UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X]
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period endedSeptember 30, 2017March 31, 2022
[ ]☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ____________
Commission file number000-55049
APPCOIN INNOVATIONSCURRENCYWORKS INC.
(Exact name of registrant as specified in its charter)
Nevada | 27-3098487 | |
(State or other jurisdiction | (I.R.S. Employer | |
of incorporation or organization) | Identification No.) |
561 Indiana3250 Oakland Hills Court Venice Beach, , Fairfield, CA 9029194534
(Address of principal executive offices) (Zip Code)
310.658.4413424.570.9446
(Registrant’s telephone number, including area code)
Redstone Literary Agents, Inc. 3250 Oakland Hills Court, Fairfield, Ca 94534N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act
Title of Each Class | Trading Symbol(s) | Name of each exchange on which registered | ||
Nil | N/A | N/A |
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 |
Indicate by check mark whether the registrant has submitted electronically | Yes |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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. (Check one):
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 |
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 11,600,000 shares of common sharesstock issued and outstanding as at November 13, 2017.May 11, 2022.
TABLE OF CONTENTS
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PART I – FINANCIAL INFORMATION
ItemITEM 1. Financial Statements.FINANCIAL STATEMENTS.
Our unaudited condensed interim consolidated financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.
It is the opinion of management that the unaudited condensed interim consolidated financial statements for the quarter ended September 30, 2017March 31, 2022 include all adjustments necessary in order to ensure that the unaudited condensed interim consolidated financial statements are not misleading.
AppCoin Innovations
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CurrencyWorks Inc. (formerly RedStone Literary Agents, Inc.)
Condensed Consolidated Balance Sheets
(Unaudited)
March 31, 2022 | December 31, 2021 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 756,626 | $ | 567,030 | ||||
Accounts receivable | 130,956 | - | ||||||
Prepaid expenses | 106,968 | 88,291 | ||||||
Total Current Assets | 994,550 | 655,321 | ||||||
Intangible asset, net | 2,850,000 | 2,925,000 | ||||||
Notes receivable, related party | 1,250,000 | 1,250,000 | ||||||
Investment, related party | 480,780 | 480,780 | ||||||
Interest receivable, related party | 66,397 | 24,773 | ||||||
Total Assets | $ | 5,641,727 | $ | 5,335,874 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current Liabilities | ||||||||
Accounts payable and accrued expenses | $ | 1,332,935 | $ | 1,249,904 | ||||
Total Current Liabilities | 1,332,935 | 1,249,904 | ||||||
Derivative liability | 171,126 | 474,595 | ||||||
Total Liabilities | 1,504,061 | 1,724,499 | ||||||
Commitments and Contingencies | - | - | ||||||
Stockholders’ Equity | ||||||||
Common stock, $ par value, shares authorized; and shares issued and outstanding as at March 31, 2022 and December 31, 2021, respectively | 77,953 | 73,359 | ||||||
Additional paid-in-capital | 41,041,752 | 39,681,142 | ||||||
Accumulated deficit | (36,474,899 | ) | (35,248,384 | ) | ||||
Total CurrencyWorks Stockholders’ Equity | 4,644,806 | 4,506,117 | ||||||
Non-controlling interest | (507,140 | ) | (894,742 | ) | ||||
Total Stockholders’ Deficit | 4,137,666 | 3,611,375 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 5,641,727 | $ | 5,335,874 |
September 30, 2017 | December 31, 2016 | |||||||
Assets | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 195,011 | $ | 56,050 | ||||
Total Current Assets | 195,011 | 56,050 | ||||||
Total Assets | $ | 195,011 | $ | 56,050 | ||||
Liabilities and Stockholders’ Deficit | ||||||||
Current Liabilities | ||||||||
Accounts payable and accrued expenses | $ | 10,140 | $ | 49,013 | ||||
Unsecured loan payable | 250,000 | - | ||||||
Total Current Liabilities | 260,140 | 49,013 | ||||||
Non-Current Liabilities | ||||||||
Convertible notes payable | 214,799 | 163,270 | ||||||
Total Liabilities | 474,939 | 212,283 | ||||||
Stockholders’ Deficit | ||||||||
Common stock, $0.001 par value, 75,000,000 shares authorized; 6,000,000 shares issued and outstanding: | 6,000 | 6,000 | ||||||
Additional paid-in-capital | 63,717 | 63,717 | ||||||
Accumulated deficit | (349,645 | ) | (225,950 | ) | ||||
Total Stockholders’ Deficit | (279,928 | ) | (156,233 | ) | ||||
Total Liabilities and Stockholders’ Deficit | $ | 195,011 | $ | 56,050 |
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
AppCoin Innovations
4 |
CurrencyWorks Inc. (formerly RedStone Literary Agents, Inc.)
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended September 30, 2017 | Three Months Ended September 30, 2016 | Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | |||||||||||||
Revenue | $ | - | $ | - | $ | - | $ | - | ||||||||
General and administrative expenses | ||||||||||||||||
Note interest and bank charges | 6,100 | 3,447 | 21,539 | 10,036 | ||||||||||||
Consulting fees | 56,500 | 2,750 | 77,900 | 8,200 | ||||||||||||
Professional fees | 8,450 | 5,409 | 20,234 | 11,282 | ||||||||||||
Filing and transfer fees | 2,062 | 770 | 4,022 | 4,238 | ||||||||||||
Total general and administrative expenses | 73,112 | 12,376 | 123,695 | 33,756 | ||||||||||||
Net loss from operations | (73,112 | ) | (12,376 | ) | (123,695 | ) | (33,756 | )) | ||||||||
Provision for taxes | - | - | - | - | ||||||||||||
Net loss | $ | (73,112 | ) | $ | (12,376 | ) | (123,695 | ) | (33,756 | ) | ||||||
Loss per common share – Basic and diluted | $ | (0.01 | ) | $ | (0.01 | )* | (0.02 | ) | (0.00 | )* | ||||||
Weighted average number of common shares outstanding, basic and diluted | 6,000,000 | 6,000,000 | 6,000,000 | 6,000,000 |
Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | |||||||
Revenues | ||||||||
Service revenue | $ | 1,324,387 | $ | - | ||||
Total revenues | 1,324,387 | - | ||||||
Operating expenses | ||||||||
General and administrative expense | 2,050,960 | 1,548,742 | ||||||
Service costs | 457,434 | - | ||||||
Total operating expenses | 2,508,934 | 1,548,742 | ||||||
Net loss from operations | (1,184,007 | ) | (1,548,742 | ) | ||||
Other income (expense) | ||||||||
Other income | - | 16,500 | ||||||
Note interest revenue | 41,625 | - | ||||||
Note interest expense | - | (45,959 | ) | |||||
Derivative liability | 303,469 | (43,294,771 | ) | |||||
Total other income (expense) | 345,094 | (43,324,230 | ) | |||||
Net (loss) | $ | (838,913 | ) | $ | (44,872,972 | ) | ||
Income/(Loss) from non-controlling interest | 387,602 | (8,968 | ) | |||||
Net loss attributable to CurrencyWorks | (1,226,515 | ) | (44,864,004 | ) | ||||
Earnings (loss) per common share – Basic | $ | (0.02 | ) | $ | (1.00 | ) | ||
Earnings (loss) per common share – Diluted | $ | (0.02 | ) | $ | (1.00 | ) | ||
Weighted average number of common shares outstanding, basic and diluted | 75,623,518 | 44,702,061 |
* Denotes a loss of less than $(0.01) per share.
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
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AppCoin InnovationsCurrencyWorks Inc. (formerly RedStone Literary Agents, Inc.)
