Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☑

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 20222023

 

☐

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _____ to _____

 

Commission File Number: 0-29651

oculuslogo.jpgpic1.jpg

OCULUS VISIONTECH INC.

(Exact name of registrant as specified in its charter)

 

Wyoming

06-1576391

(State or Other Jurisdiction of

(I.R.S. Employer

Incorporation or Organization)

Identification No.)

 

Suite 507 - 837 West Hastings Street, Vancouver, BC, Canada, V6C 3N6

(Address of principal executive offices) (Zip code)

 

(604) 685-1017

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

Yes   ☑      No   ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

 

Yes    ☑      No ☐

 

Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large, accelerated filer,” ‘‘accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large, accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer     

☐

Smaller reporting company   

☑

  

Emerging growth company

☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

Yes    ☐      No ☑

 

As at May 13, 2022,9, 2023, there were 91,422,56991,422,469 shares of the registrant’s common stock outstanding

 

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Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class

Trading Symbol(s)

Name of each exchange on which registered

Common

  

Common stock - no par value

OVTZ

Over The Counter Bulletin Board

Preferred stock - no par value

N/A

N/A

Common stock - no par value

OVT

TSX Venture Exchange

Common stock - no par value

USF1

Frankfurt Stock Exchange

 

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TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION

  

Forward Looking Statements

4

Item 1.  

 

Financial Statements

6

  

Condensed Interim Consolidated Balance Sheets

6

 

(A)

Condensed Interim Consolidated Statements of Operations and Comprehensive Loss

7

 

(B)

Condensed Interim Consolidated Statements Ofof Stockholders’ DeficiencyEquity

8

 

(C)

Condensed Interim Consolidated Statements of Cash Flows

9

 

(D)

Notes to Condensed Interim Consolidated Financial Statements

10

Item 2.  

(E)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

22

Item 4.

 

Controls and Procedures

22

    
  

PART II – OTHER INFORMATION

 
    

Item 1.  

 

Legal Proceedings

23

Item 1A.

 

Risk Factors

23

Item 2.     

 

Unregistered Sales of Equity Securities and Use of Proceeds

23

Item 3.

 

Defaults Upon Senior Securities

23

Item 4.

 

Mine Safety Disclosure

23

Item 5.

 

Other Information

23

Item 6.

 

Exhibits

23

 

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FORWARD LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements other than statements of historical fact are “forward-looking statements” for the purposes of this Quarterly Report on Form 10-Q. In some cases, you can identify these statements by forward-looking words such as “plan”, “may”, “will”, “expect”, “intend”, “anticipate”, believe”, “estimate” and “continue” or similar words. Forward-looking statements are statements that are not historical facts, and include, but are not limited to:

 

●

statements regarding our products and services, including:

 

o

our digital watermarking technology and Cloud-based document protection system;

 

o

our data privacy and data protection services and solutions; our technology, our cash needs, including our ability to fund our future capital expenditures and working capital requirements;

 

o

our expectations regarding competition and growth in our sector; the future sources and availability of additional funding; and

 

o

the effect of funding arrangements on projects and products.

 

You should read statements that contain these words carefully because they discuss future expectations and plans, which contain projections of future results of operations or financial condition or state other forward-looking information. We believe that it is important to communicate future expectations to investors. However, there may be events in the future that we are not able to accurately predict or control. Accordingly, we do not undertake any obligation to update any forward-looking statements for any reason, even if new information becomes available or other events occur in the future, except as required by law.

 

Forward-looking statements are based on current expectations about future events affecting the Company and are subject to uncertainties and factors that affect all business operating in a global market as well as matters specific to the Company. These uncertainties and factors are difficult to predict, and many of them are beyond the Company’s control. Factors to consider when evaluating these forward-looking statements include, but are not limited to:

 

 

●

the impact of pandemics;

 

●

the Company’s limited operating history makes it difficult to evaluate its business and prospects;

 

●

the Company has incurred substantial losses and expects to incur losses in the future and may never achieve profitability;

 

●

if the Company is unable to obtain substantial additional financing, it may not be able to remain in business;

 

●

the Company’s operating results in future periods are expected to be subject to significant fluctuations, which would likely affect the trading price of the Company’s common shares;

 

●

the data privacy and data protection markets are highly competitive, and the Company’s failure to successfully compete will limit its ability to attain, retain and increase its market share;

 

●

the document protection market is highly competitive, and the Company’s failure to compete successfully would limit its ability to retain and increase its market share;

 

●

the video digital watermarking business is highly competitive, and the Company’s failure to compete successfully would limit its ability to retain and increase its market share;

 

●

the Company is subject to rapid technological change, which could render its products and services obsolete;

 

●

the Company is dependent upon vendors and other third-party service providers and will be competing with some of these companies;

 

●

the Company’s services are technically complex, and it may not be able to prevent defects that could decrease their market acceptance, result in product liability, or harm its reputation;

 

●

any loss of the Company’s personnel or inability to acquire new personnel could harm its business;

 

●

a failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have material adverse effect on the Company’s business and operating results and shareholders could lose confidence in the Company’s financial reporting;

 

●

the Company does not currently have any paying customers;

 

●

the Company’s business may suffer if it cannot protect its intellectual property;

 

●

the Company’s products may infringe the intellectual property rights of others, causing the Company to incur significant costs or prevent us from licensing its products;

 

●

the Company’s success depends on the continued growth in demand for e-business applications;

 

●

government regulation and legal uncertainties could add additional costs and risks to doing business on the Internet;

 

●

the Company’s share price has been and could be highly volatile, which could result in substantial losses to investors;

 

●

the Company has not paid cash dividends in the past and does not expect to pay cash dividends in the foreseeable future.

 

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Any return on investment may be limited to the value of the Company’s common shares;

 

●

securities analysts may not initiate coverage or continue to cover the Company’s common shares, and this may have a negative impact on its market price;

 

●

anti-takeover provisions in our charter documents could prevent or delay a change in control of the Company;

 

●

the Company intends to issue additional equity securities, which may dilute the interests of current shareholders or carry rights or preferences senior to the common shares;

 

●

the exercise of options and warrants and other issuances of common shares or securities convertible into or exercisable for common shares will dilute the ownership interest of the Company’s current shareholders and may adversely affect the future market price of the Company’s common shares;

 

●

limited liability of executive officers and directors may discourage shareholders from bringing a lawsuit against them;

 

●

requirements of the SEC with regard to low-priced “penny stocks” may adversely affect the ability of shareholders to sell their shares in the secondary market;

 

●

the Company does not anticipate paying dividends to shareholders in the foreseeable future;

 

●

the Company may be exposed to adverse currency exchange rate fluctuations, which could harm the Company’s financial results and cash flows;

 

●

service outages and disruption of the Company’s infrastructure may harm the Company and adversely impact business operations and injure reputation;

 

●

security vulnerabilities in the Company’s products and services or any breach of the Company’s security measures may injure its reputation and disrupt the Company’s business;

 

●

the financial reporting obligations of being a public company in the United States are expensive, time consuming, and may place significant demands on the Company’s management; and

 

●

the Company’s failure to manage or adequately address any one or more of these risks could result in the business suffering a material adverse effect.

 

The Company believes the items outlined above are important factors that could cause estimates included in its financial statements to differ materially from the actual results and those expressed in a forward-looking statement made in this report or elsewhere by the Company or on its behalf. The Company has discussed these factors in more detail under “Risk Factors” in its Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and other periodic reports filed with the United States Securities and Exchange Commission (“SEC”). Accordingly, to the extent that this quarterly report contains forward-looking statements regarding the financial condition, operating results, business prospects or any other aspect of the Company, please be advised that the Company’s actual financial condition, operating results and business performance may differ materially from that projected or estimated by the Company in forward-looking statements. We do not intend to update our description of important factors each time a potential important factor arises, except as required by applicable securities laws and regulations. We advise our shareholders that they should (i) be aware that factors not referred to above could affect the accuracy of the Company’s forward-looking statements and (ii) use caution when considering the Company’s forward-looking statements.

