NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1. DESCRIPTION OF BUSINESS
Bitech
Technologies Corporation (formerly, Spine Injury Solutions Inc.) (the “Company”, “we” or “us”) was
incorporated under the laws of Delaware on March 4, 1998. In connection with the Company’s planned expansion of its business following
the completion of the acquisition of Bitech Mining Corporation, a Wyoming corporation (“Bitech Mining”), it filed a Certificate
of Amendment to its Certificate of Incorporation, as amended (the “Certificate of Amendment”) with the Secretary of State
of the State of Delaware on April 29, 2022 to change its corporate name to Bitech Technologies Corporation.
As
a development-stage company, we are a global technology solution enabler dedicated to providing a suite of green energy solutions with
industry focus on green data centers, commercial and residential utility, EV infrastructure, and other renewable energy initiatives.
Bitech has been developing and evaluating the commercial viability of its Evirontek™ Integrated Platform to resolve the exorbitantly
high cost of electricity in several industries. Bitech innovates energy technologies through research and development, planned acquisitions
of other green energy technologies and plans to become a grid-balancing operator using Battery Energy Storage System (BESS) solutions
and applying new green technologies in power plants to save electricity. While participating in the Clean Energy Economy, we seek business
partnerships with defensible technology innovators and renewable energy providers to facilitate investments, provide new market entries
toward emerging-growth regions and implement or manufacture these innovative, scalable energy system solutions with technological focuses
on smart grid, Building Energy Management System (BEMS), energy storage, and EV infrastructure.
The
Company acquired Bitech Mining on March 31, 2022 (the “Closing Date”) through a share exchange pursuant to a Share Exchange
Agreement (the “Share Exchange Agreement”) by and among the Company, Bitech Mining, each of Bitech Mining’s shareholders
(each, a “Seller” and collectively, the “Sellers”), and Benjamin Tran, solely in his capacity as Sellers’
Representative (“Sellers’ Representative”). The transaction contemplated by the Share Exchange Agreement is hereinafter
referred to as the “Share Exchange”). The Share Exchange Agreement provides that the Company will acquire from the Sellers,
an aggregate of 94,312,250 shares of Bitech Mining’s Common Stock, par value $0.001 per share, representing 100% of the issued
and outstanding shares of Bitech Mining (collectively, the “Bitech Mining Shares”). In consideration of the Bitech Mining
Shares, the Company issued to the Sellers an aggregate of 9,000,000 shares of the Company’s newly authorized Series A Convertible
Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”). Each Bitech Mining Share shall be entitled
to receive 0.09543 shares of Series A Preferred Stock. Each share of Series A Preferred Stock shall automatically convert into 53.975685
shares (an aggregate of approximately 485,781,300) of the Company’s Common Stock (the “Company Common Stock”) upon
filing of an amendment to its Certificate of Incorporation increasing the number of the Company’s authorized common stock so that
there are a sufficient number of shares of Company Common Stock authorized but unissued to permit a full conversion of all the Series
A Preferred Stock. Effective as of June 27, 2022, the Series A Preferred Stock automatically converted into 485,781,168 shares of Company
Common Stock following the June 27, 2022 filing of an amendment to its Certificate of Incorporation increasing the number of the Company’s
authorized common stock to 1,000,000,000 shares. Upon conversion of the Series A Preferred Stock, the Sellers held, in the aggregate,
approximately 96% of the issued and outstanding shares of Company capital stock on a fully diluted basis.
The
Share Exchange was treated as a recapitalization and reverse acquisition for financial reporting purposes, and Bitech Mining is considered
the acquirer for accounting purposes. As a result of the Share Exchange and the change in our business and operations, a discussion of
the past financial results of our predecessor, Spine Injury Solutions Inc., is not pertinent, and under applicable accounting principles,
the historical financial results of Bitech Mining, the accounting acquirer, prior to the Share Exchange are considered our historical
financial results.
Prior
to March 31, 2022, we were engaged in the business of owning, developing and leasing the Quad Video Halo video recording system (“QVH”)
used to record medical procedures including the collection of accounts receivables related to previously provided spine injury diagnostic
services (collectively, the “QVH Business”). On June 30, 2022, we sold the assets related to the QVH Business.