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | |||||||
Operating activities | ||||||||
Net loss for the period | $ | (838,913 | ) | $ | (44,872,972 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
Stock-based compensation | 100,871 | 354,817 | ||||||
Stock-based compensation, related party | 554,335 | 785,345 | ||||||
Derivative liability | (303,469 | ) | 43,303,230 | |||||
Amortization | 75,000 | - | ||||||
Changes in operating assets and liabilities | ||||||||
Accounts receivable | (130,956 | ) | 87,500 | |||||
Prepaid expense | (18,677 | ) | (327,360 | ) | ||||
Accounts payable and accrued expenses | 274,530 | 147,228 | ||||||
Accounts payable and accrued expenses, related party | - | (120,951 | ) | |||||
Accrued interest on loans payable, related party | - | 24,284 | ||||||
Accrued interest on notes receivable | (41,624 | ) | - | |||||
Accrued interest on notes payable | - | (128,737 | ) | |||||
Accrued interest on convertible notes | - | 141,954 | ||||||
Net cash used in operating activities | (328,903 | ) | (605,662 | ) | ||||
Financing activities | ||||||||
Proceeds from share issuance | 518,499 | 4,577,115 | ||||||
Proceeds from warrants exercise | - | 443,018 | ||||||
Proceeds from options exercise | - | 32,500 | ||||||
Loan repayment | - | (156,598 | ) | |||||
Share issuance cost | - | (1,210 | ) | |||||
Net cash provided by financing activities | 518,499 | 4,894,825 | ||||||
Net changes in cash and equivalents | 189,596 | 4,289,163 | ||||||
Cash and equivalents at beginning of the period | 567,030 | 33,342 | ||||||
Cash and equivalents at end of the period | $ | 756,626 | $ | 4,322,505 |
Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | |||||||
Cash derived from (used for) | ||||||||
Operating activities | ||||||||
Net loss for the period | $ | (123,695 | ) | $ | (33,756 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities | - | - | ||||||
Changes in operating assets and liabilities | ||||||||
Accrued interest included in convertible notes payable | 21,529 | 10,036 | ||||||
Accounts payable and accrued expenses | (38,873 | ) | (1,380 | ) | ||||
Net cash (used in) operating activities | (141,039 | ) | (25,100 | ) | ||||
Investing activities | - | - | ||||||
Net cash provided by (used in) investing activities | - | - | ||||||
Financing activities | ||||||||
Proceeds from issuance of convertible notes payable | 30,000 | 20,000 | ||||||
Proceeds from unsecured loan payable | 250,000 | - | ||||||
Net cash provided by financing activities | 280,000 | 20,000 | ||||||
Net changes in cash and equivalents | 138,961 | (5,100 | ) | |||||
Cash and equivalents at beginning of the year | 56,050 | 13,870 | ||||||
Cash and equivalents at end of the year | $ | 195,011 | $ | 8,770 | ||||
SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||
Cash paid in interest | $ | - | $ | - | ||||
Cash paid for income taxes | $ | - | $ | - |
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
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AppCoin Innovations Inc. (formerly RedStone Literary Agents, Inc.)
CurrencyWorks Inc.
Condensed Consolidated Statements of Cash Flows (cont’d)
(Unaudited)
SUPPLEMENTAL CASH FLOW INFORMATION
Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | |||||||
SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||
Cash paid in interest | $ | - | $ | 56,773 | ||||
Cash paid for income taxes | $ | - | $ | - | ||||
Non-cash share issue costs | $ | - | $ | - | ||||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
Stock-based compensation | $ | 100,871 | $ | 354,817 | ||||
Stock-based compensation, related party | $ | 554,335 | $ | 785,345 | ||||
Derivative liability | $ | (303,469 | ) | $ | 38,179,236 | |||
Conversion of convertible debt | $ | - | $ | - | ||||
Conversion of accounts payable | $ | 191,499 | $ | - |
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
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CurrencyWorks Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
(Unaudited)
Number of Shares | Amount | Additional Paid-in Capital | Accumulated Deficit | Non-Controlling Interest | Stockholders’ Equity (Deficit) | |||||||||||||||||||
Common Stock | Total | |||||||||||||||||||||||
Number of Shares | Amount | Additional Paid-in Capital | Accumulated Deficit | Non-Controlling Interest | Stockholders’ Equity (Deficit) | |||||||||||||||||||
Balance, December 31, 2020 | 35,426,033 | $ | 35,426 | $ | 7,895,333 | $ | (13,323,375 | ) | $ | (333,415 | ) | $ | (5,726,031 | ) | ||||||||||
Stock-based compensation | - | - | 354,817 | - | - | 354,817 | ||||||||||||||||||
Stock-based compensation, related party | - | - | 785,345 | - | - | 785,345 | ||||||||||||||||||
Share issuance | 11,600,000 | 11,600 | 2,506,486 | - | - | 2,518,086 | ||||||||||||||||||
Options exercised | 325,000 | 325 | 32,175 | - | - | 32,500 | ||||||||||||||||||
Warrants exercised | 4,941,250 | 4,941 | 11,368,702 | - | - | 11,373,643 | ||||||||||||||||||
Net loss for the period | - | - | - | (44,864,004 | ) | (8,968 | ) | (44,872,972 | ) | |||||||||||||||
Balance, March 31, 2021 | 52,292,283 | $ | 52,292 | $ | 22,942,858 | $ | (58,187,379 | ) | $ | (342,383 | ) | $ | (35,534,612 | ) | ||||||||||
Balance, December 31, 2021 | 73,359,430 | $ | 73,359 | $ | 39,681,142 | $ | (35,248,384 | ) | $ | (894,742 | ) | $ | 3,611,375 | |||||||||||
Stock-based compensation | - | - | 100,871 | - | - | 100,871 | ||||||||||||||||||
Stock-based compensation, related party | - | - | 554,335 | - | - | 554,335 | ||||||||||||||||||
Share issuances | 3,861,207 | 3,862 | 556,136 | - | - | 559,998 | ||||||||||||||||||
Debt conversion | 488,281 | 488 | 99,512 | - | - | 100,000 | ||||||||||||||||||
Private placement | 244,139 | 244 | 49,756 | - | - | 50,000 | ||||||||||||||||||
Net loss for the period | - | - | - | (1,226,515 | ) | 387,602 | (838,913 | ) | ||||||||||||||||
Balance, March 31, 2022 | 77,953,057 | $ | 77,953 | $ | 41,041,752 | $ | (36,474,899 | ) | $ | (507,140 | ) | $ | 4,137,666 |
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
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CurrencyWorks Inc.
Notes to Unaudited Condensed UnauditedInterim Consolidated Financial Statements
As of September 30, 2017March 31, 2022 and for the ninethree months ended September 30, 2017March 31, 2022 and 20162021
1. NATURE AND CONTINUANCE OF OPERATIONS
AppCoin InnovationsCurrencyWorks Inc. (formerly RedStone Literary Agents, Inc.)(the(the “Company”) was incorporated under the laws of the State of Nevada U.S. on July 20, 2010, with an authorized capital of 75,000,000 common shares, having a par value of $0.001$ per share. During the period ended December 31, 2010, the Company commenced operations by issuing shares and developing its publishing service business, focused on representing authors to publishers.
In November 2014, Ms. Wolf resigned as a director of the Company and the Company ceased pursuing the publishing service business.
On August 1, 2017, the Company incorporated a Nevada subsidiary, AppCoin Innovations (USA) Inc., which will be used to operate12, 2021, the Company’s newsubsidiary sBetOne, Inc. (“sBetOne”) entered into a business of providing services for blockchain initial coin offerings.
On August 17, 2017, the Company, Redstone Literary Agents,combination with a related party, VON Acquisition Inc., completed (“VON”) whereby sBetOne became a merger with its wholly owned subsidiary AppCoin Innovations Inc.,of VON. Please see Note 15.
On June 22, 2021, we incorporated a Nevada corporationnew Delaware subsidiary, Motoclub LLC, to effectcreate a change in the Company’s name from “RedStone Literary Agents, Inc.”marketplace for digital automotive collectibles.
On June 22, 2021, we incorporated a new Delaware subsidiary, EnderbyWorks, LLC, to “AppCoin Innovations Inc.”.create a direct-to-consumer, feature-length film viewing and distribution platform delivering feature-length films and digital collectible entertainment content as NFTs.
The Company’s new business model is a services and development business that providesto provide a turnkey set of services for companies to develop and integrate blockchain and cryptocurrency technologies with a view to conducting initial coin offerings.into their business operations. The Company will enable its customers to focus on their core competencies while providing the necessary resources and expertise to execute a strategy that will enable companies to integrate new blockchain plus cryptocurrency technologies and execute initial coin offerings.into their business operations. The Company’s plan is toCompany will be partially compensated by these companies by receivingon a fee-for-services model. The Company may also accept tokens or coins in payment for its services, to the initial coin offerings. This will allow the Company’s shareholders to indirectly participate in multiple initial coin offerings without having to open new accounts or electronic wallets with cryptocurrency exchanges.extent permitted under applicable law.
The Company’s services will include strategic planning, project planning, structure development and administration, campaign management, business plan modelling,modeling, technology development support, whitepaper preparation, due diligence reporting, escrow management, governance planning and management.
