 Related Party Transactions

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

3.10 Foreign Currency Transactions

Transactions in currencies other than the functional currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the period end exchange rates are recognized in profit and loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

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Notes to the Financial Statements For the Years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars)

BitRush Corp.

4. Amounts Receivable

The Company’s amounts receivable balance represents amounts due from government taxation authorities in respect of the Harmonized Sales Tax. The Company anticipates full recovery of these amounts and therefore no credit loss has been recorded against these receivables, which are due in less than one year.

5. Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities of the Company are primarily comprised of amounts outstanding incurred in the normal course of business. The usual credit period taken for trade purchases is between 30 to 90 days.

	December 31,	December 31,
	2023	2022
	$	$
Trade payable	298,879	176,702
Accrued liabilities	56,000	28,713
Due to related party	17,000	-
	371,879	205,415

6. Loans Payable

On August 24, 2020, the Company received $40,000 in revolving credit (the “CEBA Loan”) from the Government of Canada under the Canada Emergency Business Account (CEBA) COVID-19 Economic Response Plan. The funding is granted in the form of an interest-free loan of which up to $40,000 may be drawn.

On December 21, 2020, the Company received an additional CEBA Loan in the amount of $20,000 under the CEBA Loan expansion program.

The CEBA Loans were measured at an aggregate present value of $59,323 on initial recognition.

Effective January 1, 2023, any outstanding balance on the term loan shall bear interest at a rate of 5% per annum. If 75% of the outstanding balance of the CEBA Loan is repaid on or before December 31, 2022, the remaining 25% of the balance shall be forgiven. On January 12, 2022, the Government of Canada announced the extension of the CEBA Loan repayment deadline and interest-free period to December 31, 2023. The CEBA Loan must be repaid in full by no later than December 31, 2026, which was extended from the previous repayment deadline of December 31, 2025.

During the year ended December 31, 2023, no interest or accretion was recorded on the CEBA Loan. During the year ended December 31, 2022, accretion of $2,852 and the amortized amount of the forgivable portion of the CEBA Loans of $2,773, were recorded in the statements of loss and comprehensive loss, respectively.

14

BitRush Corp.

Notes to the Financial Statements For the Years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars)

7. Share Capital

Authorized share capital

The Company is authorized to issue an unlimited number of common shares and preferred shares.

Common shares issued and outstanding as at December 31, 2023 and 2022:

	December 31,	December 31,
	2023	2022
	$	$
Issued: 99,848,607
(December 31,2022 – 99,848,607 common shares)	4,883,249	4,883,249

There were no share capital transactions during the years ended December 31, 2023 and 2022.

8. Stock Options

On August 19, 2021, shareholders of the Company approved the adoption of an omnibus equity incentive plan (the “Omnibus Incentive Plan”), which replaced the existing option plan. The Omnibus Incentive Plan is administered by the Board (or a committee thereof) and provides that the Board may from time to time, in its discretion, and in accordance with CSE requirements or any other stock exchange on which the common shares are listed, grant to eligible participants, non-transferable awards which will include options, restricted share units, deferred share units and performance share units. Subject to adjustment, the number of common shares reserved for issuance to participants under the Omnibus Incentive Plan, together with common shares reserved for issuance under any other share compensation arrangements of the Company, shall not exceed 20% of the total number of common shares issued and outstanding.

As at December 31, 2023, the Company has 19,169,721 common shares that are issuable under the Omnibus Incentive Plan.

The following summarizes the options activity for the years ended December 31, 2023 and 2022:

	2023	2023	2022	2022
		Weighted		Weighted
	Number of	average	Number of	average
	options	exerciseprice	options	exerciseprice
	#	$	#	$
Outstanding, beginning of year	900,000	0.05	-	-
Granted	-	-	900,000	0.05
Forfeited	(100,000)	0.05	-	-
Outstanding, end of year	800,000	0.05	900,000	0.05

Options activities for the year ended December 31, 2023

On January 1, 2023, 100,000 options previously granted to a former director on March 2, 2022 at an exercise price of $0.05, were forfeited. As a result of the forfeiture, the grant date fair value of $4,925 pertaining to these options was reallocated to accumulated deficit.

No other options were granted, exercised, expired or forfeited during the year ended December 31, 2023.

Options activities for the year ended December 31, 2022

15

BitRush Corp. Notes to the Financial Statements For the Years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars)

8. Stock Options (continued)

On March 2, 2022, the Company granted 500,000 stock options to certain directors and consultants. The stock options are exercisable at a price of $0.05 per common share for a period of four years and vested immediately on grant. The options were valued using Black-Scholes with the following assumptions: expected historical volatility of 242%, expected dividend yield of 0%, risk-free interest rate of 1.58% and an expected life of four years. The grant date fair value attributable to these options of $24,624 was recorded as stock-based compensation in connection with the vesting of options during the year ended December 31, 2022.