 

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PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

OCULUS VISIONTECH INC. AND SUBSIDIARY

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS

(Stated in US Dollars)

(Unaudited)

     
     
 

31-Mar

 

December 31,

 
 

March 31,

 

December 31,

  

2023

 

2022

 
 

2022

 

2021

  
  

ASSETS

        
  

Current Assets:

  

Cash and cash equivalents

 $1,800,874  $2,208,451  $529,692   $687,602 

Prepaid expenses and other current assets

 24,288  37,832  13,728   30,238 

Total Assets

 $1,825,162  $2,246,283  $543,420   $717,840 
  

LIABILITIES AND STOCKHOLDERS' EQUITY

        
  

Current Liabilities:

  

Accounts payable and accrued expenses

 $119,199  $96,198  $302,206 

#

 $276,585 

Accounts payable and accrued expenses - related parties

 28,041  26,425  25,841   25,838 

Total current liabilities

 147,240  122,623  328,047   302,423 
  
       

Commitments and Contingencies

 -  -  -   - 
  

Stockholders' Equity:

  

Preferred stock - no par value; authorized 250,000,000 shares, none issued

  

Common stock and additional paid-in capital - no par value; authorized 500,000,000 shares, issued and outstanding 91,422,569 and 86,522,569

 46,850,710  46,850,710 

Contribution surplus

 1,138,125  998,477 

Commitment to issue shares

 414,128  414,128 

Accumulated other comprehensive income

 2,168  6,190 

Common stock and additional paid-in capital - no par value; authorized 500,000,000 shares, issued and outstanding 91,422,569 at December 31,2022 and March 31,2023

 46,850,710   46,850,710 

Additional paid-in capital

 1,431,171   1,394,997 

Accumulated other comprehensive income (loss)

 (36,015)  (34,856)

Accumulated deficit

 (46,727,209) (46,145,845) (48,030,493)  (47,795,434)

Stockholders' equity

 1,677,922  2,123,660  215,373   415,417 

Total Liabilities and Stockholders' Equity

 $1,825,162  $2,246,283  $543,420   $717,840 

 

SEE ACCOMPANYING NOTES

 

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OCULUS VISIONTECH INC. AND SUBSIDIARY

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Stated in US Dollars)

(Unaudited)

    
    
  

For the three months ended

 
  

March 31,

  

March 31,

 
  

2023

  

2022

 

Revenue

 $-  $- 
         

Expenses:

        

Consulting

  45,000   - 

Research and development

  84,203   345,463 

Selling, general and administrative (Note 8)

  72,777   96,253 

Stock-based compensation (Note 7)

  36,174   139,648 
         

Total expenses

  (238,154)  (581,364)
         

Interest income

  3,095   - 

Net loss

  (235,059)  (581,364)
         

Other comprehensive loss

        

Currency translation differences

  (1,159)  (4,022)
         
   (1,159)  (4,022)
         

Total comprehensive loss

 $(236,218) $(585,386)
         

Net loss per share - basic and diluted

 $(.00) $(.01)

Weighted-average number of common  shares outstanding - basic and diluted

  91,422,569   91,422,569 

 

OCULUS VISIONTECH INC. AND SUBSIDIARY

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Stated in US Dollars)

(Unaudited)

 

  

For the three months ended

 
  

March 31

  

March 31

 
  

2022

  

2021

 

Revenue

 $0  $0 
         

Expenses:

        

Consulting

  0   0 

Research and development

  345,463   132,724 

Selling, general and administrative (Note 8)

  96,253   83,406 

Stock-based compensation (Note 7)

  139,648   177,490 
         

Total expenses

  581,364   393,620 

Loss from operations

  (581,364)  (393,620)
         

Other income

        

Interest income

  0   0 
Net Loss  (581,364)   (393,620) 
         

Other comprehensive loss

        

Currency translation differences

  (4,022)  0 
   (4,022)  0 
         

Total Comprehensive Loss

 $(585,386) $(393,620)
         

Net loss per share - basic and diluted

 $(.01) $(.00)

Weighted-average number of common shares outstanding - basic and diluted

  91,422,569   86,522,569 

 

SEE ACCOMPANYING NOTES

 

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OCULUS VISIONTECH INC. AND SUBSIDIARY

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Stated in US Dollars)

(Unaudited)

                        
                        
  

Common Stock

                     
  

Shares

  

Amount

  

Contribution Surplus

  

Commitment to Issue Shares

  

Accumulated Other Comprehensive Loss

  

Accumulated Deficit

  

Stockholders' Equity

 
                             
                             

Balance at December 31, 2022

  91,422,569  $46,850,710  $1,394,997  $-  $(34,856) $(47,795,434) $415,417 
                             

Share-based compensation

  -   -   36,174   -   -   -   36,174 

Currency translation differences

  -   -   -   -   (1,159)  -   (1,159)

Net loss

  -   -   -   -   -   (235,059)  (235,059)
                             

Balance at March 31, 2023

  91,422,569  $46,850,710  $1,431,171  $-  $(36,015) $(48,030,493) $215,373 

 

                        
                        
  

Common Stock

                     
  

Shares

  

Amount

  

Contribution Surplus

  

Commitment to Issue Shares

  

Accumulated Other Comprehensive Loss

  

Accumulated Deficit

  

Stockholders' Equity

 
                             
                             

Balance at December 31, 2021

  91,422,569  $46,850,710  $998,477  $414,128  $6,190  $(46,145,845) $2,123,660 
                             

Share-based compensation

  -   -   139,648   -   -   -   139,648 

Currency translation differences

  -   -   -   -   (4,022)  -   (4,022)

Net loss

  -   -   -   -   -   (581,364)  (581,364)
                             

Balance at March 31, 2022

  91,422,569  $46,850,710  $1,138,125  $414,128  $2,168  $(46,727,209) $1,677,922 

OCULUS VISIONTECH INC. AND SUBSIDIARY

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY

(Stated in US Dollars)

(Unaudited)

 

  

Common Stock

                     
                             
  

Shares

  

Amount

  

Contribution

Surplus

  

Commitment to

Issue Shares

  

Accumulated

Other

Comprehensive

Loss

  

Accumulated

Deficit

  

Stockholders'

Equity

 
                             
                             

Balance at December 31, 2020

  86,522,569  $43,788,464  $284,793  $414,128  $0  $(44,159,180) $328,205 
                             

Share-based compensation

  -   0   177,490   0   0   0   177,490 

Net loss

  -   0   0   0   0   (393,620)  (393,620)
                             

Balance at March 31, 2021

  86,522,569  $43,788,464  $462,283  $414,128  $0  $(44,552,800) $112,075 
                             

Balance at December 31, 2021

  91,422,569  $46,850,710  $998,477  $414,128  $6,190  $(46,145,845) $2,123,660 

Share-based compensation

  -   0   139,648   0   0   0   139,648 

Currency translation differences

  -   0   0   0   (4,022)  0   (4,022)

Net loss

  -   0   0   0   0   (581,364)  (581,364)
                             

Balance at March 31, 2022

  91,422,569  $46,850,710  $1,138,125  $414,128  $2,168  $(46,727,209) $1,677,922 

 

SEE ACCOMPANYING NOTES

 

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OCULUS VISIONTECH INC. AND SUBSIDIARY

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(Stated in US Dollars)

(Unaudited)

       
       

Three months ended March 31,

 

2023

  

2022

 
         

Cash flows from operating activities:

        

Net loss

 $(235,059) $(581,364)

Add back non-cash share-based compensation

  36,174   139,648 

Adjustments to reconcile net loss to net cash used in operating activities:

        

Changes in operating assets and liabilities:

        

Decrease (increase) in prepaid expenses and other current assets

  16,510   13,544 

Increase (decrease) in accounts payable and accrued expenses

  25,624   23,001 

Increase (decrease) in accounts payable and  accrued expenses due to related parties

  -   1,616 
         

Net cash used in operating activities

  (156,751)  (403,555)
         
         

Effect of foreign currency translation

  (1,159)  (4,022)
         

Net increase in cash and cash equivalents

  (157,910)  (407,577)
         

Cash and cash equivalents at beginning of period

  687,602   2,208,451 
         

Cash and cash equivalents at end of period

 $529,692  $1,800,874 
         
         

Supplemental disclosures of cash flow information:

        
         

Cash paid during the period for interest

 $-  $- 

Cash paid during the period for income taxes

 $-  $- 
         
  $-  $- 

 

OCULUS VISIONTECH INC. AND SUBSIDIARY

There were no non-cash financing activities for the periods presented.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(Stated in US Dollars)

(Unaudited)

 

Three months ended March 31,

 

2022

  

2021

 
         

Cash flows from operating activities:

        

Net loss

 $(581,364) $(393,620)

Add back non-cash share-based compensation

  139,648   177,490 

Add back non-cash impairment of intangible assets

  0   0 

Adjustments to reconcile net loss to net cash used in operating activities:

        

Changes in operating assets and liabilities:

        

Decrease (increase) in prepaid expenses and other current assets

  13,544   3,281 

Increase (decrease) in accounts payable and accrued expenses

  23,001   21,249 

Increase (decrease) in accounts payable and accrued expenses due to related parties

  1,616   21 
         

Net cash used in operating activities

  (403,555)  (191,579)
         

Cash flows from investing activities

        

Cash acquired on asset acquisition

  0   0 

Net cash from financing activities

  0   0 
         

Cash flows from financing activities

        

Proceeds from the sale of common stock

  0   0 

Share issuance costs

  0   0 

Net cash from financing activities

  0   0 
         

Effect of foreign currency translation

  (4,022)  0 
         

Net increase in cash and cash equivalents

  (407,577)  (191,579)
         

Cash and cash equivalents at beginning of period

  2,208,451   490,190 
         

Cash and cash equivalents at end of period

 $1,800,874  $298,611 
         
         

Supplemental disclosures of cash flow information:

        
         

Cash paid during the period for interest

 $0  $0 

Cash paid during the period for income taxes

 $0  $0 
         
         

Non-Cash Financing and Investing Activities

        

Common stock issued on acquisition of CTI

 $0  $0 

Intangible acquired on acquisition of CTI

  0   0 

Warrants issued on acquisitionof CTI

  0   0 

Account payable acquired on acquisitionof CTI

  0   0 
         
  $-  $- 

 

SEE ACCOMPANYING NOTES

 

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OCULUS VISIONTECH INC. AND SUBSIDIARY

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 2023and 20212022

(Stated in US Dollars)

(Unaudited)

 

 

1.

BASIS OF PRESENTATION AND BUSINESS

 

Oculus VisionTech, Inc. (the "Company") is a designer of digital watermarking servicesdevelopment-stage technology company focused on cyber security, data privacy and solutions.data protection solutions for Enterprise business customers. Substantially all of the Company's assets and substantially all its operations are located and conducted in the United States and Canada.

 

The unaudited condensed consolidated financial statements and notes herein should be read in conjunction with the audited consolidated financials statementfinancial statements of Oculus VisionTech Inc. (the “Company”)the Company and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.2022. The condensed interim consolidated financialsfinancial statements included herein have been prepared by the Company without audit, pursuant to the roles and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in the financialsfinancial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the SEC’s rules and regulations. Although management believes that the disclosures are adequate and make the information presented not misleading. In the opinion of management, all adjustments, which are of a normal and recurring nature (except as otherwise noted), that are necessary to present fairly the Company’s financial position as of March 31, 20222023 and December 31, 2021,2022, and its results of operation for the three months ended March 31, 20222023 and 2021,2022, and cash flows for the three months ended March 31, 20222023 and 20212022

 

 

2.

GOING CONCERN

 

The accompanyingThese condensed interim consolidated financial statements have beenare prepared assumingon a going concern basis which assumes that the Company will continue as a going concern.  Management has forecastedbe able to realize its assets and discharge its liabilities in the Company will have sufficient working capital to operatenormal course of business for the ensuingforeseeable future. The Company has incurred losses from inception and does 12not months.currently have the financial resources to sustain operations in the long-term. As shown in the financial statements, the Company has incurred a loss of $581,364$235,059 for the three month periodmonths ended March 31, 20222023 and, in addition the Company incurred losses of $1,986,665 and $2,772,484$1,649,589 for the year ended December 31, 20212022. and 2020.As of March 31, 2022,2023, the Company had an accumulated deficit of $46,727,209$48,030,493 and a working capital of $1,677,922.$215,373. As a result of the Company’s current financial position and challenging access to capital, there can be no assurance that the Company will be able raise additional funds in the future, in which case the Company will be unable to meet its financial obligations. These material uncertainties raise substantial doubt upon the Company’s ability to continue as a going concern. The financial statements do not include adjustments to amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations. The Company’s ability to continue as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations as they come due which management believes it will be able to do.  To date, the Company has funded operations primarily through the issuance of common stock and warrants to outside investors and the Company’s management.  The Company believes that its operations will generate additional funds and that additional funding from outside investors and the Company’s management will continue to be available to the Company when needed.  The

There are many external factors that can adversely affect general workforces, economies and financial statements domarkets globally. Examples include, but are not include any adjustments relatinglimited to, the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary in the event the Company cannot continue as a going concern.

In December 2019, a coronavirus (COVID-19) was reported in China and in January 2020, the World Health Organization (WHO) declared it a Public Health Emergency of International Concern. In March 2020, the WHO declared it a global pandemic. COVID-19 continued to spread globally, directly impacting worldwide economic activity and financial markets. The extent of the COVID-19 impactglobal pandemic and political conflict in other regions. It is not possible for the Company to future operationalpredict the duration or magnitude of adverse results of such external factors and financial performance will dependtheir effect on the duration and spread of the outbreak, related public health measures, and their impact on the macroeconomy. While the Company expects this matterCompany’s business or ability to negatively impact the Company's financial condition, results of operations, or cash flows, the extent of the financial impact and duration cannot be reasonably estimated at this time, as none of these impacts can be predicted with certainty.raise funds.

 

 

3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of consolidation

 

These condensed interim consolidated financial statements are presented in United States dollars and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). On May 13, 2022,9, 2023, the Board approved the condensed interim consolidated financial statements dated March 31, 2022.2023.

 

These condensed interim consolidated financial statements include the financial statements of the Company and the entities controlled by the Company. The financial statements of subsidiaries are included in the condensed interim consolidated financial statements from the date that control commences until the date that control ceases.

 

Control is defined as the exposure, or rights, to variable returns from involvement with an investee and the ability to affect those returns through power over the investee. Power over an investee exists when an investor has existing rights that give it the ability to direct the activities that significantly affect the investee’s returns. This control is generally evidenced through owning more than 50% of the voting rights or currently exercisable potential voting rights of a Company’s capital stock. All significant intercompany transactions and balances have been eliminated.

 

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OCULUS VISIONTECH INC. AND SUBSIDIARY

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

March 31, 20222023 and 20220221

(Stated in US Dollars)

(Unaudited)

 

The controlled entities are listed in the following table:

 

Name of Subsidiary

Country of

Incorporation

 

Ownership

Interest at

March 31,

2022

 

Ownership

Interest at

December 31,

2021

 

Principal Activity

Country of

Incorporation

 

Ownership

Interest at

March 31,

2023

 

Ownership

Interest at

December 31,

2022

 

Principal Activity

        

ComplyTrust Inc.

