BitRush Corp. — Interim / Quarterly Report 2023

Nov 17, 2023

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Unaudited Condensed Interim Financial Statements

For the Three and Nine Months Ended September 30, 2023 and 2022 (Expressed in Canadian Dollars)

NOTICE TO READER

Under National Instrument 51-102, Part 4, subsection 4.3(3) (a), if an auditor has not performed a review of the condensed interim financial statements, they must be accompanied by a notice indicating that the condensed interim financial statements have not been reviewed by an auditor.

The accompanying unaudited condensed interim financial statements have been prepared by and are the responsibility of the management of the Company.

The Company’s independent auditor has not performed a review of these unaudited condensed interim financial statements in accordance with the standards established by the Chartered Professional Accountants of Canada for a review of interim financial statements by an entity’s auditor.

BitRush Corp.

Unaudited Condensed Interim Statements of Financial Position As at September 30, 2023 and December 31, 2022 (Expressed in Canadian Dollars)

	As at September 30, 2023 As at December 31, 2022
	$ $ Assets Current Assets Cash 4,204 13,880 Amounts receivable (Note 4) 3,219 6,040 Prepaid expenses 533 4,985
	Total Assets 7,956 24,905
	Liabilities Current Liabilities Accounts payable and accrued liabilities (Notes 5 and 10) 307,498 205,415 Loans payable (Note 6) 60,000 60,000 Due to related party (Note 10) 17,000 -
	Total Liabilities 384,498 265,415
	Shareholders’ Deficiency Share capital (Note 7) 4,883,249 4,883,249 Reserve for share-based payments (Note 8) 133,176 135,204 Contributed surplus 42,058 42,058 Accumulated deficit (5,435,025) (5,301,021)
	Total Shareholders’ Deficiency (376,542) (240,510)
	Total Liabilities and Shareholders’ Deficiency 7,956 24,905

Nature of operations and going concern (Note 1)

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 unaudited condensed interim financial statements.

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BitRush Corp.

Unaudited Condensed Interim Statements of Loss and Comprehensive Loss For the Three and Nine Months ended September 30, 2023 and 2022 (Expressed in Canadian Dollars)

	Three Months ended September 30, Nine Months ended September 30, 2023 2022 2023 2022
	$ $ $ $ Expenses Management fees (Note 10) 22,500 22,500 67,500 67,500 Professional fees (Note 10) 15,500 23,311 47,175 65,492 General and administrative 2,995 3,921 12,154 10,844 Filing fees 2,250 2,371 9,145 9,291 Stock-based compensation (Notes 8 and 10) 198 9,206 2,897 38,065
	Total Expenses (43,443) (61,309) (138,871) (191,192)
	Other Items Interest expense (Note 6) (58) (718) (58) (2,133) Other income - 699 - 2,174
	Total Other Items (58) (19) (58) 41
	Net Loss and Comprehensive Loss (43,501) (61,328) (138,929) (191,151)
	Weighted Average Number of Shares Outstanding Basic and diluted 99,848,607 99,848,607 99,848,607 99,848,607
	Net Loss per Share Basic and diluted $ (0.000) $ (0.001) $ (0.001) $ (0.002)

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

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BitRush Corp.

Unaudited Condensed Interim Statements of Cash Flows For the Three and Nine Months ended September 30, 2023 and 2022 (Expressed in Canadian Dollars)

	Three Months ended September 30, Nine Months ended September 30, 2023 2022 2023 2022
	$ $ $ $ Operating Activities Net loss for the period (43,501) (61,328) (138,929) (191,151) Adjustments for non-cash items: Gain on debt forgiveness - (699) - (2,074) Interest on loans payable (Note 6) - 719 - 2,133 Stock-based compensation (Note 8) 198 9,206 2,897 38,065
	(43,303) (52,102) (136,032) (153,027) Changes in non-cash working capital: Amounts receivables 191 681 2,821 44,050 Prepaid expenses 1,091 1,072 4,452 4,307 Accounts payable and accrued liabilities 38,172 18,475 102,083 41,683
	Cash Flows (used in) Operating Activities (3,849) (31,874) (26,676) (62,987)
	Financing Activities Advance from related party (Note 10) - - 17,000 -
	Cash Flows provided by Financing Activities - - 17,000 -
	Decrease in cash (3,849) (31,874) (9,676) (62,987) Cash, beginning of period 8,053 67,903 13,880 99,016
	Cash, end of period 4,204 36,029 4,204 36,029

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

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BitRush Corp.

