NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States if America of ("U.S. GAAP") as found in the Accounting Standards Codification ("ASC”), and the Accounting Standards Update ("ASU") of the Financial Accounting Standards Board ("FASB") and are expressed in US Dollars. The interim consolidated financial statements should be read in conjunction with the notes contained herein as part of the Company's quarterly filing in its Form 10-Q filing under the Securities Exchange Commission (SEC).

Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented.

Reclassification

Certain reclassifications have been made to prior periods to conform with the current reporting period. These reclassifications did not affect net income, total assets, liabilities or equity reported.

Accounts receivable

Accounts receivable balances are for Hosting Revenue and are reported at their net realizable value. Management individually reviews all delinquent accounts receivable balances based on an assessment of current creditworthiness, estimates the portion of potentially uncollectible balances and would indirectly write off these balances. Management considers a number of factors, including the age of the receivables, which is often less than 90 days, current economic conditions and the financial condition of customers. The policy for determining past due status is based on the contractual payment terms of each customer. Once collection efforts by the Company are exhausted, the determination for directly writing off uncollectible receivables is made.

               In the quarter ended March 31, 2025, the Company assumed the operations of its Orofino co-location facility and had not yet implemented co-location agreements. The official co-location agreements will require customers to pay one month in advance for upcoming estimated power consumption. Co-location customers are permitted 7-10 business days to remit the next month’s usage payment in advance, making the maximum exposure for unpaid balances to be 7-10 days of co-location use. Management periodically assesses the Company’s accounts receivable and, if necessary, establishes an allowance for estimated non-collectible amounts. Any required allowance is based on specific analysis of past due accounts, if determined to be non-collectible, the accounts are directly written off as bad debt expense. There was no allowance for doubtful accounts on March 31, 2025, neither was there a direct write down of accounts receivable during the quarter ended March 31, 2025. There were no accounts receivable or sale for the year ended June 30, 2024; therefore, no allowance was applicable.

Principles of Consolidation

As of March 31, 2025, the accounts include those of the Company and its 100% owned subsidiaries, Merger Sub, Raptor, Sabretooth, Deinodon, and Megalodon. All intercompany transactions and balances have been eliminated.

Business segments

The Company uses the “management approach” to identify its reportable segments. This approach is based on the internal organizational structure used by management for making operational decisions and assessing the performance of the business. Under this approach, the Company has determined that it operates through five reportable segments. Costs specifically identifiable to each segment are allocated to that segment; all other costs are allocated to the Holding segment.

The Holding segment, represented by T-REX Acquisition Corp., seeks business opportunities to sustain and expand operations. This segment serves as the primary source of financing for the Company, and all major corporate expenses are processed through it. The Mining segment (Raptor) includes the Company’s proprietary bitcoin mining operations and holds the mining-related assets and generates revenue through the receipt of Bitcoin rewards earned from mining activities. The Hosting segment (Megalodon) generates revenue by providing third-party hosting services at the Company’s Orofino facility. This segment holds the assets related to the facility and incurs all associated operational expenses. The Software Services segment (Deinodon) consists of the entity that focuses on operations and services that can be achieved with our state-of-the-art proprietary software platform for this industry. The Company plans to utilize this platform to support future business initiatives. The fifth segment Sabretooth, is focused on the design and fabrication of modular containers outfitted with electrical and racking infrastructure to support off-site cryptocurrency mining operations. This segment has not yet commenced operations.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

The most significant estimates made by management in the preparation of the financial statements relate to the estimates used to calculate the fair value of certain liabilities, the derivative liability, present value of note payable and any impairment and the net book value of long-lived assets. Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from such estimates under different assumptions and conditions.

Cash and Cash Equivalents

Cash and cash equivalents include short-term, highly liquid investments, such as cash on account with commercial banks, certificates of deposit or money market funds that are readily convertible to known amounts of cash and have original maturities of three months or less. All cash balances are held by major banking institutions.

Prepaid Expenses

Prepaid Expenses are primarily governed by ASC 340-10-25 (Other Assets and Deferred Costs- Recognition.) In accordance with this standard, payments made by the Company in cash or other forms of consideration for goods or services not yet received are classified as prepaid expenses. The Company issued shares to directors and consultants as compensation for services to be performed over a defined period. The portion of this share-based compensation allocated to the future services is recorded as “Pre-paid Consulting” on the balance sheet. These transactions are valued using the service amount specified in the service provider’s invoice or contract or at the Company’s stock price on the grant date, whichever is the better estimate for the value of service.