US/Delaware

 100

%

 100

%

Software Development

US/Delaware

 100

%

 100

%

Software Development

 

Significant judgments, estimates and assumptions

 

The preparation of financial statements in accordance with U.S. GAAP requires management to make judgments, 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 revenues and expenses during the period. These judgments, estimates and assumptions are regularly evaluated and are based on management’s experience and knowledge of the relevant facts and circumstances. While management believes the estimates to be reasonable, actual results could differ from those estimates and could impact future results of operations and cash flows.

 

The areas which require significant judgment and estimates that management has made at the financial reporting date, that could result in a material change to the carrying amounts of assets and liabilities, in the event actual results differ from the assumptions made, relate to, but are not limited to the following:

 

Significant judgments

 

●

the determination of functional currencies

●

share-based compensation and warrants issued in connection with private placements, using the fair value method. The Company uses the Black-Scholes option pricing model to determine the fair value of share-based compensation. This estimate also requires determining the most appropriate inputs to the valuation model. The main factor affecting the estimates of the fair value of stock options is the stock price, expected volatility used and the expected duration of the instrument. The Company currently estimates the expected volatility of its common shares based on historical stock price information.

 

Cash and cash equivalents

 

Cash equivalents include highly liquid investments with original maturities of twelve months or less, and which are subject to an insignificant risk of change in value. Cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.

 

Impairment of long-lived assets and long-lived assets to be disposed of

 

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount and the fair value less costs to sell.

 

Research and development

 

ExpenditureExpenditures on research activities is recognized on the consolidated statement of operations and comprehensive loss as incurred. Development expenditures are capitalized as part of the cost of the resulting intangible asset only if the expenditures can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset. Management determined that as at March 31, 2022,2023 , it was not yet able to demonstrate with sufficient certainty that it is probable that any economic benefits will flow to the Company. Accordingly, all research and development costs incurred to date have been expensed.

 

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OCULUS VISIONTECH INC. AND SUBSIDIARY

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

March 31, 20222023 and 20220221

(Stated in US Dollars)

(Unaudited)

 

Intangible asset

 

Identifiable intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is valued at fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses.

 

The useful lives of intangible assets are assessed as either finite or indefinite.

 

Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment annually and whenever there is an indication that the intangible asset may be impaired. The amortization period and method for an intangible asset with a finite useful life are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in profit or loss.

 

Intangible assets with indefinite lives are measured at cost less any accumulated impairment losses. These intangible assets are tested for impairment on an annual basis and more frequently if there are indicators that intangible assets may be impaired.

 

Income taxes

 

The Company accounts for income taxes under the asset and liability method. Current income taxes are the expected taxes payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to taxes payable in respect of previous years. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under the asset and liability method, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion or the entire deferred tax asset will not be recognized.

 

Net loss per share

 

Basic loss per share is calculated using the weighted average number of common shares outstanding during the period. Diluted loss per share reflects the potential dilution that could occur if securities or contracts that may require the issuance of common shares in the future were converted, unless the impact is anti-dilutive. For the period ended March 31, 2022,2023, this calculation proved to be anti-dilutive, and therefore the Company’s 5,415,000 ( MarchDecember 31, 2021:2022: 4,350,000)5,415,000) stock options and 17,400,000 ( MarchDecember 31, 2021:2022: 12,500,000)17,400,000) warrants were excluded from the calculation.

 

Right of use asset

 

The Company recognizes a right of use asset and a lease liability at the lease commencement date. The right of use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove or to restore the underlying asset or the site on which it is located, less any lease incentives received.

 

The right of use assets are subsequently amortized from the commencement date to the earlier of the end of the useful life of the right of use asset or the end of the lease term using the straight line method.

 

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NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

March 31, 20222023 and 20220221

(Stated in US Dollars)

(Unaudited)

 

Lease liability

 

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

 

Lease payments included in the measurement of the lease liability comprise the following payments during the lease term: fixed payments (including in-substance fixed payments), and the exercise price under a purchase option that the Company is reasonably certain to exercise.

 

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising mainly if the Company changes its assessment of whether it will exercise a purchase, renewal or termination option, or if there is a revised in substance fixed lease payment.

 

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right of use asset, or is recorded in profit or loss if the carrying amount of the right of use asset has been reduced to zero.

 

Stock-based compensation

 

The Company follows the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Section 718 “Compensation - Stock Compensation”, which establishes accounting for equity-based compensation awards to be accounted for using the fair value method. Equity-settled share-based payment arrangements are initially measured at fair value at the date of grant and recorded within shareholders’ equity. Arrangements considered to be cash-settled are initially recorded at fair value and classified as accrued liabilities, and subsequently re-measured at fair value at each reporting date. The Company’s stock option plan is an equity-settled arrangement.

 

The fair value at grant date of all share-based payments is recognized as compensation expense over the period for which benefits of services are expected to be derived, with a corresponding credit to shareholders’ equity or accrued liabilities depending on whether they are equity-settled or cash-settled. The Company estimates the fair value of stock options granted using the Black-Scholes option pricing model and estimate the expected forfeiture rate at the date of grant.

 

Functional currency

 

The Company’s consolidated financial statements are presented in U.S. dollars, which is the Company’s reporting currency. The functional currency of Oculus VisionTech Inc. is the Canadian (“CAD” or “C”) dollar and the functional currency of ComplyTrust Inc. is the U.S. dollar.

 

In accordance with ASC 830, Foreign Currency Matters, for companies that have a functional currency other than the US dollar, the Company translates the assets and liabilities into U.S. dollars using the rate of exchange prevailing at the balance sheet date and the statements of operations and comprehensive loss and cash flows are translated at an average rate during the reporting period. Adjustments resulting from the translation from CAD into U.S. dollars are recorded in shareholders' equity as part of accumulated other comprehensive loss.

 

Foreign currency transactions are translated into the functional currency of the respective currency of the entity or division, using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the re-measurement of monetary items denominated in foreign currency at period-end exchange rates are recognized in profit or loss. Non-monetary items that are not re-translated at period end are measured at historical cost (translated using the exchange rates at the transaction date), except for non-monetary items measured at fair value, which are translated using the exchange rates as at the date when fair value was determined. Gains and losses are recorded in the statement of operations and comprehensive loss.

 

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OCULUS VISIONTECH INC. AND SUBSIDIARY

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

March 31, 20222023 and 20220221

(Stated in US Dollars)

(Unaudited)

 

Recently issued accounting pronouncements

 

Accounting Standards Update No.2016-13—Measurement of Credit Losses on Financial Instruments. In June 2016, the FASBThe Company has reviewed new and revised accounting pronouncements that have been issued guidance intended to change how companies account for credit losses for most financial assets and certain other instruments. For trade receivables, loans and held-to-maturity debt securities, companies will be required to estimate lifetime expected credit losses and recognize an allowance against the related instruments. For available for sale debt securities, companies will be required to recognize an allowance for credit losses rather than reducing the carrying value of the asset. The adoption of this update, if applicable, will result in earlier recognition of losses and impairments.

Accounting Standards Update No.2018-19—Codification Improvements to ASC 326, Financial Instruments—Credit Losses. In November 2018, the FASB introduced guidance on an expected credit loss methodology for the impairment of financial assets measured at amortized cost basis. That methodology replaces the probable, incurred loss model for those assets. ASU 2018-19 is the final version of Proposed Accounting Standards Update 2018-270, which has been deleted. Additionally, the amendments clarify that receivables arising from operating leasesbut are not within the scope of Subtopicyet effective. The Company does 326-20.not Instead, impairment of receivables arisingexpect any material impact from operating leases should be accounted for in accordance with ASC 842, Leases.future accounting pronouncements.