Unaudited Condensed Interim Statements of Changes in Shareholders’ Deficiency For the Nine Months ended September 30, 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)	-	-	38,065	-	-	38,065
Net loss for the period	-	-	-	-	(191,151)	(191,151)
Balance, September 30, 2022	99,848,607	4,883,249	131,894	42,058	(5,249,306)	(192,105)
Balance, December 31, 2022	99,848,607	4,883,249	135,204	42,058	(5,301,021)	(240,510)
Stock-based compensation (Note 8)	-	-	2,897	-	-	2,897
Cancellation of stock options (Note 8)	-	-	(4,925)	-	4,925	-
Net loss for the period	-	-	-	-	(138,929)	(138,929)
Balance, September 30, 2023	99,848,607	4,883,249	133,176	42,058	(5,435,025)	(376,542)

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

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Notes to the Unaudited Condensed Interim Financial Statements For the Three and Nine Months ended September 30, 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 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 nine months ended September 30, 2023, the Company incurred a net loss of $138,929 and negative cash flow from operations of $26,676, and as at September 30, 2023, the Company had an accumulated deficit of $5,435,025 (December 31, 2022 – deficit of $5,301,021). These unaudited condensed interim 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 unaudited condensed interim 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 unaudited condensed interim financial statements, including comparatives, have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). These unaudited condensed interim financial statements have been prepared in accordance with International Accounting Standards 34 – Interim Financial Reporting (“IAS 34”).

These unaudited condensed interim financial statements were reviewed, approved and authorized for issuance by the Board of Directors (the “Board”) of the Company on November 17, 2023.

2.2 Basis of Measurement

These unaudited condensed interim financial statements were prepared under the historical cost basis except for financial instruments which are measured at fair value. In addition, these unaudited condensed interim 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.

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.

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Notes to the Unaudited Condensed Interim Financial Statements For the Three and Nine Months ended September 30, 2023 and 2022 (Expressed in Canadian Dollars)

BitRush Corp.

2. Basis of Presentation (continued)

2.4 Significant Accounting Judgments and Estimates (continued)

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 period-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.

3. Summary of Significant Accounting Policies

The accounting policies applied by the Company in these unaudited condensed interim financial statements are the same as those noted in the Company’s audited financial statements for the year ended December 31, 2022, unless otherwise noted.

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.

	September 30,	December 31,
	2023	2022
	$	$
Trade payable	243,577	176,702
Accrued liabilities	63,921	28,713
	307,498	205,415

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BitRush Corp.

Notes to the Unaudited Condensed Interim Financial Statements For the Three and Nine Months ended September 30, 2023 and 2022 (Expressed in Canadian Dollars)

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.

On January 1, 2021, the balance remaining on the CEBA Loan automatically converted to a non-revolving term loan with a maturity date of December 31, 2022. 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, 2025.

During the three and nine months ended September 30, 2022, accretion of $718 and $2,133, respectively, and the amortized amount of the forgivable portion of the CEBA Loans of $699 and $2,174, respectively, were recognized in the statements of loss and comprehensive loss.

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 September 30, 2023 and December 31, 2022:

	September 30,	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 nine months ended September 30, 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 September 30, 2023, the Company has 19,169,721 common shares that are issuable under the Omnibus Incentive Plan.

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BitRush Corp.

Notes to the Unaudited Condensed Interim Financial Statements For the Three and Nine Months ended September 30, 2023 and 2022 (Expressed in Canadian Dollars)

8. Stock Options (continued)

The following summarizes the options activity for the nine months ended September 30, 2023 and 2022:

	2023	2023	2022	2022
		Weighted		Weighted
	Number of	average	Number of	average
	options	exerciseprice	options	exerciseprice
	#	$	#	$
Outstanding, beginning of period	900,000	0.05	-	-
Granted	-	-	850,000	0.05
Cancelled	(100,000)	0.05	-	-
Outstanding, end of period	800,000	0.05	850,000	0.05

Options activities for the nine months ended September 30, 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 cancelled. As a result of the cancellation, the grant date fair value of $4,925 pertaining to these options was reallocated to deficit.