Going Concern
These unaudited condensed interim consolidated financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses since inception resulting in an accumulated deficit of $348,973$36,474,899 and $35,248,384 as at September 30, 2017of March 31, 2022 and December 31, 2021, respectively and further losses are anticipated in the pursuit of the Company’s new service business opportunity, raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand, loans from directors and/or the private placement of common stock.stock/warrants.
The financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The unaudited condensed interim consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles (“U.S. GAAP”GAAP”) in the United States of AmericaAmerica.
Basis of Consolidation
The unaudited condensed interim consolidated financial statements include the accounts of the Company and are presented in US dollars.its subsidiary, CurrencyWorks USA Inc. (formerly ICOx USA, Inc.), and its majority-owned subsidiaries, Motoclub LLC, and EnderbyWorks, LLC. All intercompany transactions and balances have been eliminated.
Unaudited Interim Financial Information
The accompanying unaudited condensed interim consolidated financial statements and related notes have been prepared in accordance with U.S. GAAP for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. The unaudited condensed interim consolidated financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These unaudited condensed interim consolidated financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 20162021 and notes thereto contained in the information as part of the Company’s Annual Report on Form 10-K, which was filed with the SEC on March 23, 2017.April 15, 2022.
Income TaxesUse of Estimates
The Company followspreparation of unaudited condensed interim consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the liability methodreported amounts 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 differences). The effect on deferred income taxdisclosure of contingent assets and liabilities at the date of a change in tax rates is recognized in income in the periodinterim consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and these differences could be material.
Cash and Cash Equivalents
Cash and cash equivalents include short-term, highly liquid investments, such as certificates of deposit or money market funds that includesare 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.
The carrying amounts of cash and cash equivalents, prepaid expenses, short-term loans receivable, trade payables and convertible notes payable approximate their fair value due to the enactment date.short-term maturity of such instruments.
At September 30, 2017, a full deferred tax asset valuation allowance has been provided and no deferred tax asset has been recorded.Contingent Liabilities
Earnings per Share
The Company computes loss per shareaccounts for its contingent liabilities in accordance with ASC 105,No. 450 “Contingencies”. A provision is recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.
With respect to legal matters, provisions are reviewed and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. As of March 31, 2022 and December 31, 2021, the Company was not a party to any litigation that could have a material adverse effect on the Company’s business, financial position, results of operations or cash flows.
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Collectability of Accounts Receivable
In considering the collectability of accounts receivable, the Company takes into account the legal obligation for payment by the customer, as well as the financial capacity of the customer to fund its obligation to the Company. The carrying amount of accounts receivable represents the maximum credit exposure on this balance. We have assessed the collectability of the accounts receivables and are not aware of any specific events or circumstances that require an update to our estimates and assumptions or materially affected the carrying value of our assets or liabilities as of the date of issuance of this Quarterly Report on Form 10-Q. These estimates may change as new events occur and additional information is obtained
The Company computes earnings (loss) per share (“EPS”) in accordance with ASC 260, “Earnings per Share” which requires presentation of both basic and diluted earnings per shareEPS on the face of the statement of operations. Basic loss per shareEPS is computed by dividing net lossincome (loss) available to common stockholdersshareholders by the weighted average number of shares outstanding common shares during the period. Diluted loss per shareEPS gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per shareIn 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 stock options or warrants (Note 13 and Note 8). Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive.
WithAt March 31, 2022, common shares from the exceptionconversion of debt ( shares), outstanding stock options ( shares) (Note 13), and outstanding warrants ( shares) (Note 8) have been excluded as their effect is anti-dilutive. At March 31, 2021, common shares from the conversion of debt ( shares), outstanding stock options ( shares), and outstanding warrants ( shares) have been excluded as their effects are anti-dilutive.
Stock-Based Compensation
The Company has adopted FASB guidance on stock-based compensation. Under FASB ASC 718-10-30-2, all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. The fair value of the options is calculated based off the Black Scholes valuation model (Note 13).
The Company has issued stock options to employees and non-employees. Stock options granted to non-employees for services or performance not yet rendered would be expensed over the service period or until the goals had been reached. The fair value calculation is valued as at the grant date. There were no new stock options granted during the period ended March 31, 2022.
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents, convertible notes, payable discussedand payables. The carrying amount of cash and cash equivalents and payables approximates fair value because of the short-term nature of these items.
When determining fair value, whenever possible, the Company use observable market data, and relies on unobservable inputs only when observable market data is not available. As of March 31, 2022, and March 31, 2021, the Company did not have any level 1 or 2 financial instruments. Please see Note 14 for additional information on level 3 fair value of financial instruments.
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging Contracts in Note 3,Entity s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity s Own Equity. ASU 2020-06 will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models results in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. ASU 2020-06 also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. ASU 2020-06 will be effective for public companies for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Management has not yet evaluated the impact that the adoption of ASU 2020-06 will have on the Company’s consolidated financial statement presentation or disclosures.
Revenue Recognition
Revenue is recognized in accordance with FASB ASC Topic 606, Revenue Recognition. The Company recognizes revenue when persuasive evidence of an arrangement exists, the related services are rendered or delivery has occurred.
The Company generates revenues from two main sources, NFT sales and professional services consulting agreements. These arrangements are generally recognized upon the sale of the NFT through live auctions and online sales or as consulting revenues on a contingent fee basis. There is no prepayment or retainer required prior to performing services and the entire fees is earned on a contingent basis. The Company also provides monthly post-business launch support services. The recurring monthly post-business launch support services are recognized as revenue each month that the subscription is maintained. The Company’s subsidiaries generate revenue from the sale of NFTs that are auctioned or sold directly. NFT revenue is not recognized until it has been sold.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
The Company enters into arrangements for which revenues are contingent upon achieving a pre-determined deliverable or future outcome. Any contingent revenue for these arrangements is not recognized until the contingency is resolved and collectability is reasonably assured.
Differences between the timing of billings and the recognition of revenue are recognized as either unbilled revenue (a component of accounts receivable) or deferred revenue on the consolidated balance sheet. Revenues recognized for services performed but not yet billed to clients are recorded as unbilled revenue.
Reimbursable expenses, including those relating to travel, other out-of-pocket expenses and any third-party costs, are included as a component of revenues. Typically, an equivalent amount of reimbursable expenses are included in total direct client service costs. Taxes collected from customers and remitted to governmental authorities are presented in the statement of operations on a net basis.
Costs to obtain contracts are capitalized and amortized over the course of the revenue cycle.
Service Costs
The Company’s policy is to defer direct service costs that relate to the earning of contingent fee revenue. These deferred costs are expensed when the contingent fee revenue is recognized or when the earning the contingent fee revenue is in doubt. When there are multiple obligations in an agreement or contract, the service costs are recognized based on when it has met the performance obligation and recognized in line with revenues.
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3. ACCOUNTS RECEIVABLE
As at March 31, 2022, the Company had no potentially dilutive debt or equity instruments issued or outstanding during the interim three-month periods ended September 30, 2017accounts receivables of $130,956 compared to $nil as at December 31, 2021.
4. NOTES RECEIVABLE – RELATED PARTY
Effective as of May 5, 2021, we loaned $400,000 to Fogdog Energy Solutions Inc. (“Fogdog”) pursuant to convertible promissory note. The note bears interest at a rate of 4% per annum and 2016.
3. NOTES PAYABLE
On September 14, 2015,was due on May 5, 2022. The loan was not repaid nor converted by the Company as at the reporting date and is now payable on demand. The note may not be prepaid without the written consent of our company. Under certain conditions as outlined in the promissory note, the Company may convert the outstanding loan into common shares. Our chief financial officer, secretary and treasurer, Swapan Kakumanu, is a director, chief financial officer and a shareholder of Fogdog.
Effective as of August 20, 2021, we loaned an additional $850,000 to Fogdog Energy Solutions Inc. pursuant to convertible promissory note. The note bears interest at a rate of 10% per annum and comes due on August 20, 2027. The note may not be prepaid without the written consent of our company. Our chief financial officer, secretary and treasurer, Swapan Kakumanu, is a director, chief financial officer and a shareholder of Fogdog. Accrued interest on the total loan as at March 31, 2022 is $66,397 (December 31, 2021 - $24,773).
5. INTANGIBLE ASSET
On July 6, 2021, the Company, through one of its subsidiaries, acquired the rights to a movie for a period of 10 years. This acquisition is linked to one of the Company’s subsidiary projects for movie-related NFTs. The Company has spent $nil in 2022 (2021 - $3,000,000). This asset will be amortized on a straight-line basis over the 10-year life of the asset.