 

These updates are effective beginning January 1, 2023, and the Company is currently evaluating ASU 2016-13 and ASU 2018-19 and the potential impact of adopting this guidance on its financial reporting.

 

4.

PREPAID EXPENSES AND OTHER CURRENT ASSETS

 

Prepaid expenses and other current assets consist of the following:

 

 

March 31,

 

December 31,

  

March 31,

 

December 31,

 
 

2022

 

2021

  

2023

 

2022

 
  

Prepaid expenses

 $20,824  $28,141  $12,076  $28,028 

Tax Receivable – Canadian GST

 3,464  9,691  1,652  2,210 
 $24,288  $37,832  $13,728  $30,238 

 

 

5.

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

 

Accounts payable and accrued expenses consist of the following:

 

 

March 31,

2022

 

December 31,

2021

  

March 31,

2023

 

December 31,

2022

 
  

Accounts payable

 $84,985  $61,836  $265,114  $224,716 

Accrued fees and expenses

 34,214  34,362  37,092  51,869 
 $119,199  $96,198  $302,206  $276,585 

6.

COMMON STOCK

 

The Company has no par value common stock with 500,000,000 authorized shares and 91,422,569 outstanding on March 31, 2023 and December 31, 2022.

The Company has authorized the issuance of 250,000,000 non-voting preferred shares without par value, none issued.

As of March 31, 2023, there were 1,875,000 common shares held in escrow.

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OCULUS VISIONTECH INC. AND SUBSIDIARY

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

March 31, 20222023 and 20220221

(Stated in US Dollars)

(Unaudited)

6.

COMMON STOCK

The Company has one class of no par value common stock with 500,000,000 authorized shares 91,422,569 outstanding on March 31, 2022 and 86,522,569 on March 31, 2021, respectively. As of March 31, 2022, there were 5,175,000 common shares held in escrow.

 

 

7.

STOCK OPTIONS  

 

During the period ended March 31, 20222023 and year ended December 31, 2021,2022, the Company adoptedhad a Rolling Stock Option Plan. Up to 10% of the Company’s issued and outstanding common shares may be reserved for granting of stock options. All of the options granted vest 20% every six months.

However, all options will be considered vested if one of the following criteria are met by the Company:

i.

Meeting sales forecasts:

-The greater of either the 20% vesting every six months or based on a pro rata percentage of revenue earned by the Company’s subsidiary.

ii.

the listing of the Company on any national securities exchange.

iii.

a Change of Control Event.

 

During the period ended March 31, 2022, the Company:

i) granted 100,000 stock options to a consultant, exercisable into 100,000 shares at an exercise price of $0.80CAD and an expiry date of August 1, 2024. The options have a fair value of $54,600CAD, calculated using the Black-Scholes option pricing model using the following inputs (i) Volatility of 119.10%; (ii) Term of 3 years; (iii) Discount rate of 1.24%; (iv) Dividend rate of Nil; and (v) market stock price of $0.78CAD. The options vest 20% every 6 months starting August 1, 2022. During the period ended March 31, 2022,2023, the Company did not grant any stock options and recorded $7,957CAD ($6,281) of$36,174 share-based compensation relating to the vesting period.

During the year ended December 31, 2021, the Company:

i) granted 500,000 stock options to consultants, exercisable into 500,000 shares at an exercise price of $1.20CAD and an expiry date of January 29, 2024. The options have a fair value of $424,300CAD, calculated using the Black-Scholes option pricing model using the following inputs (i) Volatility of 125.00%; (ii) Term of 3 years; (iii) Discount rate of 0.14%; (iv) Dividend rate of Nil; and (v) market stock price of $1.18CAD. The options vest 20% every 6 months starting July 29, 2021. During the period ended March 31, 2021, the Company recorded $65,035CAD ($51,351) of share-based compensation relating to the vesting period. During the period ended March 31, 2022, the Company recorded $39,576CAD ($31,242) of share-based compensation relating to the vesting period.

ii) granted 375,000 stock options to consultants, exercisable into 375,000 shares at an exercise price of $0.80CAD and an expiry date of June 10, 2024. The options have a fair value of $211,700CAD, calculated using the Black-Scholes option pricing model using the following inputs (i) Volatility of 120.80%; (ii) Term of 3 years; (iii) Discount rate of 0.25%; (iv) Dividend rate of Nil; and (v) market stock price of $0.80CAD. The options vest 20% every 6 months starting December 10, 2021. During the period ended March 31, 2021, the Company recorded $Nil of share -based compensation relating to the vesting period. During the period ended March 31, 2022, the Company recorded $26,787CAD ($21,146) of share-based compensation relating to the vesting period.

iii) granted 590,000 stock options to consultants, exercisable into 590,000 shares at an exercise price of $0.60CAD and an expiry date of October 14, 2024. The options have a fair value of $219,100CAD, calculated using the Black-Scholes option pricing model using the following inputs (i) Volatility of 119.89%; (ii) Term of 3 years; (iii) Discount rate of 0.63%; (iv) Dividend rate of Nil; and (v) market stock price of $0.54CAD. The options vest 20% every 6 months starting April 14, 2021. During the period ended March 31, 2021, the Company recorded $Nil of share -based compensation relating to the vesting period. During the period ended March 31, 2022, the Company recorded $49,406CAD ($39,002) of share-based compensation relating to the vesting period.

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OCULUS VISIONTECH INC. AND SUBSIDIARY

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 and 2021

(Stated in US Dollars)

(Unaudited)

During the year ended December 31, 2020, the Company:

i) granted 3,600,000 stock options to consultants, directors and officers exercisable into 3,600,000 shares at an exercise price of $0.35CAD and an expiry date of July 21, 2023. The options have a fair value of $909,900CAD, calculated using the Black-Scholes option pricing model using the following inputs (i) Volatility of 125%; (ii) Term of 3 years; (iii) Discount rate of 0.27%; (iv) Dividend rate of Nil; and (v) market stock price of $0.35CAD. The options vest 20% every 6 months starting January 21, 2021. During the period ended March 31, 2021, the Company recorded $135,829CAD ($107,248) of stock-based compensation relating to the vesting period. During the period ended March 31, 2022, the Company recorded $47,316CAD ($37,352) of share-based compensation relating to the vesting period.

ii) granted 250,000 stock options to consultants, directors and officers exercisable into 250,000 shares at an exercise price of $0.45CAD and an expiry date of December 21, 2023. The options have a fair value of $75,800CAD, calculated using the Black-Scholes option pricing model using the following inputs (i) Volatility of 125%; (ii) Term of 3 years; (iii) Discount rate of 0.02%; (iv) Dividend rate of Nil; and (v) market stock price of $0.425CAD. The options vest 20% every 6 months starting June 21, 2021. During the period ended March 31, 2021, the Company recorded $23,925CAD ($18,890) of stock-based compensation relating to the vesting period. During the period ended March 31, 2022, the Company recorded $5,859CAD ($4,625) of share-based compensation relating to the vesting period.for vested portion that were previously granted.

 

The changes in options are as follows:

 

 

Number of

options

 

Weighted

average

exercise price

 

Aggregate

Intrinsic Value

  

Number of

options

 

Weighted

average

exercise price

 

Aggregate

Intrinsic Value

 

Options outstanding, December 31, 2020

  3,850,000  $0.36  $3,363,000 

Granted

 1,465,000  0.86  0 

Options outstanding, December 31, 2021

  5,315,000   0.49   3,910,950   5,315,000  $0.49  $- 

Granted

 100,000  0.80  0  100,000  0.80  - 

Options outstanding, March 31, 2022

  5,415,000  $0.50  $745,000 

Options outstanding, December 31, 2022 and March 31, 2023

  5,415,000  $0.50  $- 

 

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common stock for the options that were in-the-money at March 31, 2022.2023.