Allowance for Credit Losses

The Company estimates its allowance for credit losses using the Current Expected Credit Loss (CECL) model under ASC 326. The CECL model requires recognition of expected credit losses over the contractual life of financial assets held at the reporting date, considering historical experience, current conditions, and reasonable and supportable forecasts.

Financial assets subject to CECL include trade receivables. The Company groups financial assets based on shared risk characteristics and evaluates them collectively. The allowance is measured using a combination of historical loss rates, adjusted for current economic trends and forward-looking factors such as industry outlook and macroeconomic indicators (e.g., unemployment rate, GDP).

Under CECL, the carrying amount of a financial asset (net of the allowance for credit losses) represents the amount the Company expects to collect. This means that when the CECL estimate is appropriately recorded, the net reported balance of financial assets reflects management’s best estimate of collectible cash flows, based on available and supportable information.

Management reviews the adequacy of the allowance at each reporting period and updates estimates as appropriate. Changes in estimates are recorded in the income statement as a component of credit loss expense. The Company has considered the recent guidance and does not have receivables that would require this level of analysis in determining the net realizable balance of accounts receivable.

Fair value of financial instruments

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S.) GAAP and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

The Carrying amount of the Company’s financial assets and liabilities, such as cash and accrued expenses, approximate their fair value because of the short maturity of those instruments. The Company’s notes payable approximates the fair value of such instruments based upon their present value determined from interest rates for debt obligations on March 31, 2025.

Assets and liabilities reported on the balance sheet approximate their fair value.

Derivative Financial Instruments

The Company evaluates its convertible notes to determine if such instruments have derivatives or contain features (such as conversion features) that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a weighted-average Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. The Company had convertible notes with derivative liabilities of $83,921 and $0, on March 31, 2025, and June 30, 2024, respectively, principally due to its stock price and volatility.

Digital currencies - Bitcoin

The Company applies accounting for digital assets in accordance with the AICPA Practice Aid "Accounting for and Auditing of Digital Assets", the guide is dated as of June 30, 2022, and the SEC issued Staff Accounting Bulletin No. 121, which is effective for periods after June 15, 2022, which are the current nonauthoritative guidance for accounting for digital assets under U.S. generally accepted accounting principles (GAAP). The AICPA Practice Aid is non-authoritative guidance that represents the views of the Digital Assets Working Group and AICPA staff. There is currently no official pronouncement or authoritative guidance on accounting for digital assets and digital asset transactions. The Company held approximately $1,000 in digital assets as of March 31, 2025, and held no digital assets at June 30, 2024. Under ASU No. 2023-08, effective December 15, 2024, with early adoption permitted, companies are required to mark bitcoin and similar digital assets to market at each period and eliminate the need for impairment testing. This guidance ensures that bitcoin holdings are recorded at fair market value, reflecting any unrealized gains or losses at the end of each period. The Company adopted this new accounting standard early, as of the quarter ending June 30, 2024, to enhance the transparency and accuracy of its financial reporting. The reward for a bitcoin miner changes roughly every four years, or after every 210,000 blocks are mined and gets reduced by half each time; this whole process is called bitcoin halving. The last halving occurred on April 20, 2024, and reduced the reward per block to 3.125 BTC.

Plant and equipment - Crypto-currency machines

The rate at which the Company generates digital assets and, therefore, consumes the economic benefits of its transaction verification servers are influenced by a number of factors, including the following:

The Company operates in an emerging industry for which limited data is available to make estimates on the useful economic lives of specialized mining equipment. The equipment could become obsolete within less time than other equipment due to it being specialized, new technology still being developed and improved. Plant and equipment, which includes mining equipment, are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Prior to the fiscal year June 30, 2023, management determined the expected useful life of mining machines as 7 years. During the fiscal year ended June 30, 2024, management reassessed that the mining machines’ useful life to 1-year rather than 7 years, consistent with industry research and publications on bitcoin machines at the time of assessment. The change in the estimated useful life was accounted for prospectively by updating the accumulated depreciation and incurring the related depreciation expense in the fiscal year ended June 30, 2024. Management’s assessment takes into consideration the availability of historical data and management's expectations regarding the direction of the industry, including potential changes in technology. Management will review this estimate annually and will revise such estimates as and when data becomes available.