BITECH
TECHNOLOGIES CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
2. CRITICAL ACCOUNTING POLICIES
The
following are summarized accounting policies considered to be critical by our management:
Going Concern
Since our inception,
our expenses substantially exceeded our revenue, resulting in continuing losses and an accumulated deficit of $1,096,594 as of December
31, 2022. Presently, we are trying to limit all operating expenses as much as possible. If in the future we decide to increase our service
development, marketing efforts and/or brand building activities, we will need to increase our operating expenses and our general and administrative
functions to support such growth in operations. No such growth in operations is presently planned. We are also actively seeking a private
company with which to enter into a strategic business transaction, including without limitation a merger; however, we cannot predict the
ultimate outcome of our efforts. Our continued existence is dependent upon our ability to successfully merge with a financially viable
company, or our ability to obtain additional capital from borrowing and/or selling securities, as needed, to fund our operations. There
is no assurance that additional capital can be obtained or that it can be obtained on terms that are favorable to us and our existing
stockholders. Any expectation of future profitability is likely dependent upon our ability to successfully merge with another company,
of which there can be no assurances.
We were not
involved in any procedures in 2022 and have no plans to do so in the future. The previous service revenues earned has resulted in longer
settlement times, which has created a slowdown in cash collections.
Basis
of Consolidation
The accompanying consolidated financial statements
include the accounts of Bitech Technologies Corporation. and its wholly owned subsidiary, Quad Video Halo, Inc. All material intercompany
transactions have been eliminated upon consolidation.
Revenue
recognition
The
Company adopted Accounting Standards Codification (“ASC”) 606. ASC 606, Revenue from Contracts with Customers, establishes
principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s
contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer
of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange
for those goods or services recognized as performance obligations are satisfied.
The
Company has assessed the impact of the guidance by performing the following five steps analysis:
Step
1: Identify the contract
Step
2: Identify the performance obligations
Step
3: Determine the transaction price
Step
4: Allocate the transaction price
Step
5: Recognize revenue
Substantially
all of the Company’s revenue is derived from leasing equipment. The Company considers a signed lease agreement to be a contract
with a customer. Contracts with customers are considered to be short-term when the time between signed agreements and satisfaction of
the performance obligations is equal to or less than one year, and virtually all of the Company’s contracts are short-term. The
Company recognizes revenue when services are provided to customers in an amount that reflects the consideration to which the Company
expects to be entitled in exchange for those services. The Company typically satisfies its performance obligations in contracts with
customers upon delivery of the services. The Company does not have any contract assets since the Company has an unconditional right to
consideration when the Company has satisfied its performance obligation and payment from customers is not contingent on a future event.
Generally, payment is due from customers immediately at the invoice date, and the contracts do not have significant financing components
nor variable consideration. There are no returns and there is no allowances. All of the Company’s contracts have a single performance
obligation satisfied at a point in time and the transaction price is stated in the contract, usually as a price per unit. All estimates
are based on the Company’s historical experience, complete satisfaction of the performance obligation, and the Company’s
best judgment at the time the estimate is made.
BITECH
TECHNOLOGIES CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Fair
Value of Financial Instruments
Cash,
accounts receivable, accounts payable, accrued liabilities and notes payable as reflected in the consolidated financial statements, approximates
fair value. Fair value estimates are made at a specific point in time, based on relevant market information and information about the
financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore
cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Cash
and Cash Equivalents
Cash
and cash equivalents consist of liquid investments with original maturities of three months or less. Cash equivalents are stated at cost,
which approximates fair value. We maintain cash and cash equivalents in banks which at times may exceed federally insured limits. We
have not experienced any losses on these deposits.
Property
and Equipment
Property
and equipment are carried at cost. When retired or otherwise disposed of, the related carrying cost and accumulated depreciation are
removed from the respective accounts, and the net difference, less any amount realized from the disposition, is recorded in operations.
Maintenance and repairs are charged to operating expenses as incurred. Costs of significant improvements and renewals are capitalized.
Property
and equipment consist of computers and equipment and are depreciated over their estimated useful lives of three years, using the straight-line
method.
Long-Lived
Assets
We
periodically review and evaluate long-lived assets when events and circumstances indicate that the carrying amount of these assets may
not be recoverable. In performing our review for recoverability, we estimate the future cash flows expected to result from the use of
such assets and its eventual disposition. If the sum of the expected undiscounted future operating cash flows is less than the carrying
amount of the related assets, an impairment loss is recognized in the consolidated statements of operations. Measurement of the impairment
loss is based on the excess of the carrying amount of such assets over the fair value calculated using discounted expected future cash
flows.