 

Details of options outstanding as at March 31, 20222023 are as follows:

 

Exercise price (CAD)

  

Number of

options

outstanding

 

Expiry date

 

Number of options

exercisable

  

Remaining

contractual life (years)

 
                
$0.350   3,600,000 

July 21, 2023

  2,160,000   1.31 
$0.450   250,000 

December 21, 2023

  100,000   1.73 
$1.200   500,000 

January 29, 2024

  200,000   1.83 
$0.800   375,000 

June 10, 2024

  75,000   2.20 
$0.600   590,000 

October 14, 2024

  0   2.54 
$0.80   100,000 

January 31, 2025

  0   2.84 
                
     5,415,000    2,535,000     

Exercise price

(CAD)

  

Number of

options

outstanding

 

Expiry date

 

Number of options

exercisable

  

Remaining

contractual life (years)

 
                
 $0.350   3,600,000 

July 21, 2023

  3,600,000   0.31 
 $0.450   250,000 

December 21, 2023

  200,000   0.73 
 $1.200   500,000 

January 29, 2024

  400,000   0.83 
 $0.800   375,000 

June 10, 2024

  225,000   1.20 
 $0.600   590,000 

October 14, 2024

  236,000   1.54 
 $0.800   100,000 

January 31, 2025

  40,000   1.84 
                
     5,415,000    4,701,000     

 

15
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OCULUS VISIONTECH INC. AND SUBSIDIARY

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

March 31, 20222023 and 20220221

(Stated in US Dollars)

(Unaudited)

 

 

8.

WARRANTS  

 

The changes in warrants are as follows:

 

  

Number of

warrants

  

Weighted

average

exercise price

 

Warrants outstanding, December 31, 2020

  12,500,000  $0.001 

Granted

  4,900,000   1.00 

Warrants outstanding, December 31, 2021 and March 31, 2022

  17,400,000  $0.28 
  

Number of

warrants

  

Weighted

average

exercise price

 

Warrants outstanding, December 31, 2021, December 31, 2022 and March 31, 2023

  17,400,000  $0.28 

 

Details of warrants outstanding as at DecemberMarch 31, 20212023 are as follows:

 

Exercise price

Exercise price

 

Number of

warrants

outstanding

 

Expiry date

 

Number of

warrants

exercisable

 

Remaining

contractual life

(years)

 

Exercise price

   

Number of

warrants

outstanding

 

Expiry date

 

Number of

warrants

exercisable

 

Remaining

contractual life

(years)

 
                       
$1.00

 (CAD)

 4,900,000 

April 19, 2023

 4,900,000  1.05 1.00 

(CAD)

 4,900,000 

April 19, 2023(2)

 4,900,000  0.05 
$0.001

(1)  (USA)

 12,500,000 

June 4, 2025

 0  3.18 0.001(1) 

(USA)

 12,500,000 

June 4, 2025

 -  2.18 
                       
   17,400,000   4,900,000        17,400,000   4,900,000    

 

 

(1)

No share purchase warrants are exercisable until specific performance criteria have been met. Such criteria being 1) revenue sales projections per CTI’s 5 year-year proformas, or 2) listing on a major US exchange, or 3) change of control.

(2)

Expired subsequent to March 31, 2023

 

 

 

9.

SELLING, GENERAL AND ADMINISTRATIVE

 

The breakdown of selling, general and administrative for the period ended March 31, 20222023 and 20212022 is as follows:

 

          
 

2022

 

2021

  

2023

 

2022

 
  

Filing and regulatory fees

 $22,447  $9,877  $12,577  $22,447 

Marketing

 37,965  7,108  -  37,965 

Professional fees

 6,225  22,446  14,091  6,225 

Rent

 9,381  9,290  10,813  9,381 

Office and administration

 20,235  34,685  35,296  20,235 
  
 $96,253  $83,406  $72,777  $96,253 

 

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NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

March 31, 20222023 and 20220221

(Stated in US Dollars)

(Unaudited)

 

 

10.

RESEARCH AND DEVELOPMENT  

 

The breakdown of research and development for the period ended March 31, 20222023 and 20212022 is as follows:

 

          
 

2022

 

2021

  

2023

 

2022

 
  

Project management

 $11,990  $30,000  $84,203  $11,990 

Software development

 269,250  102,724  49,765  269,250 

Business development

 32,451  0  3,952  32,451 

Payroll

 31,772  0  30,486  31,772 
  
 $345,463  $132,724  $84,203  $345,463 

 

 

11.

RELATED PARTIES  

 

Related parties include the Board of Directors, officers, close family members and enterprises that are controlled by these individuals as well as certain persons performing similar functions.

 

The Company defines its key management as the Board of Directors, Chief Executive Officer, President, and Chief Financial Officer. Remuneration of directors and key management personnel of the Company for the period ended March 31, 2023 and 2022was as follows:

 

        
 

Period ended

March 31,

  

2023

 

2022

 
 

2021

 

2020

  
 

Consulting

 $45,000  $- 

Selling general and administrative

 $27,493  $15,032  15,369  27,493 

Share-based compensation to directors and officers

  17,431  50,049  1,442  17,431 
 $44,924  $65,081  $61,811  $44,924 

 

The Company for the period ended March 31, 20222023 and 20212022 reimbursed a related party $27,493$15,369 and $15,032,$27,493, respectively, for selling, general and administrative expenses paid on behalf of the Company. The Company also recorded share-based compensation of $17,431$1,442 (20212022 - $50,049)$17,431) for options vested to related parties during the period ended March 31, 20222023 and 2021. The Company incurred 0 expenses from a related party for research and development for the period ended March 31, 2022 and 2021.2022.

 

 

12.

FINANCIAL INSTRUMENTS AND RISKS

Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are described below.

Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – 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 - inputs for the asset or liability that are not based on observable market data (unobservable inputs).

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OCULUS VISIONTECH INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022 and 2021

(Stated in US Dollars)

Fair value of financial instruments

The Company has various financial instruments including cash and cash equivalents, accounts payable and accrued expenses, and accounts payable and accrued expenses – related parties. The carrying values of accounts payable and accrued expenses and accounts payable and accrued expenses – related parties approximate their fair values due to the short-term nature of these financial instruments.

Cash and cash equivalents is carried at a level 1 fair value measurement.

The Company’s risk exposures and the impact on the Company’s financial instruments are summarized below:

Credit risk

The Company is exposed to credit risk only with respect to uncertainties as to timing and amount of collectability of receivables. The Company believes its credit risk is low because receivables is comprised of goods and services tax (GST) which is recoverable from the governing body in Canada. Management does not believe the receivables are impaired. The Company doesn’t believe there is significant credit risk associated with cash as these amounts are held with major Canadian banks.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at March 31, 2023, the Company had a cash and cash equivalents balance of $529,692 ( December 31, 2022 – $687,602) to settle current liabilities of $328,047 ( December 31, 2022 – $302,423). All of the Company’s financial liabilities have contractual maturities of 30 days or due on demand and are subject to normal trade terms.

Interest rate risk

Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The risk that the Company will realize such a loss is limited as it does not have any significant interest-bearing financial instruments.

Foreign currency risk

As at March 31, 2023 and December 31, 2022, the Company is exposed to foreign currency risk as certain monetary financial instruments are denominated in Canadian currency. The Company’s sensitivity analysis suggests that reasonably expected changes in the rates of exchange in the United States would change foreign exchange gain or loss by an insignificant amount.

13.

OPERATING LEASES  

 

The Company has one operating leaseslease with unrelated third parties for office space at the Vancouver, Canada.

 

The lease at the Vancouver, Canada location is on a month-to-month basis with monthly rental payments of $3,950 (CND). For the period ended March 31, 20222023 and 20212022 rent expense was $8,874$10,305 and $9,290,$8,874, respectively.