In March 2025, Megalodon consummated the purchase of a co-location data center located in Orofino, Idaho, pursuant to a previously executed letter of intent. The closing purchase consideration paid at closing was approximately $500,000. Prior to the closing, the Company commenced operations at the facility in October 2024 to incentivize the seller to maintain the terms of the letter of intent. Costs incurred during this pre-acquisition operating period totaled approximately $93,173, which were capitalized and allocated to the respective components of the acquired property, plant and equipment, in accordance with applicable accounting guidance.

Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value may not be realizable. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset are compared to the asset's carrying value to determine if an adjustment for impairment is necessary. The effect of any impairment would be to expense the difference between the fair value of such asset and its carrying value.

Revenue recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. The core principle of the new 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 Company applies the following five-step model to all revenue streams within the scope of ASC 606:

The Company derives revenue from two primary sources: (i) cryptocurrency mining activities and (ii) co-location hosting services.

Cryptocurrency Mining Revenue

The Company earns revenue by successfully validating transactions and adding blocks to the Bitcoin blockchain network. In return, the Company receives consideration in the form of cryptocurrency (i.e., newly minted Bitcoin and transaction fees). Although these rewards do not arise from a contract with a customer, the Company applies the guidance in ASC 606 by analogy, as permitted by ASC 610-20, and in accordance with PCAOB Staff Guidance on nontraditional revenue sources.

Revenue is recognized at a point in time, specifically upon confirmation of a mined block and receipt of the reward in the Company’s cryptocurrency wallet. The amount of revenue recognized is based on the fair value of the cryptocurrency received, measured using quoted market prices at the time control is obtained. Such inputs are classified as Level 1 within the fair value hierarchy under ASC Topic 820, Fair Value Measurement.

Co-location Hosting Revenue

The Company provides co-location hosting services to third-party customers, primarily digital asset mining businesses, through the provision of physical space and supporting infrastructure within its mining facility. These services generally include the allocation of rack space for customer-owned mining equipment, delivery of electrical power, internet connectivity, facility cooling, physical security, and basic operational support such as equipment monitoring and maintenance. The Company’s facilities are designed to support the high power and uptime requirements typical of cryptocurrency mining operations.

Revenue from these services is recognized over time, as the performance obligation (continuous hosting access) is satisfied. Customers typically prepay a fixed estimated fee at the beginning of each month for that month’s services; charge adjustments and credits are applied at the end of each month based on actual charges. The estimated fixed fee is determined based on the manufacturer’s stated power usage for each type of machine.

The Company applies the ASC 606 model as follows:

Software Development and Licensing Revenue

               Through Deinodon, its subsidiary, the Company expects to generate revenue from the development and licensing of proprietary software used for the remote monitoring and management of physical operations, including real-time temperature tracking of hardware components, operational performance analytics, and predictive maintenance alerts.

Modular Infrastructure Sales

               Through Sabretooth, its subsidiary, the Company expects to generate revenue through the design, fabrication, and sale of modular containers equipped with electrical and racking infrastructure to support off-site cryptocurrency mining operations.

Transaction Price Considerations

The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both.

When determining the transaction price, the Company considers the following elements as required by ASC 606-10-32:

Disaggregated Revenue Disclosure

The Company’s customers or sources of revenue generation were only in the United States during the period ended March 31, 2025. Below is a table of revenue by type:

Stock based compensation.

The Company accounts for stock-based compensation in accordance with ASC Section 718 Compensation – Stock Compensation. Under the fair value recognition provisions of ASC 718 stock-based compensation is measured at the grant date based on the fair value of the award and is recognized as expensed ratably over the requisite service period/vesting period.

The Company accounts for its non-employee stock-based compensation in accordance with Update 2018-07—Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.

Commitments and contingencies

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. Through the fiscal period ended June 30, 2024, the quarter ended March 31, 2025, and through the date of filing, there have been no intervening lawsuits, claims or judgments filed. Please refer to Note 12. Commitments and Contingencies

Related Party Disclosures

Under ASC 850 “Related Party Transactions” an entity or person is considered to be a “related party” if it has control, significant influence or is a key member of management personnel. A transaction is considered to be a related party transaction when there is a transfer of resources of obligations between related parties. The Company, in accordance with the standard ASC 850, presents disclosures about related party transactions and outstanding balances with related parties, see Note 11.

Earnings per Share

The Company computes earnings (loss) per share ("EPS") in accordance with ASC 260, "Earnings per Share" which requires presentation of both basic and diluted EPS on the face of the statement of operations. Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted average number of shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of warrants or stock options and the conversion of instruments convertible to common stock. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.