SCHEDULE OF INTANGIBLE ASSETS
March 31, 2022 | December 31, 2021 | |||||||
Cost | $ | 3,000,000 | $ | 3,000,000 | ||||
Accumulated amortization | (150,000 | ) | (75,000 | ) | ||||
Net | $ | 2,850,000 | $ | 2,925,000 |
6. INVESTMENTS, RELATED PARTY
On August 12, 2021, the Company’s subsidiary sBetOne, Inc. (“sBetOne”) entered into a private placement subscription agreementbusiness combination with a related party, VON Acquisition Inc. (“VON”) whereby sBetOne became a wholly owned subsidiary of VON. The Company received common shares or 6.31% of the total outstanding common shares of VON as at the date of the business combination. The transition from having a 59.02% ownership in sBetOne to having a 6.31% ownership in VON has led the Company to deconsolidate sBetOne from the Company’s financial statements and issuedrecord the ownership of VON as an unsecured convertible note (the “First Note”)investment. The common shares were valued at $ CAD per share.
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During the year ended December 31, 2021, the sBetOne carrying amount in liabilities of $824,041 and loss in NCI of $350,942 were removed from the principal amountCompany and converted into shares of $73,825 to one subscriber.VON, resulting in a gain of $120,478 upon deconsolidation of sBetOne recorded in other income.
SCHEDULE OF INVESTMENTS IN RELATED PARTY
March 31, | December 31, | |||||||
2022 | 2021 | |||||||
Investments, related party | $ | 480,780 | $ | 480,780 |
7. DERIVATIVE LIABILITIES
In connection with warrants, the Company records derivative liabilities since the strike price is denominated in a currency other than the Company’s functional currency. The First Note, and accrued interest, will mature five (5) years fromwarrants are valued on the date of issuance and will bear interestrevalued at each reporting period.
The derivative liabilities were revalued at USD$171,126, resulting in a loss of $303,469 for the rate of 18% interest per annum, compounded annually. The principal amountperiod ended March 31, 2022, related to the change in fair market value of the First Note, plus any interest accrued thereon, may be converted into shares of common stock ofderivative liabilities. The derivative liabilities were revalued using the Company at a conversionBlack-Scholes option pricing model with the following assumptions: an exercise price of $0.03 per share. As at September 30, 2017, the First Note had a balance outstanding of $103,463, comprised of a principle amount of $73,825 and accrued interest of $27,160. The Company has determined that no beneficial conversion feature exists due to the current share valueCAD$ , our stock price on the date of issuance.valuation of CAD$ , expected dividend yield of 0%, average expected volatility of 51.37%, average risk-free interest rate of 1.14%, an average expected term of 0.71 years and foreign exchange rate of 1.2496.
On December8. WARRANTS
For the three months ended March 31, 2016,2022, the Company entered into a private placement subscription agreementissued warrants.
The fair value of each warrant is estimated using the Black-Scholes valuation method. Assumptions used in calculating the fair value at March 31, 2022 were as follows:
SCHEDULE OF ASSUMPTIONS OF FAIR VALUE OF WARRANT
Weighted Average Inputs Used | ||||
Annual dividend yield | $ | - | ||
Expected life (years) | 0.2-0.85 | |||
Risk-free interest rate | 0.35%-1.35 | % | ||
Expected volatility | 49.26%-59.28 | % | ||
Common stock price (CAD) | $ | 0.20 |
Since the expected life of the warrants was greater than the Company’s historical stock information available, the Company determined the expected volatility based on price fluctuations of comparable public companies.
8. WARRANTS (CONT’D)
The issuances, exercises and issued an unsecured convertible note (the “Second Note”)pricing re-sets during the three months ended March 31, 2022, are as follows:
SCHEDULE OF ISSUANCES, EXERCISES AND PRICING RE-SETS
Outstanding at December 31, 2021 | 18,102,771 | |||
Issuances | 3,813,593 | |||
Exercises | - | |||
Anti-Dilution/Modification | - | |||
Forfeitures/cancellations | - | |||
Outstanding at March 31, 2022 | 21,916,364 | |||
Weighted Average Price at March 31, 2022 (CAD) | $ | 0.7088 |
The intrinsic value of the principal amount of $50,000 to one subscriber. The Second Note, and accrued interest, will mature five (5) years from the date of issuance and will bear interest at the rate of 18% interest per annum, compounded annually. The principal amount of the Second Note, plus any interest accrued thereon, may be converted into shares of common stock of the Company at a conversion price of $0.03 per share. As at September 30, 2017, the Second Note had a balance outstanding of $56,756, comprised of a principle amount of $50,000 and accrued interest of $6,756. three months ended March 31, 2022 is $nil. warrants exercised in the
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9. COMMITMENTS
The Company has determined that no beneficial conversion feature exists dueoutstanding commitments as at March 31, 2022.
Litigation
From time to the current share value on the date of issuance.
On December 31, 2016,time, the Company entered into a private placement subscription agreementmay be subject to legal proceedings and issued an unsecured convertible note (the “Third Note”)claims which arise in the principal amountordinary course of $21,500 to one subscriber. The Third Note included repaymentbusiness. As of the principal amount of $20,000 for an unsecured note issued on June 6, 2016 plus a $1,500 restructuring fee. The Third Note, and accrued interest, will mature five (5) years from the date of issuance and will bear interest at the rate of 18% interest per annum, compounded annually. The principal amount of the Third Note, plus any interest accrued thereon, may be converted into shares of common stock of the Company at a conversion price of $0.03 per share. As at September 30, 2017, the Third Note had a balance outstanding of $24,405, comprised of a principal amount of $21,500 and accrued interest of $2,905. The Company has determined thatMarch 31, 2022, there are no beneficial conversion feature exists due to the current share value on the date of issuance.legal proceedings.
On March 2, 2017, the Company entered into a private placement subscription agreement and issued an unsecured convertible note (the “Fourth Note”) in the principal amount of $20,000 to one subscriber. The Fourth Note, and accrued interest, will mature five (5) years from the date of issuance and will bear interest at the rate of 18% interest per annum, compounded annually. The principal amount of the Fourth Note, plus any interest accrued thereon, may be converted into shares of common stock of the Company at a conversion price of $0.03 per share. As at September 30, 2017, the Fourth Note had a balance outstanding of $22,091, comprised of a principle amount of $20,000 and accrued interest of $2,091. The Company has determined that no beneficial conversion feature exists due to the current share value on the date of issuance.
On June 8, 2017, the Company entered into a private placement subscription agreement and issued an unsecured convertible note (the “Fifth Note”) in the principal amount of $10,000 to one subscriber. The Fifth Note, and accrued interest, will mature five (5) years from the date of issuance and will bear interest at the rate of 18% interest per annum, compounded annually. The principal amount of the Fifth Note, plus any interest accrued thereon, may be converted into shares of common stock of the Company at a conversion price of $0.03 per share. As at September 30, 2017, the Fifth Note had a balance outstanding of $10,562, comprised of a principle amount of $10,000 and accrued interest of $562. The Company has determined that no beneficial conversion feature exists due to the current share value on the date of issuance.
3. NOTES PAYABLE (CONT’D)
On September 7, 2017, the Company received a $250,000 loan from a shareholder. The loan is unsecured, repayable on demand and is non-interest bearing. Subsequent to September 30, 2017, this loan was used to subscribe an unsecured convertible debenture as explained in Note 5 - Subsequent Events.
4. 10. RELATED PARTY TRANSACTIONS
In support of the Company’s efforts and cash requirements, it may rely on advances from stockholders until such time as the Company can support its operations through revenue generation or attain adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by stockholders. Amounts represent advances or amounts paid in satisfaction of liabilities.
The Company’s office premises are providedCompany engaged two clients to it atbuild out their business models, technology strategy, market entry strategy, and capital structure, including a blockchain platform launch. The Company signed an agreement with BIG in which 80% of the revenue received is reimbursed to BIG for expenses incurred to meet the performance obligations as outlined.
As of January 15, 2021, Business Instincts Group (“BIG”) is no cost by its sole director and officer. The Company’s solelonger considered a related party due to Cameron Chell’s resignation as director and officer did not takefrom BIG. Cameron also no longer has any fees for servingbeneficial ownership in BIG.
On December 4, 2018, the Company appointed Swapan Kakumanu as director or officer during the interim three-month periods ended September 30, 2017 and 2016.