Concentrations
of Credit Risk
Assets
that expose us to credit risk consist primarily of cash and accounts receivable. Our accounts receivable arise from a diversified customer
base and, therefore, we believe the concentration of credit risk is minimal. We evaluate the creditworthiness of customers before any
services are provided. We record a discount based on the nature of our business, collection trends, and an assessment of our ability
to fully realize amounts billed for services. We have no accounts receivable to warrant any allowance at December 31, 2022 or December
31, 2021.
BITECH
TECHNOLOGIES CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Stock
Based Compensation
We
account for the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors,
including employee stock options, based on estimated fair values. Under authoritative guidance issued by the Financial Accounting Standards
Board (“FASB”), companies are required to estimate the fair value or calculated value of share-based payment awards on the
date of grant using an option-pricing model. The value of awards that are ultimately expected to vest is recognized as expense over the
requisite service periods in our consolidated statements of operations. We use the Black-Scholes Option Pricing Model to determine the
fair-value of stock-based awards. During the years ended December 31, 2022 and 2021, we did not recognize any compensation expense during
those periods.
Income
Taxes
We
account for income taxes in accordance with the liability method. Under the liability method, deferred assets and liabilities are recognized
based upon anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and
liabilities and their respective tax basis. We establish a valuation allowance to the extent that it is more likely than not that deferred
tax assets will not be utilized against future taxable income.
Uncertain
Tax Positions
Accounting
Standards Codification “ASC” Topic 740-10-25 defines the minimum threshold a tax position is required to meet before being
recognized in the financial statements as “more likely than not” (i.e., a likelihood of occurrence greater than fifty percent).
Under ASC Topic 740-10-25, the recognition threshold is met when an entity concludes that a tax position, based solely on its technical
merits, is more likely than not to be sustained upon examination by the relevant taxing authority. Those tax positions failing to qualify
for initial recognition are recognized in the first interim period in which they meet the more likely than not standard or are resolved
through negotiation or litigation with the taxing authority, or upon expiration of the statute of limitations. De-recognition of a tax
position that was previously recognized occurs when an entity subsequently determines that a tax position no longer meets the more likely
than not threshold of being sustained.
We
are subject to ongoing tax exposures, examinations and assessments in various jurisdictions. Accordingly, we may incur additional tax
expense based upon the outcomes of such matters. When applicable, we will adjust tax expense to reflect our ongoing assessments of such
matters which require judgment and can materially increase or decrease our effective rate as well as impact operating results.
Under
ASC Topic 740-10-25, only the portion of the liability that is expected to be paid within one year is classified as a current liability.
As a result, liabilities expected to be resolved without the payment of cash (e.g. resolution due to the expiration of the statute of
limitations) or are not expected to be paid within one year are not classified as current. Estimated interest and penalties are recognized
as income tax expense and tax credits as a reduction in income tax expense. For the year ended December 31, 2022, we recognized no estimated
interest or penalties as income tax expense.
Legal
Costs and Contingencies
In
the normal course of business, we incur costs to hire and retain external legal counsel to advise us on regulatory, litigation and other
matters. We expense these costs as the related services are received.
If
a loss is considered probable and the amount can be reasonably estimated, we recognize an expense for the estimated loss. If we have
the potential to recover a portion of the estimated loss from a third party, we make a separate assessment of recoverability and reduce
the estimated loss if recovery is also deemed probable.
BITECH
TECHNOLOGIES CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Net
Loss per Share
Basic
and diluted net loss per common share is presented in accordance with ASC Topic 260, “Earnings per Share,” for all periods
presented. During the years ended December 31, 2022 and 2021, common stock equivalents from outstanding stock options and warrants have
been excluded from the calculation of the diluted loss per share in the consolidated statements of operations, because all such securities
were anti-dilutive. The net loss per share is calculated by dividing the net loss by the weighted average number of shares outstanding
during the periods.
Recent
Accounting Pronouncements Not Yet Adopted
In
June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on
Financial Instruments. ASU No. 2016-13 eliminates the probable initial recognition threshold in current generally accepted accounting
principles (“GAAP”) and, instead, requires the measurement of all expected credit losses for financial assets held at the
reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. In addition, ASU No. 2016-13
amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.
In November 2019, the FASB issued ASU No. 2019-10 to amend the effective date for entities that had not yet adopted ASU No. 2016-13.
