| BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT POLICIES | NOTE 1 – BASIS OF PRESENTATION AND SUMMARY
OF SIGNIFICANT POLICIES About Bitmine Immersion Technologies, Inc. Bitmine Immersion Technologies Inc. f/k/a Sandy Springs
Holdings, Inc. (“ Bitmine Company By a written consent dated July 16, 2021, holders
of a majority of the Company’s issued and outstanding common stock approved a resolution to appoint Jonathan Bates, Raymond Mow,
Michael Maloney, and Seth Bayles to the board of directors of the Company, and to appoint Jonathan Bates as Chairman, Seth Bayles as Corporate
Secretary, Raymond Mow as Chief Financial Officer, and Ryan Ramnath as Chief Operating Officer (collectively, the “ New O&Ds The appointment of certain of the New O&Ds
to the Company’s board, and issuance to the New O&Ds of a controlling interest in the Company, were made in order to
enable the Company to enter the business of creating a hosting center for Bitcoin mining computers primarily utilizing
immersion cooling technology, as well mining the Bitcoin digital currency for its own account. Prior to the change of control to the
New O&Ds, the Company was a shell company. During the fiscal year ended August 31, 2022, the
Company began implementing its business plan by generating revenue from the mining of Bitcoin digital currency, hosting a third party
Bitcoin miner and the sale of mining equipment. The Company’s year-end is August 31st. Basis of Presentation The foregoing unaudited interim condensed financial
statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“ GAAP SEC The preparation of condensed financial statements
in accordance with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure
of contingent assets and liabilities known to exist as of the date the condensed financial statements are published, and the reported
amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent
in the preparation of the Company’s condensed financial statements; accordingly, it is possible that the actual results could differ
from these estimates and assumptions that could have a material effect on the reported amounts of the Company’s financial position
and results of operations. Operating results for the six months ended February
29, 2024, are not necessarily indicative of the results that may be expected for the year ending August 31, 2024. Management’s Representation of Interim
Condensed Financial Statements The accompanying unaudited condensed financial statements
have been prepared by the Company without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).
The Company uses the same accounting policies in preparing quarterly and annual condensed financial statements. Certain information and
footnote disclosures normally included in condensed financial statements prepared in accordance with accounting principles generally accepted
in the United States (“GAAP”) have been condensed or omitted as allowed by such rules and regulations, and management believes
that the disclosures are adequate to make the information presented not misleading. These condensed financial statements include all of
the adjustments, which in the opinion of management are necessary to a fair presentation of financial position and results of operations.
All such adjustments are of a normal and recurring nature. Interim results are not necessarily indicative of results for a full year. Use of Estimates The preparation of condensed financial statements
in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of liabilities and disclosure
of contingent assets and liabilities at the date of the condensed financial statements. The most significant estimates relate to the calculation
of stock-based compensation, calculation of the Company’s derivative liability, useful lives and impairment of fixed assets, income
taxes and contingencies. The Company bases its estimates on historical experience, known or expected trends, and various other assumptions
that are believed to be reasonable given the quality of information available as of the date of these condensed financial statements.
The results of these assumptions provide the basis for making estimates about the carrying amounts of assets and liabilities that are
not readily apparent from other sources. Actual results could differ from these estimates. There have been no material changes to the
Company’s accounting estimates since the Company’s condensed financial statements for the fiscal year ended August 31, 2023. Segment Reporting The Company operates in one segment - the cryptocurrency
mining industry. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision
maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating
resources and assessing performance for the entire Company. All material Company operations qualify for aggregation due to their similar
customer base and similarities in economic characteristics, nature of products and services, and procurement, manufacturing and distribution
processes. Revenue Recognition On July 1, 2018, the Company adopted Accounting Standards
Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). Results for reporting periods
beginning after January 1, 2018, are presented under ASC 606. Revenues from digital currency mining The Company recognizes revenue under ASC 606, Revenue
from Contracts with Customers. The core principle of the revenue standard is that a company should recognize revenue to depict the transfer
of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in
exchange for those goods or services. The following five steps are applied to achieve that core principle:
· Step 1: Identify the contract with the customer;
· Step 2: Identify the performance obligations in the contract;
· Step 3: Determine the transaction price;
· Step 4: Allocate the transaction price to the performance obligations in the contract; and
· Step 5: Recognize revenue when the Company satisfies a performance obligation. Step 1: Step 2
· The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct); and
· The entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract). Based on these criteria, the Company has a single
performance obligation in providing hash calculation services (i.e., hashrate) to the mining pool operator (i.e., customer). The performance