5. SUBSEQUENT EVENTS
OnChief Financial Officer. Previously, on October 9, 2017, James P. Geiskopf resignedthe Company had signed an agreement with a company owned by Swapan Kakumanu to complete the accounting functions of the Company. As of March 31, 2022, the Company had trade and other payables owing to this related party of $22,500 (December 31, 2021 - $46,688). On May 5, 2021, the Company loaned Fogdog Energy Solutions Inc. $400,000 of which our CFO is a director, chief financial officer and shareholder of (Note 4).
Effective as secretaryof August 20, 2021, we loaned an additional $850,000 to Fogdog Energy Solutions Inc. pursuant to convertible promissory note. The note bears interest at a rate of 10% per annum and treasurer. Michael Blum was appointedcomes due on August 20, 2027. The note may not be prepaid without the written consent of our company. Accrued interest on the total loan as at March 31, 2022 is $66,397.
On August 12, 2021, the Company’s subsidiary sBetOne entered into a business combination with a related party, VON whereby sBetOne became a wholly owned subsidiary of VON. The Company received 6.31% of the total outstanding common shares of VON as at the date of the business combination. The common shares were valued at $ CAD per share. Our CFO is the chief financial officer secretary, treasurerof VON. common shares or
As at March 31, 2022, the Company had outstanding notes receivable from a related party of $1,250,000 compared to $1,250,000 as at December 31, 2021.
11. REVENUE
The majority of revenue streams in 2022 relates to the movie distribution revenue and 2021 mainly related to NFT sales with the remainder related to consulting revenue. Please refer to Note 2 for revenue recognition methodology.
12. SHARE CAPITAL
Some of the warrants issued by the Company are denominated in CAD at issuance. The Company’s functional currency is USD. Under U.S. GAAP, where the strike price of warrants is denominated in a directorcurrency other than an entity’s functional currency the warrants would not be considered indexed to the entity’s own stock and would consequently be considered to be a derivative liability. Therefore, the value of the warrants denominated in CAD needs to be included as a derivative liability.
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On January 5, 2021 the Company completed a private placement where 300,000 CAD ($236,090 USD). The derivative liability valuation of the warrants issued is $1,559,108. units were issued, consisting of one common share and one common share purchase warrant issued at a price of $ (Canadian dollars (“CAD”)) for total gross proceeds of $
February 4, 2021 the Company completed a private placement where 4,000,000 CAD ($3,118,179 USD). The derivative liability valuation of the warrants issued is $1,818,140. units were issued, consisting of one common share and one common share purchase warrant issued at a price of $ (Canadian dollars (“CAD”)) for total gross proceeds of $
On March 23, 2021, the Company completed a private placement where 1,200,000 USD. units were issued, consisting of one common share and one common share purchase warrant issued at a price of $ (United States dollars (“USD”)) for total gross proceeds of $
On May 11, 2021, 135,138. On June 25, 2021, common shares were issued for debt conversion of $341,370. The sBetOne Inc. debt of $824,041 was converted into shares of VON upon deconsolidation. common shares were issued for debt conversion of $
On July 14, 2021, the Company completed a registered direct offering where 3,750,000 USD. units were issued, consisting of one common share and one common share purchase warrant issued at a price of $ USD for total gross proceeds of $
On November 29, 2021, the Company converted debt for services rendered where units were issued.
On December 29, 2021, the Company completed a registered direct offering where units were issued, consisting of one common share and one common share purchase warrant issued at a price of $ USD for total gross proceeds of $ USD.
On December 29, 2021, the Company completed a private placement where 50,000 USD. common shares were issued to directors and officers of the Company at a price of $ USD for total gross proceeds of $
On January 28, 2022, the Company completed a private placement where 50,000 USD. common shares were issued at a price of $ USD for total gross proceeds of $
On January 28, 2022, the Company completed a debt conversion where 100,000 USD. common shares were issued at a price of $ USD for total gross proceeds of $
On January 28, 2022, the Company completed a private placement where common shares were issued at a price of $ USD for total gross proceeds of $ USD.
On February 11, 2022, the Company completed a private placement where 9,999 USD. common shares were issued in consideration for services rendered to the Company. The common shares were issued at a deemed price of $ USD , for a total value of $
12. SHARE CAPITAL (CONT’D)
On February 28, 2022, the Company completed a private placement where 350,000 USD. common shares were issued at a price of $ USD for total gross proceeds of $
During the three months ended March 31, 2022, there were warrants exercised and options exercised for common shares. During the year ended December 31, 2021, there were warrants and options exercised for common shares.
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13. STOCK-BASED COMPENSATION
The Company has adopted the 2017 Equity Incentive Plan (“the Plan”) under which non-transferable options to purchase common shares of the Company may be granted to directors, officers, employees, or consultants of the Company. James P. Geiskopf remains as a non-executive directorThe terms of the Company.
On October 15, 2017,Plan provide that our board of directors may grant options to acquire common shares of the Company appointed Bruce Elliott as the presidentat not less than 100% of the Company.In ordergreater of: (i) the fair market value of the shares underlying the options on the grant date and (ii) the fair market value of the shares underlying the options on the date preceding the grant date at terms of up to accommodateten years. No amounts are paid or payable by the appointmentrecipient on receipt of Bruce Elliott, Cameron Chellthe options. On April 26, 2021, the maximum number of options available for grant was increased to shares. As of March 31, 2022, there are stock options issued (March 31, 2021 – ) and 4,998,334 stock options unissued (March 31, 2021 – 1,430,207).
The Company has resigned asalso granted stock options to non-employees. These stock options were granted to consultants who have provided their services for cash compensation below cost, with the president and was appointed as a non-executive chairman.stock options providing additional compensation in lieu of cash.
On October 15, 2017,February 10, 2021, the Company granted a total of 1,400,000 stock options to itsofficers and directors and officers.of the Company. The stock options are exercisable at the exercise price of $0.10$ per share for a period of from the date of grant. The stock options vesthave a fair value of $ and are exercisable as follows:
(i) | 1/3 | |
(ii) | ||
1/3 on the first anniversary date; and | ||
(iii) | ||
1/3 on the second anniversary date. |
On October 30, 2017,March 19, 2021, the Company entered intogranted a private placement subscription agreement and issued unsecured convertible notes intotal of stock options to a consultant of the principal amountCompany. The stock options are exercisable at the exercise price of $325,000 in exchange$ per share for the previously issued unsecured and non-interest bearing note payable from one subscriber and additional funds received from a second subscriber. The convertible note and accrued interest, will mature three (3)period of from the date of issuancegrant. The stock options have a fair value of $ and will bear interestare exercisable as follows:
(i) | 1/3 the date of the grant; | |
(ii) | 1/3 on the first anniversary date; and | |
(iii) | 1/3 on the second anniversary date. |
On May 5, 2021, the Company granted a total of rateexercise price of 10%$ per annum compounded annually.share for a period of from the date of grant. The principalstock options have a fair value of this convertible note, plus any accrued interest thereon, may$ and are exercisable as follows: stock options to a consultant. The stock options are exercisable at the
(i) | 1/3 on the first anniversary date; | |
(ii) | 1/3 on the second anniversary date; and | |
(iii) | 1/3 on the third anniversary date. |
On June 15, 2021, the Company granted a total of stock options to a consultant. The stock options are exercisable at the exercise price of $ per share for a period of from the date of grant. The stock options have a fair value of $ and are exercisable as follows:
(i) | 1/3 on the first anniversary date; | |
(ii) | 1/3 on the second anniversary date; and | |
(iii) | 1/3 on the third anniversary date. |
13. STOCK-BASED COMPENSATION (CONT’D)
On September 9, 2021, the Company granted a total of stock options to a consultant. The stock options are exercisable at the exercise price of $ per share for a period of from the date of grant. The stock options have a fair value of $ and are exercisable as follows:
(i) | 1/5 on the first anniversary date; | |
(ii) | 1/5 on the second anniversary date; | |
(iii) | 1/5 on the third anniversary date; | |
(iv) | 1/5 on the fourth anniversary date; and | |
(v) | 1/5 on the fifth anniversary date. |
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Stock-based compensation expense recognized for the periods ended March 31, 2022 and 2021 were $ and $ respectively. Stock options granted are valued at the fair value calculation based off the Black-Scholes valuation model. The weighted average assumptions used in the calculation are as follows:
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Share price | $ | $ | - | |||||
Exercise price | $ | $ | - | |||||
Time to maturity (years) | ||||||||
Risk-free interest rate | %- | % | ||||||
Expected volatility | %- | % | ||||||
Dividend per share | $ | $ | ||||||
Forfeiture rate | Nil |
Number of Options | Weighted Average Grant-Date Fair Value ($) | Weighted Average Exercise Price ($) | Weighted Average Remaining Life (Yrs) | |||||||||||||
Options outstanding, December 31, 2021 | 8,301,666 | 0.79 | 0.86 | |||||||||||||
Granted | - | - | - | - | ||||||||||||
Exercised | - | - | - | - | ||||||||||||
Forfeited | - | - | - | - | ||||||||||||
Options outstanding, March 31, 2022 | 8,301,666 | 0.79 | 0.86 | |||||||||||||
Options exercisable, March 31, 2022 | 5,486,661 | 0.62 | 0.67 |
14. FINANCIAL INSTRUMENTS
Fair value is an exit price representing the amount that would be converted intoreceived to sell an asset or aid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.