Accordingly, the provisions of ASU No. 2016-13 are effective for annual periods beginning after December 15, 2022, with early application
permitted in annual periods beginning after December 15, 2018. The amendments of ASU No. 2016-13 should be applied through a cumulative-effect
adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. Management is currently
evaluating the future impact of ASU No. 2016-13 on the Company’s consolidated financial position, results of operations and disclosures.
NOTE
3. STOCKHOLDERS’ EQUITY
The
total number of authorized shares of our common stock, par value $0.001
per share, was 250,000,000 shares and
increased on June 27, 2022 to 1,000,000,000
shares. On June 27, 2022 the 9,000,000
shares of Series A Convertible Preferred Stock issued as of March 31, 2022 automatically converted to 485,781,168
shares of common stock. As of December 31, 2022, there were 515,505,770
common shares issued and outstanding including the 7,983,720 of Restricted Stock Awards granted in April 2022 but not yet issued until vested.
On
January 19, 2021, our stockholders approved the filing of an amendment to our certificate of incorporation authorizing 10,000,000 shares
of preferred stock with a par value of $0.001 per share. Such amendment was filed on January 20, 2021.
BITECH
TECHNOLOGIES CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On
March 30, 2022, the Secretary of State of Delaware acknowledged the Company’s filing of a Certificate of Designations of Preferences
and Rights of Series A Convertible Preferred Stock (the “Certificate of Designations”) with the Delaware Secretary of State
creating a series of 9,000,000 shares of Series A Preferred Stock (the “Series A Preferred Stock”) to be issued in connection
with the Share Exchange. The Certificate of Designations include:
|
● |
the
stated value of each share is $1.00 (the “Stated Value”), |
|
|
|
|
● |
each
share has 53.9757 votes per share on any matter, event or action submitted to the holders of our common stock for a vote or on which
the holders of our common stock have a right to vote, |
|
|
|
|
● |
each
share is automatically convertible into shares of our common stock determined by dividing (i) the Stated Value by (ii) the Conversion
Price then in effect. Initially, the “Conversion Price” is $0.018526887 per share, subject to adjustment as described
below on the first business day immediately following the earlier of (a) the date on which the Secretary of State of Delaware shall
have filed the Certificate of Designations; and (b) the date on which FINRA has affected a reverse stock split of the Company’s
outstanding common stock, after all required approvals by the Company’s board of directors and its stockholders, in either
(a) or (b), so that there are a sufficient number of shares of the Company’s Common Stock authorized but unissued to permit
a full conversion of all the Series A Preferred Stock based upon the Conversion Price, |
|
|
|
|
● |
the
conversion price of the Series A Preferred Stock is subject to proportional adjustment in the event of stock splits, stock dividends
and similar corporate events, and |
|
|
|
|
● |
upon
any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (a “Liquidation”), each holder
of the Series A Preferred Stock shall be entitled to receive out of the assets, whether capital or surplus, of the Company an amount
equal to the Stated Value, plus any other fees or liquidated damages then due and owing thereon under the Certificate of Designations,
for each share of Series A Preferred Stock before any distribution or payment shall be made to the holders of any junior securities
(as hereinafter defined), and if the assets of the Company shall be insufficient to pay in full such amounts, then the entire assets
to be distributed to each holder of the Series A Preferred Stock shall be ratably distributed among each such holder in accordance
with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full. |
On
March 31, 2022, we issued 9,000,000 shares of Series A Preferred Stock in exchange for 94,312,250 shares of Bitech Mining’s Common
Stock, par value $0.001 per share, representing 100% of the issued and outstanding shares of Bitech Mining.
On
April 19, 2022, the Company issued 4,635,720 shares of its restricted Common Stock to an individual as compensation for future services
at a fair value price on the date of issuance of $0.10 per share. The shares vest 25% on each April 18 commencing on April 18, 2023 so
long as the individual is providing services to the Company or one of its subsidiaries.
On
April 14, 2022, the Company issued 3,348,000
shares of its restricted Common Stock to an individual as compensation for future services at a fair value price on the date of
issuance of $0.10
per share. 1,802,769 shares vest on April 13, 2023 and 515,077
shares vest on April 13, 2024, April 13, 2025, and April 13, 2026 so long as the individual is providing services to the Company or
one of its subsidiaries.
Effective
as of July 8, 2022, the Financial Industry Regulatory Authority, Inc. (“FINRA”) confirmed that it had received the necessary
documentation to process the Company’s request to change its name and trading symbol previously disclosed in its Form 8-K filed
with the Securities and Exchange Commission on May 2, 2022. The Company’s ticker symbol on the OTCQB tier of the OTC Markets Group.
