BitRush Corp. — Interim / Quarterly Report 2023

May 4, 2023

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Unaudited Condensed Interim Financial Statements For the Three Months Ended March 31, 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 March 31, 2023 and December 31, 2022 (Expressed in Canadian Dollars)

	As at March 31, 2023 As at December 31, 2022
	$ $ Assets Current Assets Cash 10,491 13,880 Amounts receivable (Note 4) 4,610 6,040 Prepaid expenses 3,305 4,985
	Total Assets 18,406 24,905
	Liabilities Current Liabilities Accounts payable and accrued liabilities (Note 5) 227,532 205,415 Loans payable (Note 6) 60,000 60,000 Due to related party (Note 10) 17,000 -
	Total Liabilities 304,532 265,415
	Shareholders’ Deficiency Share capital (Note 7) 4,883,249 4,883,249 Reserve for share-based payments (Note 8) 137,077 135,204 Contributed surplus 42,058 42,058 Accumulated deficit (5,348,510) (5,301,021)
	Total Shareholders’ Deficiency (286,126) (240,510)
	Total Liabilities and Shareholders’ Deficiency 18,406 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 Months ended March 31, 2023 and 2022 (Expressed in Canadian Dollars)

	2023 2022
	$ $ Expenses Management fees (Note 10) 22,500 22,500 Professional fees (Note 10) 15,500 20,400 General and administrative 5,261 4,640 Filing fees 2,355 4,539 Stock-based compensation (Notes 8 and 10) 1,873 24,624
	Total Expenses (47,489) (76,703)
	Other Items Interest expense (Note 6) - (703) Other income - 783
	Total Other Items - 80
	Net Loss and Comprehensive Loss (47,789) (76,623)
	Weighted Average Number of Shares Outstanding Basic and diluted 99,848,607 99,848,607
	Net Loss per Share Basic and diluted $ (0.000) $ (0.001)

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 Months ended March 31, 2023 and 2022 (Expressed in Canadian Dollars)

	2023 2022
	$ $ Operating Activities Net loss for the period (47,489) (76,623) Adjustments for non-cash items: Gain on debt forgiveness - (684) Interest on loans payable (Note 6) - 703 Stock-based compensation (Note 8) 1,873 24,624
	(45,616) (51,980) Changes in non-cash working capital: Amounts receivables 1,430 42,234 Prepaid expenses 1,680 1,617 Accounts payable and accrued liabilities 22,117 (3,614)
	Cash Flows (used in) Operating Activities (20,389) (11,743)
	Financing Activities Advance from related party 17,000 -
	Cash Flows provided by Financing Activities 17,000 -
	Decrease in cash (3,389) (11,743) Cash, beginning of period 13,880 99,016
	Cash, end of period 10,491 82,273

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 Three Months ended March 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)	-	-	24,624	-	-	24,624
Net loss for the period	-	-	-	-	(76,623)	(76,623)
Balance, March 31, 2022	99,848,607	4,883,249	118,453	42,058	(5,134,778)	(91,018)
Balance, December 31, 2022	99,848,607	4,883,249	135,204	42,058	(5,301,021)	(240,510)
Stock-based compensation (Note 8)	-	-	1,873	-	-	1,873
Net loss for the period	-	-	-	-	(47,489)	(47,489)
Balance, March 31, 2023	99,848,607	4,883,249	137,077	42,058	(5,348,510)	(286,126)

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 Months ended March 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 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 three months ended March 31, 2023, the Company incurred a net loss of $47,489 and negative cash flow from operations of $20,389, and as at March 31, 2023, the Company had an accumulated deficit of $5,348,510 (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 May 4, 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 Months ended March 31, 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.

	March 31,	December 31,
	2023	2022
	$	$
Trade payable	193,819	176,702
Accrued liabilities	33,713	28,713
	227,532	205,415

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Notes to the Unaudited Condensed Interim Financial Statements For the Three Months ended March 31, 2023 and 2022 (Expressed in Canadian Dollars)

BitRush Corp.