A three-tier fair value hierarchy is established as a base for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:
● | Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. | |
● | Level 2: Observable inputs that reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. | |
14. FINANCIAL INSTRUMENTS (CONT’D) | ||
● | Level 3: unobservable inputs reflecting our own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participants assumptions that are reasonably available. |
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Investment in related party
The derivative liabilities would be classified as a level 3 financial instrument.
SCHEDULE OF DERIVATIVE LIABILITIES
March 31, | December 31, | |||||||
2022 | 2021 | |||||||
Investment in related party | $ | 480,780 | $ | 480,780 | ||||
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
SCHEDULE OF DERIVATIVE LIABILITIES AT FAIR VALUE
Warrants
Derivative liability at December 31, 2021 | $ | 474,595 | ||
Addition of new conversion option derivatives | - | |||
Warrant exercise | - | |||
Change in fair value | (303,469 | ) | ||
Derivative liability at March 31, 2022 | $ | 171,126 |
Please see Note 7 for additional information on the related observable inputs.
15. NON-CONTROLLING INTEREST
For sBetOne, Inc., on April 1, 2019, the Company transferred common stock ofsBetOne, Inc. were issued to third-parties, reducing the Company at a conversion price of $0.10 per share.Company’s ownership in this subsidiary to 59.02%. of its shares to a third-party and cancelled of its shares. Additionally, shares of
On October 30, 2017,August 12, 2021, the CompanyCompany’s subsidiary sBetOne, Inc. (“sBetOne”) entered into a private placement subscription agreementbusiness combination with 35 subscribers,a related party, VON Acquisition Inc. (“VON”) whereby sBetOne became a wholly owned subsidiary of VON. The Company received common shares or 6.31% of the total outstanding common shares of VON as at the date of the business combination. The transition from having a 59.02% ownership in sBetOne to having a 6.31% ownership in VON has led the Company to deconsolidate sBetOne from the Company’s financial statements and record the ownership of VON as an investment.
On June 22, 2021, the Company incorporated a new Delaware subsidiary, EnderbyWorks, LLC, in which the Company owns 51%. CurrencyWorks also has an 80% ownership of Motoclub LLC.
The following table sets forth a summary of the changes in non-controlling interest:
SUMMARY OF CHANGES IN NON-CONTROLLING INTEREST
Non-controlling interest at December 31, 2021 | $ | (894,742 | ) | |
Net income | 387,602 | |||
Non-controlling interest at March 31, 2022 | $ | (507,140 | ) |
16. SUBSEQUENT EVENTS
Effective as of May 5, 2021, we loaned $400,000 to Fogdog Energy Solutions Inc. (“Fogdog”) pursuant to which it issued an aggregateconvertible promissory note. The note bears interest at a rate of 5,600,000 shares of common stock of4% per annum and was due on May 5, 2022. The loan was not repaid nor converted by the Company as at the reporting date and is now payable on demand. The note may not be prepaid without the written consent of our company. Under certain conditions as outlined in the promissory note, the Company may convert the outstanding loan into common shares. Our chief financial officer, secretary and treasurer, Swapan Kakumanu, is a pricedirector, chief financial officer and a shareholder of $0.10 per share for aggregate gross proceeds of $560,000.Fogdog.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Forward-Looking Statements
This quarterly report contains “forward-looking statements”. Allforward-looking statements. Forward-looking statements other than statementsare projections of historical fact are “forward-looking statements” for purposes of federalevents, revenues, income, future economic performance or management’s plans and state securities laws, including, but not limited to, statements regarding: the plans, strategies and objections of managementobjectives for future operations;operations. In some cases, forward-looking statements can be identified by the future plansuse of terminology such as “may”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or business“continues” or the negative of our company; future economic conditionsthese terms or performance; and anyother comparable terminology. Examples of forward-looking statements of assumptions underlying any of the foregoing.
Forward-looking statementsmade in this quarterly report include or may include, the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate”among others, statements about:
● | our proposed plan of operations; | |
● | our financial and operating objectives and strategies to achieve them; | |
● | the costs and timing of our services; | |
● | our use of available funds; | |
● | our capital and funding requirements; and | |
● | our other financial or operating performances. |
The material assumptions supporting these forward-looking statements include, among other similar words. things:
● | our future growth potential, results of operations, future prospects and opportunities; | |
● | execution of our business strategy; | |
● | there being no material variations in current regulatory environments; | |
● | our operating expenses, including general and administrative expenses; | |
● | our ability to obtain any necessary financing on acceptable terms; | |
● | timing and amount of capital expenditures; | |
● | retention of skilled personnel; | |
● | continuation of current tax and regulatory regimes; and | |
● | general economic and financial market conditions. |
Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.
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These forward-looking statements presentare only predictions and involve known and unknown risks, uncertainties and other factors, including:
● | inability to efficiently manage our operations; | |
● | general economic and business conditions; | |
● | our negative operating cash flow; | |
● | our ability to obtain additional financing; | |
● | increases in capital and operating costs; | |
● | general cryptocurrency risks; | |
● | technological changes and developments in the blockchain and cryptocurrencies; | |
● | risks relating to regulatory changes or actions; | |
● | competition for blockchain platforms and technologies; and | |
● | other risk factors discussed in our annual report on Form 10-K filed on April 15, 2022, |
any of which may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Further, although we have attempted to identify factors that could cause actual results, levels of activity, performance or achievements to differ materially from those described in forward-looking statements, there may be other factors that cause results, levels of activity, performance or achievements not to be as anticipated, estimated or intended.
While these forward-looking statements and any assumptions upon which they are based are made in good faith and reflect management’s current judgment regarding the direction of our business, actual results may vary, sometimes materially, from any estimates, andpredictions, projections, assumptions only as of the date of this report.or other future performance suggested herein. Accordingly, readers are cautionedshould not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made.statements. Except as required by applicable law, including the securities laws of the United States and Canada, we do not intend and undertake no obligation, to update any of the forward-looking statement.
Although we believe the expectations reflected in thestatements to conform these statements to actual results. All forward-looking statements in this quarterly report are reasonable, actual results could differ materially from those projected or assumed in any forward-looking statements. All forward-looking statements are subject to change and inherent risks and uncertainties. The factors impacting these risks and uncertainties include, but are not limited to:qualified by this cautionary statement.
All financial information contained herein is shown in United States dollars unless otherwise stated. Our consolidated financial statements are prepared in accordance with United States generally accepted accounting principles. Unless otherwise stated, “$” refers to United States dollars.
In this quarterly report, unless otherwise specified, all references to “shares” refer to shares of common stock in the capital of our company.
As used in this quarterly report, on Form 10-Q, the terms “we”, “us”, “the Company”, “our” and “AppCoin” refer to AppCoin Innovations“CurrencyWorks” mean CurrencyWorks Inc. (formerly RedStone Literary Agents,and its wholly-owned subsidiary, CurrencyWorks USA Inc.), a Nevada corporation,and its majority-owned subsidiaries EnderbyWorks LLC, and Motoclub LLC, unless otherwise specified.
Corporate Overview
We were incorporated under the laws of the State of Nevada on July 20, 2010CurrencyWorks aims to build and are considered a development stage company. Following incorporation, we commenced the business of representing authors to publishers.
Upon the resignation of Mary Wolf as an officer of our company on August 28, 2014, we ceased pursuing the business of representing authors to publishers and sought new business opportunities.
