NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED NOVEMBER 30, 2021
(UNAUDITED)
Note 1 – Organization and Basis of Presentation
Organization and Basis of Presentation
Gabbit
Corp. (the “Company”) is a corporation incorporated under the laws of the State of Nevada on August 16, 2015.
The Company plans to develop
operations as a Bitcoin “miner”, which is a company that allocates computational resources to support and secure the Bitcoin
blockchain, and in doing so earn Bitcoin.
The accompanying
financial statements are prepared on the basis of accounting principles generally accepted in the United States of America (“GAAP”)
and have been prepared assuming the continuation of the Company as a going concern. The Company has not yet established an ongoing source
of revenues sufficient to cover its operating costs and is dependent on debt and equity financing to fund its operations. Management of
the Company is making efforts to raise additional funding until a registration statement relating to an equity funding facility is in
effect. While management of the Company believes that it will be successful in its capital formation and planned operating activities,
there can be no assurance that the Company will be able to raise additional equity capital or be successful in the development and commercialization
of the products it develops or initiates collaboration agreements thereon. The accompanying financial statements do not include any adjustments
to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities
that may result from the possible inability of the Company to continue as a going concern.
Note 2 – Summary of significant accounting policies
Cash and Cash Equivalents
The Company doesn’t maintain any bank accounts
and does not have any cash in hand. For day-to-day business activities, the Company depends upon the directors’ personal accounts.
For purposes of reporting within the statements
of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly
liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.
Use of Estimates
The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Loss per Common Share
Net loss per common share is computed by dividing
net loss by the weighted average number of common shares outstanding for the period. As a result, diluted loss per common share is the
same as basic loss per common share for the three and nine months ended November 30, 2021 and 2020.
Income Taxes
The Company accounts for income taxes pursuant
to FASB ASC Topic 740, Income Taxes. Under FASB ASC Topic 740, deferred tax assets and liabilities are determined based on
temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred
tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating
the differences.
The Company maintains a valuation allowance with
respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred
tax asset and taking into consideration the Company’s financial position and results of operations for the current period. Future
realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carry-forward period under the
Federal tax laws.
Changes in circumstances, such as the Company
generating taxable income, could cause a change in judgment about the reliability of the related deferred tax asset. Any change in the
valuation allowance will be included in income in the year of the change in estimate.
Recent Accounting Pronouncements
The Company reviewed all the recently issued,
but not yet effective, accounting pronouncements and we do not believe any of these pronouncements will have a material impact on the
Company.
Note 3 – Going Concern
For the nine months ended November 30, 2021 and
2020 we incurred net losses of approximately $14,272 and $1,650 respectively. As of November 30, 2021, we had no cash on hand and current
liabilities of $26,477. As of February 28, 2021, we had no cash on hand and current liabilities of $12,205. These losses combined with
our current liabilities cast significant doubt on the company’s ability to operate under the going concern. The Company filed a
Registration Statement; Form-10 which became effective on September 22, 2021. Management believes that this plan provides an opportunity
for the Company to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable
operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal
business operations when they come due. Management intends to finance operating costs over the next twelve months with loans from directors
and/or private placement of common stock. The failure to achieve the necessary levels of profitability or obtaining additional funding
would be detrimental to the Company.
Note 4 – Related party transactions
The Company’s Co-CEO has provided office
space at no cost to the Company. Our Co-CEO and CFO incurred expenses on behalf of the Company amounting to $14,272 and $1,650 during
the nine months ending November 30, 2021 and 2020 respectively. As of November 30, 2021 and February 28, 2021, total amounts due to our
Co-CEO and CFO are $21,738 and $7,466 respectively. Such amounts do not bear any interest and due upon demand.
Note 5 – Shareholders’ Equity
The Company
has 75,000,000 shares of common stock authorized with a par value of $0.001 per share. As of November 30, 2021 and February 28,
2021, the Company had 11,490,000 shares issued and outstanding.
Note 6 – Income Taxes
The Company accounts for income taxes under FASB
ASC Topic 740, which requires use of the liability method. FASB ASC Topic 740 provides that deferred tax assets and liabilities are recorded
based on the differences the tax basis of assets and liabilities and their carrying amounts for financial reporting purposes, referred
to as temporary differences.
As of November 30, 2021, the Company incurred
a net operating loss and, accordingly, no provision for income taxes has been recorded. In addition, no benefit for income taxes has been
recorded due to the uncertainty of the realization of any tax assets. The Company has approximately $60,000 and $46,000 of federal net
operating loss carry forwards at November 30, 2021 and February 28, 2021, respectively. In addition, the Company had gross deferred tax
assets of approximately $13,000 and $10,000 as of November 30, 2021 and February 28, 2021 for which a full valuation allowance has provided.
Based on the available objective evidence, including
the Company's history of losses, management believes it is more likely than not, the net deferred tax assets will not be fully realizable.
Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets at November 30, 2021 and February
28, 2021. The Company had no uncertain tax positions as of November 30, 2021 and February 28, 2021.
Note 7 – Other Liabilities
As of November 30, 2021 and February 28 2021,
the Company has Other Liabilities of $4,739 payable to its former CEO.
Note 8 – Acquisition
In connection with a change in our business plan from providing cash
advances to small and medium sized entities (“SME”) to developing operations as a participant in the cryptocurrency ecosystem,
specifically as a company that supports and secures the Bitcoin blockchain as a Bitcoin miner, we have on October 21, 2021 entered into
a definitive letter of intent which gives us the right to acquire 2 properties, one of which is currently operating as a data center and
the other requires buildout to begin data center operations.
The properties are located in North Carolina and Tennessee, respectively.
The North Carolina facility is 165,000 sq.ft on 21 acres and the Tennessee facility is 30,000 sq. ft. on 14.5 acres.
Our decision to exercise our option to acquire the facilities will
be based on our completion of due diligence of the properties, finalizing terms of the agreement, receiving the necessary waivers and
consents from lenders, and our ability to raise a minimum of $10 million, at a valuation at or excess of $60 million.
The acquisition price of the properties is 30% of our equity, on a
fully diluted basis, the restructuring and or retirement of $21.5 million in debt. The transaction is to be structured under Section 721
of the IRS tax code. The Sellers will be entitled two seats of five seats on our board of directors and members of the datacenter’s
ownership team will join our company as c-suite employees.