Inc. was changed to “BTTC” on July 8, 2022.
During
August 2022 and October 2022, the Company sold a total of 1,500,000
shares of its unregistered common stock to four accredited investors for $0.10
per share for total gross proceeds of $150,000.
BITECH
TECHNOLOGIES CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
4. ACQUISITION OF BITECH MINING
On
March 31, 2022, the Company acquired 94,312,250 shares of Bitech Mining’s Common Stock in exchange for 9,000,000 shares of its
Series A Preferred Stock representing 100% of the issued and outstanding shares of Bitech Mining.
The
Share Exchange was treated as a recapitalization and reverse acquisition for financial reporting purposes, and Bitech Mining is considered
the acquirer for accounting purposes. As a result of the Share Exchange and the change in our business and operations, a discussion of
the past financial results of our predecessor, Spine Injury Solutions Inc., is not pertinent, and under applicable accounting principles,
the historical financial results of Bitech Mining, the accounting acquirer, prior to the Share Exchange are considered our historical
financial results.
The
Combination of the Company and Bitech Mining is considered a business acquisition and the method used to present the transaction is the
acquisition method. The acquisition method is a method of accounting for a merger of two businesses. The tangible assets and liabilities
and operations of the acquired business were combined at their market value of the acquisition date, which is the date when the acquirer
gains control over the acquired company.
The
following table summarizes the consideration paid for Bitech Mining and the fair value amounts of assets acquired and liabilities assumed
recognized at the acquisition date:
SCHEDULE OF FAIR VALUE OF ASSETS AND LIABILITIES
| |
| | |
Purchase price | |
$ | 1,113,679 | |
| |
| | |
Cash | |
$ | 1,150,163 | |
Total assets: | |
$ | 1,185,163 | |
Less: liabilities assumed | |
$ | (71,484 | ) |
Net assets acquired | |
$ | 1,113,679 | |
Purchase price in excess of net assets acquired | |
$ | 0 | |
NOTE
5. RELATED PARTY TRANSACTIONS
Up
until March 31, 2022, the Company maintained its executive offices at 5151 Mitchelldale A2, Houston, Texas 77092. This office space encompassed
approximately 200 square feet and was provided to us at the rental rate of $1,000 per month under a month-to-month agreement with Northshore
Orthopedics, Assoc. (“NSO”), a company owned by William Donovan, M.D., our former director and Chief Executive Officer. The
rent included the use of the telephone system, computer server, and copy machines. We discontinued paying rent in December 2021 due to
a lack of funds, and until March 31, 2022 when this lease was cancelled NSO provided the Company this office space rent free.
NOTE 6. SUBSEQUENT EVENTS
Effective February 20, 2023, the Company and its wholly owned subsidiary Bitech Mining Corporation entered into a Confidential
Settlement, Mutual Release, and Share Transfer Agreement (the “C. Cao Settlement Agreement”) with Calvin Cao (“C. Cao”)
and SuperGreen Energy Corporation (“SuperGreen,” together with C. Cao, the “C. Cao Parties”). The C. Cao Settlement
Agreement settles as to the C. Cao Parties, the Company’s lawsuit as disclosed in its Current Report on Form 8-K filed with the
U.S. Securities and Exchange Commission on February 3, 2023 (the “Cao Lawsuit”). Pursuant to the C. Cao Settlement Agreement,
the C. Cao Parties terminated the Patent & Technology Exclusive and Non-Exclusive License Agreement between Bitech Mining Corporation
and SuperGreen dated January 15, 2021 as amended on January 15, 2021 and on March 26, 2022 (the “License Agreement”) and SuperGreen
canceled 51,507,749 shares of the Company’s common stock, par value $0.001 per share issued by the Company to SuperGreen pursuant
to the License Agreement. In addition, the parties to the Settlement Agreement agreed to a mutual general release of liabilities against
each other, refrain from making any disparaging remarks about each other and the Company’s filing a dismissal with prejudice of
the Cao Lawsuit as to the C. Cao Parties. The Settlement Agreement also contains additional covenants, representations and warranties
that are customary of litigation settlement agreements. The Company intends to continue to pursue the Cao Lawsuit as to the remaining
defendants in that case, namely Michael Cao, B&B Investment Holding, LLC and Linh Dao.