In July 2017, we decided to operate a new business of providing servicesfull-service blockchain platform for blockchain initial coin offeringsNon Fungible Tokens (NFTs), digital currencies, digital assets and incorporated a Nevada subsidiary, AppCoin Innovations (USA) Inc. on August 1, 2017.security tokens.
Effective August 17,Since 2017, we completed a merger with our wholly-owned subsidiary, AppCoin Innovations Inc., a Nevada corporation, which was incorporated solely to effect a change in our name. As a result, we have changed our name from “Redstone Literary Agents, Inc.” to “AppCoin Innovations Inc.”.
On August 21, 2017, we appointed Cameron Chell as the president and a director of our company. On the same date, James P. Geiskopf resigned as the president of our company. Mr. Geiskopf remained as the secretary, treasurer and a director of our company. In connection with our new business, on August 21, 2017, and pursuant to a transfer agreement dated for reference August 21, 2017, Mr. Geiskopf sold to Blockchain Fund GP Inc., 2,000,000 shares of our common stock for total consideration of $5,000. Cameron Chell holds a 5.6% interest in Blockchain Fund GP Inc.
On October 9, 2017, Mr. Geiskopf resigned as our secretary and treasurer and we appointed Michael Blum as the chief financial officer, secretary, treasurer and a director of our company. Mr. Geiskopf remains as a non-executive director of the Company.
On October 15, 2017, we appointed Bruce Elliott as the president of our company. In order to accommodate the appointment of Bruce Elliott, Cameron Chell resigned as the president and was appointed as the non-executive chairman. In connection with Mr. Chell’s resignation as president, the independent consultant agreement with Mr. Chell was rescinded effective as of the original effective date of that agreement.
The principal offices of our company are located at 561 Indiana Court, Venice Beach, CA 90291. Our telephone number is 310.658.4413.
Our Current Business
On August 1, 2017, we incorporated a Nevada subsidiary, AppCoin Innovations (USA) Inc., which will be used to operate our new business of providing services for blockchain initial coin offerings.
Our new business is a services and development business that providesprovide a turnkey set of services for companies to develop and integrate blockchain and cryptocurrencypayment technologies with a viewinto their business operations. We intend to conducting initial coin offerings. offer Fintech (financial technology) services and infrastructure offerings in key categories, including: digital currencies; digital assets including Non Fungible Tokens (NFTs); and, digital securities.
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We enable companies to focus on their core competencies while providing the necessary resources and expertise to execute a strategyanticipate that we will enable companies to integratedigitize, sell and manage new or existing asset classes on blockchain plus cryptocurrency technologiesinfrastructure, transact in digital/ cryptocurrencies (Payments, Rewards and execute initial coin offerings. Credit infrastructure), issue or create digital/crypto assets and/or manage their digital/crypto assets (Non Fungible Tokens, Fungible Cold Storage, Mining).
Our plan iscore revenue streams are expected to be partially compensated by these companies by receiving tokens or coins in the initial coin offerings. This will allow our shareholders to indirectly participate in multiple initial coin offerings without having to open new accounts or electronic wallets with cryptocurrency exchanges.
Our services will include strategic planning, project planning, structure development and administration, campaign management, business plan modelling, technology development support, whitepaper preparation, due diligence reporting, escrow management, governance planning & management.,
Blockchain is a continuously growing list of records called blocks, which are linked and secured using cryptography. Each block contains typically a hash pointerremain as a link to a previous block, a timestampconsulting revenues and transaction data. By design, blockchains are inherently resistantfees. We may also earn equity stakes in payment for our services, to modification of the data. Functionally, a blockchain can serve as an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. For use as a distributed ledger, a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks and a collusion of the network majority.extent permitted under applicable law.
Blockchains are secure by design and are an example of a distributed computing system and decentralization can be achieved with a blockchain. This makes blockchains potentially suitable for the recording of events, medical records and other records management activities, such as identity management, documenting provenance, digital asset registration and transaction processing.
Initial coin offerings are an important new finance structure that enable companies to finance their business plans or projects without issuing equity (and diluting ownership) but rather by facilitating investment by a community of users or supporters that will actually be participating in the project and creating the value. By having a structured stake in the company or project, the investors are incentivized to increase the project’s value thereby driving the value of the crypto currency issued in the initial coin offering.
Cryptocurrency is a digital asset designed to work as a medium of exchange using cryptography to secure the transactions and to control the creation of additional units of the currency.
Results of Operations
Three Months Ended September 30, 2017March 31, 2022 Compared to the Three Months Ended September 30, 2016March 31, 2021
Revenue
We recognized total revenue of $1,324,387, with $1,250,000 coming from the sale of movie rights, $24,886 coming from the sale of NFTs and $49,501 from consulting services, for the three months ended March 31, 2022. We had no revenue for the three months ended September 30, 2017 and 2016.March 31, 2021.
Operating Expenses
We incurred general and administrative expenses of $73,112$2,050,960 and $12,376$1,548,742 for the three months ended September 30, 2017March 31, 2022 and 2016,2021, respectively, representing an increase of $60,736$502,218 between the two periods. These expenses consisted primarily of stock-based compensation expense for issuance of options, consulting fees, pre-licensing fees, professional fees, note interestamortization, and bank charges, filingother general and transfer fees.administrative costs. The increase in general and administrative expenses was mainly due to additional projects in 2022 which increased our consulting fees between the two periods from $2,750 in 2016 to $56,500 in 2017 was due to the entering into of a consulting agreement with Business Instincts Group to provide strategicby $218,985, general and project management services. Business Instincts Group is a related party as Cameron Chell is a common director of the companies. Professionaladministrative costs by $208,705 and professional fees increased from $5,409 in 2016by $81,261 compared to $8,450 in 2017 and the increase was primarily due to an increase in legal services related to the evaluationMarch 31, 2021. There are also service costs of potential business opportunities in 2017. The increase in note interest and bank charges from $3,447 in 2016 to $6,100 in 2017 was due to the increase in notes payable in 2017 partially offset by a correction in the historical calculation. The increase in filing and transfer fees from $770 in 2016 to $2,062 in 2017 was due to the increase in the amount of transactions with the transfer agent.
Net Loss
We$457,434 incurred net losses of $73,112 and $12,376 for the three months ended September 30, 2017March 31, 2022 related to contract projects that began in the third quarter of the fiscal year ended December 31, 2021 that are ongoing related to NFT sales ($nil – March 31, 2021).
Other Income (Expense)
Other income includes $41,625 note interest revenue and 2016,$303,469 in change in derivative liability for the three months ending March 31, 2022, compared to $16,500 interest receivable for the three months ending March 31, 2021. Other expenses were $nil for the three months ended March 31, 2022 compared to $45,959 note interest expense and $43,294,771 in change in derivative liability for the three months ended March 31, 2021.
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Net Loss from Operations
We incurred net losses from operations of $1,184,007 and $1,548,742 for the three months ended March 31, 2022 and 2021, respectively, representing an increasea net change of $60,736,$364,735, primarily attributable to the factors discussed above under the headingheadings “Revenue” and “Operating Expenses”.
Nine Months Ended September 30, 2017 Compared to the Nine Months Ended September 30, 2016
Revenue
We had no revenue for the nine months ended September 30, 2017 and 2016.
Operating Expenses
We incurred general and administrative expenses of $123,695 and $33,756 for the nine months ended September 30, 2017 and 2016, respectively, representing an increase of $89,939 between the two periods. These expenses consisted primarily of consulting fees, professional fees, note interest and bank charges, filing and transfer fees. The increase in operating expenses between the two periods related to an increase in consulting fees from $8,200 in 2016 to $77,900 in 2017 due to the entering into of a consulting agreement with Business Instincts Group to provide strategic and project management services, an increase in note interest and bank charges from $10,036 in 2016 to $21,539 in 2017 due to the increase in loans payable that bear interest of 18% per annum partially offset by a correction in the historical calculation, and an increase in professional fees from $11,282 in 2016 to $20,234 in 2017 due to the evaluation of potential business opportunities in 2017. These increases were partially offset by a decrease in filing and transfer fees between the two periods from $4,238 in 2016 to $4,022 in 2017 primarily due to decreases in the amount of transactions with the transfer agent.
Net Loss
We incurred net losses of $123,695 and $33,756 for the nine months ended September 30, 2017 and 2016, respectively, representing an increase of $89,939, primarily attributable to the factors discussed above under the heading “Operating Expenses”.