 

 

13.14.

SEGMENTED INFORMATION  

 

The Company currently operates in a single reportable operating segment. All of the Company’s assets and expenditures are located in theCanada and United States. Since the Company does not have any revenue producing activities, there is no segment information by revenues.

 

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Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

FORWARD-LOOKING STATEMENTS AND SUPPLEMENTARY DATA

 

The following discussion should be read in conjunction with our condensed interim financial statements and other financial information appearing elsewhere in this quarterly report. In addition to historical information, the following discussion and other parts of this quarterly report contain forward-looking statements under applicable securities laws. You can identify these statements by forward-looking words such as “plan”, “may”, “will”, “expect”, “intend”, “anticipate”, believe”, “estimate” and “continue” or similar words. Forward-looking statements are statements that are not historical facts, and include, but are not limited to, statements regarding our products and services, including our digital watermarking technology and Cloud-based document protection system, our data privacy and data protection services and solutions, our technology, our cash needs, including our ability to fund our future capital expenditures and working capital requirements, and our expectations regarding competition and growth in our sector, are forward looking statements, the future sources and availability of additional funding, and the effect of funding arrangements on projects and products. You should read statements that contain these words carefully because they discuss future expectations and plans, which contain projections of future results of operations or financial condition or state other forward-looking information. We believe that it is important to communicate future expectations to investors. However, there may be events in the future that we are not able to accurately predict or control. Accordingly, we do not undertake any obligation to update any forward-looking statements for any reason, even if new information becomes available or other events occur in the future, except as required by law.

 

The forward-looking statements included herein are based on current expectations that involve a number of risks and uncertainties set forth under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 20212022 and other periodic reports filed with the United States Securities and Exchange Commission (“SEC”). Accordingly, to the extent that this quarterly report contains forward-looking statements regarding the financial condition, operating results, business prospects or any other aspect of the Company, please be advised that the Company’s actual financial condition, operating results and business performance may differ materially from that projected or estimated by the Company in forward-looking statements.

 

OVERVIEW OF THE COMPANY

 

Oculus VisionTech Inc. (OVTZ) is a Canadian-based development-stage technology company focused on cyber security, data privacy and data protection solutions for Enterprise business customers. Headquartered in Vancouver, British Columbia, Canada, the company was originally founded by image processing experts and is operated by experienced leadership. Currently, OVTZ is expanding and investing in a suite of new data protection and data privacy security products that will revolutionize CCPA, GDPR, LGPD and other data privacy legislation compliance for both data subjects and data controllers worldwide. Our mission is innovation of viable software tools that enable intelligent automated solutions for public cloud customer services and needs specific to data privacy and data protection for individuals, organizations and their customers worldwide, through a vision of mutually trusted data compliance.

 

Our Forget-Me-Yes® data privacy product is a Software-as-a-Service (SaaS) platform developed to specifically address the global ‘Right-to-be-Forgotten’ (RtbF) and Right-of-Erase (RoE) legal components of Brazil’s LGPD, Europe’s GDPR, California Consumer Privacy Act (CCPA), Colorado Privacy Act (CPA) and Virginia CDPA data privacy regulatory compliance. An additional new data protection software tool, ComplyScan®, is being developed to address public cloud data governance compliance. Our legacy Cloud Document Protection System (Cloud-DPS) technology leveraged our digital watermarking technology to enable OVTZ to offer a SaaS-based document management platform for tamper-proof document authentication and protection. Historically, we have used our digital watermarking technology for streaming video content distribution based on embedded digital watermarking, as well as video-on-demand (VOD) systems, services and source-to-destination digital media delivery solutions that allow live or recorded digitized and compressed video to be transmitted through Internet, intranet, satellite or wireless connectivity.

 

We were incorporated on April 18, 1986, as "First Commercial Financial Group Inc." in the Province of Alberta, Canada. In 1989, our name was changed to "Micron Metals Canada Corp.", which purchased 100% of the outstanding shares of USA Video Inc., a Texas corporation, in order to focus on the digital media business. In 1995, we changed our name to "USA Video Interactive Corp." and continued out of the Province of Alberta into the State of Wyoming. At a shareholders meeting held on December 30, 2011, a resolution was passed to change our name to "Oculus VisionTech Inc." and to alter our share capital by way of a reverse stock split (share consolidation) on the basis of fifteen old common shares for one new common share. On January 25, 2012, we changed our name to "Oculus VisionTech Inc." In June 2020, OVTZ acquired OCL Technologies Inc. (OCL), a Delaware corporation data privacy software development startup based in San Diego, California. As a 100% wholly-owned subsidiary of OVTZ and to better align with customer and market focus, OCL has completed a corporate name change to ComplyTrust® Inc. (CTI) on January 21, 2021. All OCL references throughout this document are synonymous with the new name change, CTI.

 

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Our executive and corporate headquarter offices are located at Suite 507, 837 West Hastings Street, Vancouver, British Columbia, Canada, V6C 3N6. Our telephone number is 1-800-684-0183 and our facsimile number is 604-685-5777. Our email address is contact@ovtz.com and our website is www.ovtz.com. Our common shares are listed for trading on the TSX Venture Exchange (TSX.V – OVT, OTCQB – OVTZ, FSE – USF1).

 

BUSINESS OBJECTIVES:

 

In this age of digital transformation, data monetization, IoT, and massive data migration to converged hyperscale, geo-disbursed Cloud infrastructure and workloads, data protection and data privacy have taken center stage. GDPR, LGPD, CCPA, and many other new international (China/(Canada/PIPEDA, China/PIPL, India)India/DIA) and upcoming US Federal (ADPPA) and individual State data privacy regulations enable individuals and organizations the right to access and request deletion of all personal information for a given data subject. In our ever increasing Everything-as-a-Service world, OVTZ recognizes the need for global cloud-native data privacy and data protection solutions that are multi-cloud platform-ready and can augment both existing legacy and newer agile-driven architectures. OVTZ is building modular microservices-based software solutions and services for both hybrid on-premise and multi-cloud data management that incorporate automated malware, privacy and ransomware scanning, reporting and visualization.

 

Our new Forget-Me-Yes® (FMY) Software-as-a-Service (Saas)(SaaS) data privacy solution is a secure, Zero-Knowledge platform providing a single-source capability of continuous ‘right-to-be-forgotten’ (RtbF) and ‘right-of-erase’ (RoE) privacy compliance by incorporating automated policy-driven re-query services that guarantees a Data Subject’s requested RtbF/RoE data remains ‘forgotten’ over the life of their FMY subscription. FMY incorporates hybrid encryption technology that ensures all User Interface, data-in-transit and data-at-rest remain secure and can only be accessed by the subscriber. With a cloud-native architecture, the FMY functionality can be utilized as either a complete turnkey SaaS subscription platform, or individually licensed for seamless integration with existing 3rd. party applications and data privacy platforms.

 

Our new ComplyTrust® Software-as-a-Service Suite (CTSS) is a set of software tools specifically designed to address cloud-native data management and regulatory compliant data governance. CTSS will help to remove enterprise organizational barriers and blockers to further enable successful cloud migration and deployment that benefit the cloud infrastructure providers, enterprise organizations, and users collectively. CTSS helps to automate and visualize cloud compliance reporting across accounts, regions and services based on a variety of user-definable and data driven metrics. Development of the first CTSS product, a cloud-native data backup compliance reporting tool called ComplyScan® (CS), has commenced.

 

OVTZ had recognized that cloud-based, digital document security/protection products were a potentially viable business opportunity for the Company that allowed us to apply our proprietary real-time digital video watermarking technology, originally developed for studios and networks in the entertainment industry, to the digital document security/protection market. Cloud-DPS secures and protects digital documents (including text documents, photos, blueprints, etc.) from any modification, and/or attempted forgery by imperceptibly watermarking documents, using real-time image processing and watermarking algorithms, embedded into a secured/protected copy of a document. This authentication and verification process ensures the integrity of the original digital document.