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 months ended March 31, 2022, accretion of $703 and the amortized amount of the forgivable portion of the CEBA Loans of $184, were recognized in the statements of loss and comprehensive loss, respectively.

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 March 31, 2023 and December 31, 2022:

	March 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 three months ended March 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 March 31, 2023, the Company has 19,069,721 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 Months ended March 31, 2023 and 2022 (Expressed in Canadian Dollars)

8. Stock Options (continued)

The following summarizes the options activity for the three months ended March 31, 2023 and 2022:

	March	31, 2023	March	31, 2022
		Weighted		Weighted
	Number of	average	Number of	average
	options	exerciseprice	options	exerciseprice
	#	$	#	$
Outstanding, beginning of period	900,000	0.05	-	-
Granted	-	-	500,000	0.05
Outstanding, end of period	900,000	0.05	500,000	0.05

Options activities for the three months ended March 31, 2023

No options were granted, exercised, expired, cancelled or forfeited during the three months ended March 31, 2023.

During the three months ended March 31, 2023, the Company recorded stock-based compensation of $1,873 in connection with the vesting of options granted between April 1, 2022 to December 31, 2022.

Options activities for the three months ended March 31, 2022

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 three months ended March 31, 2022.

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

	Number of	Number of		Weighted average
	options	options		remaining
Date of expiry	outstanding	exercisable	Exerciseprice	contractual life
	#	#	$	Years
March 2, 2026	500,000	500,000	0.05	2.92
June 8, 2026	250,000	203,125	0.05	3.19
August 19, 2026	100,000	100,000	0.05	3.39
November 17, 2026	50,000	21,875	0.05	3.63
	900,000	825,000	0.05	3.09

9. Warrants

As at March 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.

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BitRush Corp.

Notes to the Unaudited Condensed Interim Financial Statements For the Three Months ended March 31, 2023 and 2022 (Expressed in Canadian Dollars)

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 months ended March 31, 2023 and 2022 were as follows:

llows:
	2023	2022
	$	$
Management fees	22,500	22,500
Professional fees	10,500	13,500
Stock-based compensation	-	14,774
	33,000	50,774

During the three months ended March 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 $22,500 (2022 – $22,500) for consulting services provided to the Company, which are included in management fees. As at March 31, 2023, an aggregate amount of $99,625 (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 months ended March 31, 2023, Branson Corporate Services Ltd. (“Branson”), where the Company’s Chief Financial Officer (“CFO”) is employed, charged $22,500 (2022 – $22,500) for consulting services provided to the Company, which are included in management fees. As at March 31, 2023, an aggregate amount of $99,625 (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 months ended March 31, 2022, the Company granted certain options to its directors. Stock-based compensation of $19,702 was recorded in connection with the vesting of these options.

Other related party transactions

During the three months ended March 31, 2023, the Company received an advance of $17,000 from Just In-Genius to fund its general working capital. As at March 31, 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.

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Notes to the Unaudited Condensed Interim Financial Statements For the Three Months ended March 31, 2023 and 2022 (Expressed in Canadian Dollars)

BitRush Corp.

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.

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 March 31, 2023, the Company had a cash balance of $10,491 (December 31, 2022 – $13,880) to settle current liabilities of $304,532 (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 March 31, 2023:

ion of significant financial liabilities as at March 31, 2023:
Carrying amount	Contractual maturities
	Year 1 Year 2 to 3 Year 4 to 5
$ Accounts payable 227,532 Loan payable 60,000 Due to related party 17,000	$ $ $ 227,532 - - 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).

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BitRush Corp.

Notes to the Unaudited Condensed Interim Financial Statements For the Three Months ended March 31, 2023 and 2022 (Expressed in Canadian Dollars)

12. Financial Instruments (continued)

Fair value (continued)

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, March 31, 2023	10,491	-	-	10,491
Cash,December 31,2022	13,880	-	-	13,880

As at March 31, 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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