On June 8, 2022, the Company granted 250,000 stock options to certain advisors. The stock options are exercisable at a price of $0.05 per common share for a period of four years. 25% of the options vested immediately on grant, with the remaining options vesting in equal increment on a quarterly basis up to one year after the grant date. The options were valued using Black-Scholes with the following assumptions: expected historical volatility of 242%, expected dividend yield of 0%, risk-free interest rate of 3.17% and an expected life of four years. The grant date fair value attributable to these options was $12,318, of which $1,573 was recorded as stock-based compensation in connection with the vesting of options during the year ended December 31, 2023 (2022 – $10,745).

On August 19, 2022, the Company granted 100,000 stock options to a director. The stock options are exercisable at a price of $0.05 per common share for a period of four years and vested immediately on grant. The options were valued using Black-Scholes with the following assumptions: expected historical volatility of 242%, expected dividend yield of 0%, risk-free interest rate of 3.18% and an expected life of four years. The grant date fair value attributable to these options of $4,927 was recorded as stock-based compensation in connection with the vesting of options during the year ended December 31, 2022.

On November 17, 2022, granted 50,000 stock options to another advisor. The stock options are exercisable at a price of $0.05 per common share for a period of four years. 25% of the options vested immediately on grant, with the remaining options vesting in equal increment on a quarterly basis up to one year after the grant date. The options were valued using Black-Scholes with the following assumptions: expected historical volatility of 242%, expected dividend yield of 0%, risk-free interest rate of 3.47% and an expected life of four years. The grant date fair value attributable to these options was $2,464, of which $1,384 was recorded as stock-based compensation in connection with the vesting of options during the year ended December 31, 2023 (2022 – $1,079).

The following table summarizes information of stock options outstanding and exercisable as at December 31, 2023:

	Number of	Number of		Weighted average
	options	options		remaining
Date of expiry	outstanding	exercisable	Exerciseprice	contractual life
	#	#	$	Years
March 2, 2026	400,000	400,000	0.05	2.17
June 8, 2026	250,000	250,000	0.05	2.44
August 19, 2026	100,000	100,000	0.05	2.64
November 17, 2026	50,000	50,000	0.05	2.88
	800,000	800,000	0.05	2.36

16

Notes to the Financial Statements For the Years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars)

BitRush Corp.

9. Warrants

As at December 31, 2023, the Company had a total of 5,889,260 warrants outstanding as follows:

	Number of
	warrants
Date of issuance	outstanding	Exerciseprice
	#	$
October 25, 2019	2,889,260	0.10
December 6, 2021	3,000,000	0.10
	5,889,260	0.10

All warrants are exercisable for a period of 36 months following the date on which BitRush’s common shares will be reinstated for trading on the CSE.

10. Related Party Transactions and Balances

In accordance with IAS 24 – Related Party Disclosures, key management personnel, including companies controlled by them, are those persons having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including any directors (executive and non-executive) of the Company.

Compensation provided to key management personnel during the years ended December 31, 2023 and 2022 were as follows:

	2023	2022
	$	$
Management fees	90,000	90,000
Professional fees	42,000	45,000
Stock-based compensation	-	19,702
	132,000	154,702

During the year ended December 31, 2023, Just In-Genius Inc. (“Just In-Genius”), an entity controlled by the President, Chief Executive Officer, and a director of the Company, charged $90,000 (2022 – $90,00) for consulting services provided to the Company, which are included in management fees. As at December 31, 2023, an aggregate amount of $176,375 (December 31, 2022 – $74,975), owing to Just In-Genius, for the consulting fees and reimbursement of expenses paid on behalf of the Company, was included in accounts payables and accrued liabilities. The amount outstanding is unsecured, non-interest bearing and due on demand.

17

Notes to the Financial Statements For the Years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars)

BitRush Corp.

10. Related Party Transactions and Balances (continued)

During the year ended December 31, 2023, Branson Corporate Services Ltd. (“Branson”), where the Company’s Chief Financial Officer (“CFO”) is affiliated, charged $42,000 (2022 – $45,000) for CFO, accounting and other administrative services to the Company, which are included in professional fees. As at December 31, 2023, an aggregate amount of $59,157 (December 31, 2022 – $74,943), owing to Branson was included in accounts payables and accrued liabilities. The amount outstanding is unsecured, non-interest bearing and due on demand.

During the year ended December 31, 2022, the Company recorded stock-based compensation of $19,702 in connection with the vesting of the options previously granted to its directors.

Other related party transactions

During the year ended December 31, 2023, the Company received an advance of $17,000 from Just In-Genius to fund its general working capital. As at December 31, 2023, the amount was included in accounts payables and accrued liabilities. The amount outstanding is unsecured, non-interest bearing and due on demand.