Liquidity and Capital Resources
Working Capital
As at September 30, 2017 | As at December 31, 2016 | As at 2022 | As at December 31, 2021 | |||||||||||||
Current Assets | $ | 195,011 | $ | 56,050 | $ | 994,550 | $ | 655,321 | ||||||||
Current Liabilities | $ | 260,140 | $ | 49,013 | 1,332,935 | 1,249,904 | ||||||||||
Working capital (deficit) | $ | (65,129 | ) | $ | 7,037 | |||||||||||
Working Capital/(Deficit) | $ | (338,385 | ) | $ | (594,583 | ) |
Current Assets
Current assets of $195,011were $994,550 as at September 30, 2017March 31, 2022 and $56,050 as$655,321 at December 31, 2016 were comprised only of cash and cash equivalents.2021. The increase in current assets as at September 30, 2017 wasis mainly due to our company receiving $250,000increase in connection withcash and accounts receivables in the purchase of a convertible note. Even though the purchase of the note has not yet completed, the investor permitted the purchase proceeds to be released to our company on interest free basis until closing of the purchase. The loan is unsecure, repayable on demand and is non-interest bearing.three months ended March 31, 2022.
Current Liabilities
Current liabilities of $1,332,935 as at September 30, 2017March 31, 2022 were attributable to $10,140 in accounts payable and accrued expenses, compared to $49,013$1,249,904 in accounts payable and accrued expenses as at December 31, 2016.2021.
Cash Flow
Nine Months ended September 30, 2017 | Nine Months ended September 30, 2016 | Three months ended March 31, 2022 | Three months ended March 31, 2021 | |||||||||||||
Net cash (used in) operating activities | $ | (141,039 | ) | $ | (25,100 | ) | ||||||||||
Net cash used in operating activities | $ | (328,903 | ) | $ | (605,662 | ) | ||||||||||
Net cash provided by financing activities | 280,000 | 20,000 | 518,499 | 4,894,825 | ||||||||||||
Net changes in cash and cash equivalents | $ | 138,961 | $ | (5,100 | ) | $ | 189,596 | $ | 4,289,163 |
Operating Activities
Net cash used in operating activities was $141,039$328,903 for the nine-monththree-month period ended September 30, 2017,March 31, 2022, as compared to $25,100net cash used of $605,662 for the nine-monththree-month period ended September 30, 2016, an increaseMarch 31, 2021, a decrease of $115,939.$276,759. The increasedecrease in net cash used in operating activities was primarily due to the paymentrepayment of accounts payablepayables and an increase in operating expenses including an increaseaccrued liabilities in the evaluation of potential business opportunities.prior year.
Investing Activities
InvestingThere were no investing activities used cash was $nil for the nine-monththree-month periods ended September 30, 2017March 31, 2022 and September 30, 2016.March 31, 2021.
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Financing Activities
Financing activities provided cash of $280,000$518,499 for the ninethree months ended September 30, 2017March 31, 2022 and $20,000$4,894,825 for the ninethree months ended September 30, 2016. On March 2, 2017, we issued an unsecured convertible note in31, 2021, a decrease of $4,376,326. This decrease is mainly due to less share issuances during the principal amount of $20,000. The principal amount of the note, and accrued interest, will mature five (5) years from the date of issuance and will bear interest at the rate of 18% interest per annum, compounded annually. The principal amount, plus any interest accrued thereon, may be converted into shares of common stock of our company at a conversion price of $0.03 per share. On June 8, 2017, we issued an unsecured convertible note in the principal amount of $10,000. The principal amount of the note, and accrued interest, will mature five (5) years from the date of issuance and will bear interest at the rate of 18% interest per annum, compounded annually. The principal amount, plus any interest accrued thereon, may be converted into shares of common stock of our company at a conversion price of $0.03 per share. On September 7, 2017, we received $250,000 in connection with the purchase of a convertible note. Even though the purchase of the note has not yet completed, the investor permitted the purchase proceeds to be released to our company as on interest free basis until closing.quarter ended March 31, 2022.
Plan of OperationsCash Requirements
We expect that we will require $1.5 million to $2.0 million, in addition to$2,400,000, including our current cash,working capital, to fund our operating expenditures for the next twelve months. Projected working capital requirements for the next twelve months are as follows:
Estimated Working Capital Expenditures During the Next Twelve Months
Operating expenditures | ||||
Operator expenses | $ | 1,000,000 | ||
General and administrative(including professional fees) | $ | 500,000 | ||
Total | $ | 1,500,000 |
General and administrative expenses | $ | 2,400,000 | ||
Total | $ | 2,400,000 |
ProfessionalOur estimated general and administrative expenses for the next 12 months are $2,400,000 and are comprised of: consulting fees, are expectedaccounting services, board of directors and our advisory board, investor relations consultants, and to includeour public relations and marketing consultants; legal and professional fees related to complying with public reporting requirements, maintaining our quotation on the OTCQB, conducting capital raises(including auditing fees); for insurance; marketing and expenses in connection with our new business.advertising expenses; trade shows; travel expenses; office rent and miscellaneous and office expenses.
Cash Requirements
As we have no cash flow from operations, weWe will require additional cash resources including from the sale of equity or debt securities, to meet our planned capital expenditures and working capital requirements for the next 12 months. We estimate that our capital needs over the next 12 months will be $1.5 million to $2.0 million. We expect to require additional cash for general and administrative expenses and to evaluate new business opportunities. We expect to derive such cash through the sale of additional equity or debt securities or by obtaining a credit facility. The sale of additional equity securities will result in dilution to our stockholders. The incurrence of indebtedness will result in debt service obligations, could cause additional dilution to our stockholders, and could require us to agree to financial covenants that could restrict our operations or modify our plans to source a new business opportunity. Financing may not be available in amounts or on terms acceptable to us, if at all. Failure to raise additional funds could cause our company to fail.
Going Concern
Our unaudited condensed consolidated financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. We have not yet established a source of revenues sufficient to cover our operating costs and to allow us to continue as a going concern. We have incurred losses since inception resulting in an accumulated deficit of $348,973$36,474,899 as at September 30, 2017March 31, 2022 (December 31, 2016: $225,950)2021: $35,248,384). Our ability to operate as a going concern is dependent on obtaining adequate capital to fund operating losses until we become profitable.
In its report on our financial statements for the yearperiods ended December 31, 2016,2021 and 2020, our independent registered public accounting firm included an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. Our unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resourcesresources.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
“Disclosure controls and procedures”, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the“Exchange Act”), includeprocedures are controls and other procedures that are designed to ensure that information required to be disclosed inby our company’s reports filed under the Exchange Actcompany is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms of the SEC. Our principal executive officer, who is our president, and that such informationour principal financial officer, who is accumulatedour chief financial officer, are responsible for establishing and communicated tomaintaining disclosure controls and procedures for our company.
Our management to allow timely decisions regarding required disclosure.
Ourconducted an evaluation, with the participation of our principal executive officer and our principal financial officer, evaluatedof the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934, as of September 30, 2017.the end of the period covered by this quarterly report on Form 10-Q. Based on thisupon that evaluation, theyour principal executive officer and our principal financial officer concluded that as a result of September 30, 2017,the material weaknesses in our internal control over financial reporting described in our annual report on Form 10-K for the fiscal year ended December 31, 2021, our disclosure controls and procedures were not effective such that the information relating to us that is required to be disclosed in our SEC reports: (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms; and (ii) is accumulated and communicated to our management, including our principal executive and financial officer, to allow timely decisions regarding required disclosure.as of March 31, 2022.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the fiscal quarter ended September 30, 2017,March 31, 2022, that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We know of no material pending legal proceedings to which our company is a party or of which any of our properties is the subject. In addition, we do not know of any such proceedings contemplated by any governmental authorities.
We know of no material proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder is a party adverse to our company or has a material interest adverse to our company.
ITEM 1A. RISK FACTORS.
As we are a smaller reporting company, we are not required to provide the information required by this item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Since the beginning of the fiscal quarter ended September 30, 2017,March 31, 2022, we have not sold any equity securities that were not registered under theSecurities Act of 1933, as amended, that were not previously reported in a quarterly report on Form 10-Q or a current report on Form 8-K.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Since the beginning of the fiscal quarter ended September 30, 2017, we have had no senior securities issued and outstanding.None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
None.
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None.
ITEM 6. EXHIBITS.
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*Filed herewith.
SIGNATURES
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.
/s/ | |
Chief Financial Officer | |
(Duly Authorized Officer) | |
Dated: |
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