obligation of hash calculation services is fulfilled daily over-time, as opposed to a point in time, because the Company provides the
hashrate throughout the day and the customer simultaneously obtains control of it and uses the asset to produce bitcoin. The Company has
full control of the mining equipment utilized in the mining pool and if the Company determines it will increase or decrease the processing
power of its machines and/or fleet (i.e., for repairs or when power costs are excessive) the hash calculation services provided to the
customer will be reduced. Step 3 The transaction consideration the Company earns is
all variable since it is dependent on the daily hash calculation services provided by the Company, as well as other factors outside the
control of the Company, such as the difficulty index of the bitcoin network. The Company’s bitcoins earned through the contractual
payout formula is not known until the Company’s computational hashrate contributed over the daily measurement period is fulfilled
over-time daily between midnight-to-midnight UTC time. The Company’s expected amount of the global network transaction fee rewards
earned are calculated at the end of each transactional day (midnight to midnight UTC time). There are no other forms of variable considerations,
such as discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, penalties, or other similar items. The Company fully constrains all variable consideration
as a result of ASC 606-10-32-11 and 12 because the amount of consideration is highly susceptible to factors outside of our control as
defined by the Company’s customer’s payout methodology. The variable consideration is constrained until the Company receives
confirmation of the amount, usually via settlement of the fractional share of block reward and transaction fee in the Company’s
digital wallet (i.e., at that point, the variability is resolved and there is no longer the reasonable possibility of significant reversal
of revenue). Before settlement occurs, estimation of the variable consideration to which the Company is entitled, which depends on inputs
unknowable to the Company, carries the risk of a significant revenue reversal from mis-estimation. Settlement of consideration typically
occurs within 24 hours after the end of each day. Step 4 Step 5 In exchange for providing hash calculation services,
the Company is entitled to the expected bitcoin awards earned over the measurement period, plus the expected global transaction fee rewards
for the respective measurement period, less net digital asset fees due to the mining pool operator over the measurement period. The transaction
consideration the Company receives is non-cash consideration, in the form of bitcoin. The Company measures the bitcoin at the closing
U.S. dollar spot rate at the end of the date earned (midnight UTC). However, this accounting convention does not result in materially
different revenue recognition from using the fair value of the bitcoin earned at contract inception and has been consistently applied
in all periods presented. There are no deferred revenues or other liability
obligations recorded by the Company since there are no payments in advance of the performance. At the end of the 24 hour “midnight-to-midnight”
period, there are no remaining performance obligations. During the six months ending February 29, 2024, the
Company utilized one mining pool for its self-mining operations, which charges 0.3% of the bitcoin payable to the Company as a pool management
fee. During the three and six months ending February 29,
2024, the Company generated $ 861,026 1,190,749 Revenues from Hosting The Company provides energized space to customers
who locate their equipment within the Company’s co-hosting facility. The equipment generating the hosting revenue is owned by the
customer. The Company gives hosting customers the option of having all mining proceeds paid into a cold wallet address in the Company’s
name, which case the Company pays the hosting client its share of mining awards on a daily basis, or having all mining awards sent to
an account of the customer, in which case the Company bills the customer monthly for any hosting fee that is contingent on the amount
of the client’s award. All performance obligations are achieved simultaneously by providing the hosting environment for the customers’
operations. Hosting revenues consist of amounts billed in U.S. dollars for electricity and other fees, and a percentage of cryptocurrency
generated by the client’s hosting activities. With regard to hosting revenues that are billed in U.S. dollars, revenues are recorded
at the time of invoicing. With regard to hosting revenues that are based on a percentage of cryptocurrency generated by the customer,
revenues are recorded based on the Company’s share of cryptocurrency received from the mining pool on the date of receipt or invoicing. During the three and six months ending February
29, 2024, the Company generated $ 10,116 21,980 Revenues from the sale of mining equipment The Company records revenue from the resale of
mining equipment it has purchased. Revenue for the sale of mining equipment is recognized under the guidelines of ASC 606. During
the three and six months ending February 29, 2024, the Company generated $ 20,471 190,192 Cash and cash equivalents The Company considers all highly liquid temporary
cash investments with an original maturity of three months or less to be cash equivalents. On February 29, 2024, and August 31, 2023,
respectively, the Company’s cash equivalents totaled $ 342,296 270,547 Cryptocurrency Cryptocurrencies held are accounted for as
intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for
impairment quarterly, when events or changes in circumstances occur indicating that it is more likely than not that the
indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the
quoted price of the cryptocurrency at the time its fair value is being measured. In testing for impairment, the Company has the
option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is
determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the
Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is
recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses, if the price of
cryptocurrency increases, is not permitted. During the three and six months ending February 29, 2024, the Company realized gains of
$ 76,591 76,591 Cryptocurrency earned by the Company through its mining
activities are included within operating activities on the accompanying consolidated statements of cash flows. The sales of digital currencies
are included within investing activities in the accompanying consolidated statements of cash flows and any realized gains or losses from
such sales are included in other income (expense) in the consolidated statements of operations and comprehensive income (loss). The Company
accounts for its gains or losses in accordance with the moving weighted average method of accounting. The Company holds its cryptocurrencies in an account
at Bitgo Trust (“Bitgo”), a well-known Bitcoin custodian, which it also uses to liquidate its Bitcoin when necessary. The
Company also has an account with Gemini Trust Company, LLC, which is a qualified custodian regulated by the New York Department of Financial
Services as a backup facility, and may hold Bitcoin from time to time in a cold storage wallet. The Company uses Bitgo’s multi-signature
feature for account access. Income taxes The Company accounts for income taxes under FASB ASC
740, “Accounting for Income Taxes” “Accounting for Uncertainty in Income Taxes” Stock-based Compensation The Company accounts for stock-based compensation
using the fair value method following the guidance outlined in Section 718-10 of the FASB Accounting Standards Codification for disclosure
about Stock-Based Compensation. This section requires a public entity to measure the cost of employee services received in exchange for
an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized
over the period during which an employee is required to provide service in exchange for the award- the requisite service period (usually
the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service. Net Loss per Share Net loss per common share is computed by dividing
net loss by the weighted average common shares outstanding during the period as defined by Financial Accounting Standards, ASC Topic 260,
“Earnings per Share.” Basic earnings per common share (“EPS”) calculations are determined by dividing net income
by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share calculations
are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. Stock Purchase Warrants The Company accounts for warrants issued to purchase
shares of its common stock as equity in accordance with FASB ASC 480, Accounting for Derivative Financial Instruments Indexed to, and
Potentially Settled in, a Company’s Own Stock, Distinguishing Liabilities from Equity. If the warrants do not require liability classification
under ASC 815-40, in order to conclude equity classification, we also assess whether the warrants are indexed to our common stock and
whether the warrants are classified as equity under ASC 815-40 or other GAAP. After all such assessments, we conclude whether the warrants
are classified as liability or equity. Liability classified warrants require fair value accounting at issuance and subsequent to initial
issuance with all changes in fair value after the issuance date recorded in the statements of operations. Equity classified warrants only
require fair value accounting at issuance with no changes recognized subsequent to the issuance date. We do not have any liability classified
warrants as of any period presented. Property and equipment Property and equipment are stated at cost and depreciated
using the straight-line method over the estimated useful lives of the assets. Estimated useful lives for leasehold improvements are typically
the lesser of the estimated useful life of the asset or the life of the term of the lease. The estimated useful lives for all other property
and equipment are as follows:
Schedule of useful lives of assets
Life (Years)
Miners and mining equipment 2
Machinery and equipment 5 7
Office and computer equipment 3 No depreciation is recorded on an asset until it is
placed in service. Due to the nature of the equipment, it can only be placed in service when the hosting site is properly configured to
turn on the machines. As of February 29, 2024, and August 31, 2023, the Company had $ 2,711,142 4,453,466 Recent Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02,
Leases (Topic 842) Codification Improvements Codification Improvements to Topic 842, Leases (Topic 842) Targeted Improvements, We adopted ASC 842 on July 16, 2020. The adoption
of this guidance did not have any impact on our condensed financial statements. In March 2022, the SEC staff released Staff
Accounting Bulletin No. 121 (“SAB 121”), which requires entities that hold crypto assets on behalf of platform users to
recognize a liability to reflect the entity’s obligation to safeguard the crypto assets held for its platform users, whether
directly or through an agent or another third party acting on its behalf, along with a corresponding safeguarding asset. Both the
liability and corresponding safeguarding asset shall be measured at fair value. SAB 121 also requires disclosure of the nature and
amount of crypto assets being safeguarded, how the fair value is determined, an entity’s accounting policy for safeguarding
liabilities and corresponding safeguarding assets, and may require disclosure of other information about risks and uncertainties
arising from the entity’s safeguarding activities. The Company is not in the business of holding its customer’s crypto
assets for safekeeping. For crypto assets that are not maintained on our platform and for which the Company does not maintain a
private key or the ability to recover a customer’s private key, these balances are not recorded, as there is no related
safeguarding obligation in accordance with SAB 121. This guidance is effective from the first interim period after June 15,
2022 and should be applied retrospectively. We adopted SAB 121 during the three months ended August 31, 2023, and it did not
have any impact on our condensed financial statements. |