As of March 31, 2025, and June 30, 2024, there were outstanding warrants that could convert into 3,340,834 and 8,999,089 common stock shares, respectively and convertible notes that could be converted into 1,225,445 and 11,115,265 shares of common stock on March 31, 2025, and June 30, 2024, respectively. At the end of both periods, the potentially dilutive shares were excluded because the effect would have been anti-dilutive.

Income taxes

The Company follows the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary or permanent differences). The effect on deferred income tax assets and liabilities from a change in tax rates is recognized in income in the period that includes the enactment date.

FASB Accounting Standards Codification Topic 740, Income Taxes (“ASC 740”), clarifies the accounting for uncertainty in income taxes recognized in the financial statements. ASC 740 provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related matters. The Company has determined that it does not believe it has any material uncertain tax positions that require measurement The IRS requires all domestic corporations in existence for any part of the tax year to file an income tax return whether or not they have taxable income. The Company has filed its tax returns through the fiscal year ended June 30, 2015, and is in the process of filing the reaming returns t become current The Company incurred a loss for the fiscal years ended June 30, 2024, and has not filed tax returns for that year or since its 2015 filings. The Company has not received any notifications from the IRS regarding filed or unfiled returns. Reported tax benefits and valuation allowances are the Company’s best estimate of its tax positions and have not been reviewed by the taxing authority.

Our policy is to recognize interest and/or penalties related to income tax matters in income tax expense. We had no accrual for interest or penalties on our consolidated balance sheets at March 31, 2025, or June 30, 2024, and have not recognized interest and/or penalties in the consolidated statement of operations for the period or year then ended.

We are subject to taxation or reporting by the U.S. Federal authorities and the state taxing authorities of Nevada, Florida and Idaho. The Company’s tax returns remain subject to potential examination by the tax authorities within 3 years from the filing date.

Cash flows reporting

The Company prepares its statements of cash flows in accordance with ASC-230, Statement of Cash Flows, using the indirect method. Cash Equivalents include investments, with original maturities of three months or less. Non-Cash investing and financing activities are disclosed separately in the supplemental section of the cash flow statement. Cash receipts from cryptocurrency mining rewards are classified as operating cash inflows. Cash purchases of property and equipment are classified as investing activities, while proceeds from debt or equity financing are included in financing activities. Some transactions were part cash and part non-cash and disclosed accordingly.

Advertising Costs

Advertising costs are expensed as incurred in accordance with ASC 720-35, Advertising Costs. These costs are included in selling, general and administrative expenses on the consolidated statements of operations. Advertising expenses were $1,380 for nine months ended March 31, 2025, and $0 for the fiscal year ended June 30, 2024.

Equity/Shares Capital

The Company accounts for equity transactions in accordance with ASC 505, Equity. Common stock is recorded at par value, with the excess of proceeds over par value recorded as additional paid-in-capital. Equity issuance costs are charged directly to additional paid-in- capital. Shares issued for services received or non-cash consideration are measured at the fair value of the equity instruments issued on the grant date or the fair value of the service received, whichever is more reliably measurable. The Company is authorized to issue 350,000,000 shares of common stock at $0.0001 per share. As of March 31, 2025, and June 30, 2024, 23,131,733 and 18,223,953 shares of common stock are issued and outstanding.

Subsequent events

The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company evaluates subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer, considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.

Recent Accounting Pronouncements

Environmental Credits (Proposed Topic 818) - New guidance on how to account for environmental credits like carbon offsets and renewable energy certificates. Focus on consistent recognition, measurement, and disclosure. Still in proposal stage (comment period through April 2025). As no renewable energy sources are used for operations, we currently deem these credits are not applicable.

Disaggregation of Income Statement Expenses (ASU 2024-03) - Companies must break out major expense categories (e.g., labor, depreciation) in the notes to financial statements aimed at improving transparency. Effective for annual periods after Dec 15, 2026 (early adoption allowed). This is applicable to the Company but it’s not yet effective and the Company has not elected early adoption.

Income Tax Disclosure Improvements (ASU 2023-09) - Requires clearer details on income taxes paid (by federal, state, and foreign) and better breakdowns of rate reconciliations. Helps investors better understand a company’s tax situation. This standard applies to the Company but is not currently applicable to current period financials, as we have incurred losses and have no tax expense.