11. Income Taxes

Provision for income taxes

Major items causing the Company’s effective income tax rate to differ from the combined Canadian federal and provincial statutory rate of 26.5% (2022 – 26.5%) were as follows:

	2023	2022
	$	$
Net loss before income taxes	(185,595)	(242,866)
Expected income tax recovery based on statutory rate	(49,000)	(64,000)
Permanent differences and others	1,000	143,000
Changes in unrecognized deferred tax assets	48,000	(79,000)
Income tax(recovery) provision	-	-

Deferred income tax

Deferred income tax assets have not been recognized in respect of the following deductible temporary differences:

	2023	2022
	$	$
Non-capital loss carry-forwards	791,000	743,000
Share issue costs and others	17,000	17,000
Deferred tax assets not recognized	(808,000)	(760,000)
	-	-

Deferred tax assets have not been recognized in respect of these items because it is not probable that future taxable profit will be available against which the Company can use the benefits.

The Company has non-capital tax losses totaling $2,983,000, which begins expiring in 2035. The other temporary differences do not expire under current legislation.

18

BitRush Corp. Notes to the Financial Statements For the Years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars)

12. Capital Management

The Company’s objective when managing capital is to safeguard its ability to continue as a going concern and to maintain optimal returns to shareholders and benefits for its stakeholders. While the Company does not yet have any revenues, management monitors its capital structure and makes adjustments according to market conditions to meet its objectives given the current outlook of the business and industry in general. The Board of the Company does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the management team to sustain the future development of the business.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. The Company’s capital management objectives, policies and processes have remained unchanged since the Company’s most recent financial reporting period.

The Company is not subject to any externally imposed capital requirements.

13. Financial Instruments

The Company is exposed to various risks as it relates to financial instruments. Management, in conjunction with the Board, mitigates these risks by assessing, monitoring and approving the Company’s risk management process. There have not been any changes in the nature of these risks or the process of managing these risks from the previous reporting periods.

Credit risk

Credit risk is the risk of loss associated with a counterparty’s inability to fulfill its payment obligations. Cash is held with a reputable Canadian chartered bank, which is closely monitored by management. Management believes that the credit risk concentration with respect to cash is minimal. The maximum exposure to credit risk at period-end is limited to the amounts receivable balance.

Liquidity risk

Liquidity risk arises through the excess of financial obligations over available financial assets due at any point in time. The Company manages liquidity risk by ensuring that it has sufficient cash and other financial resources available to meet its needs. The Company forecasts cash flows for a period of 12 months to identify financial requirements. These requirements are met through cash management, dispositions of assets and accessing financing through advances from related parties and arm’s length parties. As at December 31, 2023, the Company had a cash balance of $1,604 (December 31, 2022 – $13,880) to settle current liabilities of $431,879 (December 31, 2022 – $265,415).

The following table summarizes the carrying amount and the contractual maturities of both the interest and principal portion of significant financial liabilities as at December 31, 2023:

Carrying amount	Contractual maturities
	Year 1 Year 2 to 3 Year 4 to 5
$ Accounts payable 371,879 Loan payable 60,000 Due to related party 17,000	$ $ $ 371,879 - - 60,000 - - 17,000 - -

The Company manages liquidity risk by maintaining adequate cash reserves and by continuously monitoring forecasts and actual cash flows for a rolling period of 12 months to identify financial requirements. Where insufficient liquidity may exist, the Company may pursue various debt and equity instruments for short or long-term financing.

19

Notes to the Financial Statements For the Years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars)

BitRush Corp.

13. Financial Instruments (continued)

Fair value

Fair value estimates of financial instruments are made at a specific point in time based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair values. The Company’s financial instruments consist of cash, accounts payable, loans payable and due to related party. The fair value of cash, accounts payable, and loans payable are approximately equal to their carrying value due to their short-term nature.

The Company classifies financial instruments recognized at fair value in accordance with a fair value hierarchy that includes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The three levels of the fair value hierarchy are described below:

• Level 1 - valuation based on quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2 - valuation techniques based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

• Level 3 - valuation techniques using inputs for the asset or liability that are not based on observable market data (unobservable inputs).

			Level 1	Level 2	Level 3	Total
			$	$	$	$
Cash, December	31,	2023	1,604	-	-	1,604
Cash,December	31,	2022	13,880	-	-	13,880

As at December 31, 2023 and 2022, the Company’s financial instruments carried at fair value consisted of its cash, which has been classified as Level 1. There were no transfers between Levels 2 and 3 for recurring fair value measurements during the years.

14. Subsequent Events

Subsequent to year-end, the Company received two loans for working capital purposes, comprised of (i) a loan of $20,000 from a director of BitRush, and (ii) a loan of USD $3,738 (approximately $5,000) from an arm’s length party.

20