 

Our near-term business objectives for the above:

 

1.

Patent and license new technology developed within the corporate research and development program;

 

2.

Demonstrate proof of concept on selected commercial projects with our Forget-Me-Yes® (FMY) data privacy Software-as-a-Service platform and ComplyTrust® SaaS Suite (CTSS), gain industry recognition for the architectural and business differentiators of the company product’s FMY data privacy, ComplyScan® (CS) reportingcompliance validation tool and our legacy C-DPS authentication/tamper-proof functionality, and generate sales and support revenues in FY21+.

 

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CRITICAL ACCOUNTING POLICIES (AND ESTIMATES)

 

In preparing its consolidated financials statement, the Company follows GAAP, which is described in Note 3, Summary of Significant Accounting Policies, to the Company’s December 31, 20212022 Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K. The application of these principles requires significant judgements or an estimation process that can affect the results of operations, financial position and cash flows of the Company, as well as the related footnote disclosures. The Company continually reviews its accounting policies and financials information disclosures. Except as noted in Note 3, Summary of Significant Accounting Policies, of the Company’s financials statements, there have been no material changes in the Company’s critical accounting policies or estimates since December 31, 2021.2022.

 

RESULTS OF OPERATIONS

 

Sales

 

Sales for the three monththree-month period ended March 31, 2023 and 2022 and 2021 were $-0-$nil.

 

Cost of Sales

 

The cost of sales for the three monththree-month period ended March 31, 2023 and 2022 and 2021 were $-0-.$nil.

 

Selling, General and Administrative Expenses

 

Selling, general and administrative expenses, consisting of product marketing expenses, consulting fees, office, professional fees and other expenses to execute our business plan and for our day-to-day operations, increased in the periodyear ended MarchDecember 31, 2022.  

We continue to develop and have begun to market C-DPS – Cloud Document Protection System and the Forget-Me-Yes® (FMY) “Right-to-be-Forgotten” and “Right-to-Erase” data privacy platform. Administrative expenses have decreased/increased moderately as a result of insignificant fluctuations in general costs.

 

Three month period ended March 31, 2022

Selling, general and administrative expenses for the three monthsperiod ended March 31, 2022 increased2023 decreased to $96,253$72,777 from $83,406$96,253 for the period ended March 31, 2021.2022. We incurred increaseddecreased costs in 2022during the period due to increased in business activities.minimal corporate and filing activities during the fiscal year.

 

We have arranged for additional staff and consultants to engage in marketing activities in an effort to identify and assess appropriate market segments, develop business arrangements with prospective partners, create awareness of new products and services, and communicate to the industry and potential customers. Other components of selling, general and administrative expenses did not change significantly.

 

Research and Development

 

Three monthResearch and development for the period ended March 31, 2022

Research and development costs for the three months ended March 31, 2022, increased2023 decreased to $345,463$84,203 from $132,724$345,463 for the comparable period in 2023. This was a result of the Company’s effort to reduce costs due to the minimal activity during the period. We incurred increasedcomparable costs in 2022 dueas the management maintain its decision in 2021, to management’s decision to continuedevelop CTSS (ComplyScan®) as well as the on-going development of theour subsidiary’s Forget-Me-Yes® (FMY)zero trust data privacy solutionplatform. (“Right-to-be-Forgotten” and initiated development of the new CTSS ComplyScan® (CS) backup reporting tool, while evaluating the legacy C-DPS architecture, addressable market and potential future integration into CTSS.“Right-to-Erase”).

 

Net Losses

Three month period ended March 31, 2022

 

To date, we have not achieved profitability and expect to incur substantial losses for the foreseeable future. Our net loss for the three months ended March 31, 20222023 was $581,364,$235,059, compared with a net loss of $393,620$581,364 for the comparative period. Our total comprehensive loss for the three months ended March 31, 2023 was $236,218, compared with a comprehensive loss of $558,386, which includes currency translation differences of $1,159.

 

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Liquidity and Capital Resources

 

At March 31, 2022,2023 our cash and cash equivalents position was $1,800,874, compared to $2,208,451$529,692, a decrease from $687,602 at December 31, 2021.2022. We had a working capital of $1,677,922$215,373 and an accumulated deficit of $46,727,209$48,030,493 at March 31, 2022.2023.

 

We have historically satisfied our capital needs primarily by shareholders’ loans and issuing equity securities to our officers, directors, employees and a small group of investors, and from short-term bridge loans from members of management.

 

As of March 31, 2023, we had $529,692 in cash and cash equivalents. Management has forecasted the Company will not have sufficient working capital to operate for the ensuing 12 months. We will require an additional $3 million to $5 million to finance operations for the fiscal 2023 and we intend to obtain such financing through sales of our equity securities. While the Company has been successful in the past in obtaining financing, there can be no assurance that the Company will be able to obtain adequate financing, or that such financing will be on terms acceptable to the Company, to meet future operational needs which may result in the delay, reduction, or discontinuation of ongoing development programs.

Assuming the aforementioned $3 million to $5 million in financing is obtained, continuing operations for the longer-term will be supported through anticipated growth in revenues and through additional sales of our securities. Although longer-term financing requirements may vary depending upon our sales performance, management expects that we will require additional financing of $3 million to $5 million for fiscal 2023. We have no binding commitments or arrangements for additional financing, and there is no assurance that management will be able to obtain any additional financing on terms acceptable to us, if at all.

OFF-BALANCE SHEET ARRANGEMENTS

 

As of March 31, 20222023, we have no off-balance sheet arrangements.

 

Item 3.Quantitative and Qualitative Disclosures About Market Risk.

Quantitative and Qualitative Disclosures About Market Risk.

 

Oculus is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and is not required to provide information required under this Item.

 

Item 4.Controls and Procedures.

Controls and Procedures.

 

We maintain “disclosure controls and procedures”, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer, who is our principal executive officer, and Chief Financial Officer, who is our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.

 

As of March 31, 2022,2023, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in the our internal control over financial reporting for the quarterly period ended March 31, 2022,2023, identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15, that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II - OTHER INFORMATION

 

Item 1.

Legal Proceedings.

 

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.

 

Item 1A.

Risk Factors.

 

Oculus is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide information required under this Item. A description of the risks associated with our business, financial condition, and results of operations is set forth in Part I, Item 1A, of our Annual Report on Form 10 -K for the fiscal year ended December 31, 20212022 filed with the SEC on March 21, 2022.28, 2023. Those factors continue to be meaningful for your evaluation of Oculus and we urge you to review and consider the risk factors presented in such Form 10-K.

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

 

None.

 

Item 3.

Defaults Upon Senior Securities.

 

None.

 

Item 4.

Mine Safety Disclosures.

 

Not applicable.

 

Item 5.

Other Information.

 

None.

 

Item 6.

Exhibits.

 

The information required by this Item is set forth on the exhibit index which follows the signature page of this report.

 

Exhibit

No.

Description

  

EX-31.1

Certification of CEO

  

EX-31.2

Certification of CFO

  

EX-32.1

SOX Certifiaction of CEO

  

EX-32.2

SOC Certification of CFO

 

101.INS

Inline XBRL Instance Document

  

101.SCH

Inline XBRL Taxonomy Extension Schema Document

  

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

  

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

  

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

  

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

  
104Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

OCULUS VISIONTECH INC.

   

May 13, 20229, 2023

By:

/s/ Rowland Perkins

 
  

Rowland Perkins

  

President and Chief Executive Officer

  

(principal executive officer)

   
   

May 13, 20229, 2023

By:

/s/ Anton J. Drescher

 
  

Anton J. Drescher

  

Chief Financial Officer

  

(principal financial and accounting officer)

 

24