No other options were granted, exercised, expired or forfeited during the nine months ended September 30, 2023.

During the three and nine months ended September 30, 2023, the Company also recorded stock-based compensation of $198 and $1,324, respectively, in connection with the vesting of options granted in November 2022.

Options activities for the nine months ended September 30, 2022

On March 2, 2022, the Company granted 500,000 stock options to various officers, 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 nine months ended September 30, 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 stock-based compensation of $nil and $1,573, respectively, was recorded with the vesting of options during the three and nine months ended September 30, 2023 (2022 – $4,279 and $8,514).

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 three and nine months ended September 30, 2022.

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BitRush Corp.

Notes to the Unaudited Condensed Interim Financial Statements For the Three and Nine Months ended September 30, 2023 and 2022 (Expressed in Canadian Dollars)

8. Stock Options (continued)

The following table summarizes information of stock options outstanding and exercisable as at September 30, 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	2.42
June 8, 2026	250,000	250,000	0.05	2.69
August 19, 2026	100,000	100,000	0.05	2.89
November 17, 2026	50,000	40,625	0.05	3.13
	800,000	790,625	0.05	2.61

9. Warrants

As at September 30, 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

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 three and nine months ended September 30, 2023 and 2022 were as follows:

2022 were as follows:
	Three	Months ended	Nine	Months ended
		September 30,		September 30,
	2023	2022	2023	2022
	$	$	$	$
Management fees	22,500	22,500	67,500	67,500
Professional fees	10,500	10,500	31,500	34,500
Stock-based compensation	-	4,927	-	19,702
	33,000	37,927	99,000	121,702

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BitRush Corp.

Notes to the Unaudited Condensed Interim Financial Statements For the Three and Nine Months ended September 30, 2023 and 2022 (Expressed in Canadian Dollars)

10. Related Party Transactions (continued)

During the three and nine months ended September 30, 2023, Just In-Genius Inc. (“Just In-Genius”), an entity controlled by the President, Chief Executive Officer, and a director of the Company, charged $22,500 and $67,500 (2022 – $22,500 and $67,500), respectively, for consulting services provided to the Company, which are included in management fees. As at September 30, 2023, an aggregate amount of $150,945 (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.

During the three and nine months ended September 30, 2023, Branson Corporate Services Ltd. (“Branson”), where the Company’s Chief Financial Officer (“CFO”) is employed, charged $10,500 and $31,500 (2022 – $10,500 and $34,500), respectively, for CFO, accounting and other administrative services to the Company, which are included in professional fees. As at September 30, 2023, an aggregate amount of $48,657 (December 31, 2022 – $74,943), owing to Branson was included in accounts payables and accrued liabilities. The amount outstanding is unsecured, noninterest bearing and due on demand.

During the three and nine months ended September 30, 2022, the Company recorded stock-based compensation of $4,927 and $19,702, respectively, in connection with the vesting of the options previously vested to its directors.

Other related party transactions

During the nine months ended September 30, 2023, the Company received an advance of $17,000 from Just In-Genius to fund its general working capital. As at September 30, 2023, the amount is recorded as due to related party on the statements of financial position. The amount outstanding is unsecured, non-interest bearing and due on demand.

11. 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.

12. 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.

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BitRush Corp.

Notes to the Unaudited Condensed Interim Financial Statements For the Three and Nine Months ended September 30, 2023 and 2022 (Expressed in Canadian Dollars)

12. Financial Instruments (continued)

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 September 30, 2023, the Company had a cash balance of $4,204 (December 31, 2022 – $13,880) to settle current liabilities of $384,498 (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 September 30, 2023:

Carrying amount	Contractual maturities
	Year 1 Year 2 to 3 Year 4 to 5
$ Accounts payable 307,498 Loan payable 60,000 Due to related party 17,000	$ $ $ 307,498 - - 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.

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, loans payable and due to related party 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, September	30,	2023	4,204	-	-	4,204
Cash,December	31,	2022	13,880	-	-	13,880

As at September 30, 2023 and December 31, 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 reporting period.

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