NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2022 (Unaudited)
(Expressed
in US dollars)
1.
NATURE OF OPERATIONS
Biotricity
Inc. (formerly MetaSolutions, Inc.) (the “Company” or “Biotricity”) was incorporated under the laws of the State
of Nevada on August 29, 2012. iMedical Innovations Inc. (“iMedical”) was incorporated on July 3, 2014 under the laws of the
Province of Ontario, Canada and became a wholly-owned subsidiary of Biotricity through reverse take-over on February 2, 2016.
Both
the Company and iMedical are engaged in research and development activities within the remote monitoring segment of preventative care.
They are focused on a realizable healthcare business model that has an existing market and commercialization pathway. As such, its efforts
to date have been devoted to building and commercializing an ecosystem of technologies that enable access to this market.
2.
BASIS OF PRESENTATION, MEASUREMENT AND CONSOLIDATION
The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States (“US GAAP”) for interim financial information and the Securities and Exchange Commission (“SEC”)
instructions to Form 10-Q and Article 8 of SEC Regulation S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete consolidated financial statements and should be read in conjunction
with Biotricity’s audited consolidated financial statements for the years ended March 31, 2022 and 2021 and their accompanying
notes.
The
accompanying unaudited condensed consolidated financial statements are expressed in United States dollars (“USD”). In the
opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of financial
position and results of operations for the interim periods presented have been reflected herein. Operating results for the interim periods
presented herein are not necessarily indicative of the results that may be expected for the year ending March 31, 2023. The Company’s
fiscal year-end is March 31.
The
unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. Significant
intercompany accounts and transactions have been eliminated.
Certain
prior year amounts related to general and administrative expenses and other (expense) income line items on the condensed consolidated
statements of operations and comprehensive loss have been reclassified to conform to the current year’s presentation.
Liquidity
and Basis of Presentation
The
Company is in the early stages of commercializing its first product and is concurrently in development mode, operating a research and
development program in order to develop, obtain regulatory clearance for, and commercialize other proposed products. The Company has
incurred recurring losses from operations, and as at December 31, 2022, had an accumulated deficit of $107,713,387
and a working capital deficiency of $2,496,289.
Management anticipates the Company will continue on its revenue growth trajectory and improve its liquidity through continued business
development and after additional equity or debt capitalization of the Company. On August 30, 2021, the Company completed an underwritten
public offering of its common stock that concurrently facilitated its listing on the Nasdaq Capital Market. Prior to listing on the Nasdaq
Capital Market, the Company had also filed a shelf Registration Statement on Form S-3 (No. 333-255544) with the Securities and Exchange
Commission on April 27, 2021, which was declared effective on May 4, 2021. This may help facilitate better transactional preparedness
when the Company seeks to issue equity or debt to potential investors, since it continues to allow the Company to offer its shares to
investors only by means of a prospectus, including a prospectus supplement, which forms part of an effective registration statement.
As such, the Company has developed and continues to pursue sources of funding that management believes will be sufficient to support
the Company’s operating plan and alleviate any substantial doubt as to its ability to meet its obligations at least for a period
of one year from the date of these condensed consolidated financial statements. During the fiscal quarter ended June 30, 2021, the Company
raised $499,900
through government EIDL loan. In addition, during
the fiscal quarter ended September 30, 2021, the Company raised total net proceeds of $14,545,805
through the underwritten public offering that
was concurrent with its listing onto the Nasdaq Capital Markets. Furthermore, during the fiscal quarter ended December 31, 2021, the
Company raised an additional net proceeds of $11,756,563
through a term loan transaction (Note 6). During
the fiscal quarter ended December 31, 2022, the Company raised short-term loans and promissory notes with net proceeds of $1,889,144
from various lenders.
BIOTRICITY
INC.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2022 (Unaudited)
(Expressed
in US dollars)
As
we proceed with the commercialization of the Bioflux, Biotres, and Biocare product development, we expect to continue to devote significant
resources on capital expenditures, as well as research and development costs and operations, marketing and sales expenditures.
Based
on the above facts and assumptions, we believe our existing cash, along with anticipated near-term equity financings, will be sufficient
to meet our needs for the next twelve months from the filing date of this report. However, we will need to seek additional debt or equity
capital to respond to business opportunities and challenges, including our ongoing operating expenses, protecting our intellectual property,
developing or acquiring new lines of business and enhancing our operating infrastructure. The terms of our future financings may be dilutive
to, or otherwise adversely affect, holders of our common stock. We may also seek additional funds through arrangements with collaborators
or other third parties. There can be no assurance we will be able to raise this additional capital on acceptable terms, or at all. If
we are unable to obtain additional funding on a timely basis, we may be required to modify our operating plan and otherwise curtail or
slow the pace of development and commercialization of our proposed product lines.
In
December 2019, a novel strain of coronavirus (COVID-19) emerged in Wuhan, Hubei Province, China and spread globally, causing significant
disruption to the global and US economy. On March 20, 2020, the Company announced the precautionary measures taken as well as announcing
the business impact related to the coronavirus (COVID-19) pandemic. Though its operations have since returned to a normal state, the
extent to which the COVID-19 pandemic will continue to affect the economy and the Company’s operations remains unclear and will
depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of any future
ongoing COVID-19 outbreaks, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative
and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption,
reduced patient traffic and reduced operations. The measures taken to date may continue to impact the Company’s fiscal year 2023
business and potentially beyond. Management expects that all of its business segments, across all of its geographies, may be impacted
to some degree, but the significance of the full long-term impact of the COVID-19 outbreak on the Company’s business and the duration
for which it may have an impact cannot be determined at this time.
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue
Recognition
The
Company adopted Accounting Standards Codification Topic 606, “Revenue from Contracts with Customers” (“ASC 606”)
on April 1, 2018. In accordance with ASC 606, revenue is recognized when promised goods or services are transferred to customers in an
amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services by applying
the core principles – 1) identify the contract with a customer, 2) identify the performance obligations in the contract, 3) determine
the transaction price, 4) allocate the transaction price to performance obligations in the contract, and 5) recognize revenue as performance
obligations are satisfied.
BIOTRICITY
INC.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2022 (Unaudited)
(Expressed
in US dollars)
Both
the Bioflux mobile cardiac telemetry device, and the Biotres device are wearable devices. The cardiac data that the devices monitor and
collect is curated and analyzed by the Company’s proprietary algorithms and then securely communicated to a remote monitoring facility
for electronic reporting and conveyance to the patient’s prescribing physician or other certified cardiac medical professional.
Revenues earned are comprised of device sales revenues and technology fee revenues (technology as a service). The devices, together with
their licensed software, are available for sale to the medical center or physician, who is responsible for the delivery of clinical diagnosis
and therapy. The remote monitoring, data collection and reporting services performed by the technology culminate in a patient study that
is generally billable when it is complete and is issued to the physician. In order to recognize revenue, management considers whether
or not the following criteria are met: persuasive evidence of a commercial arrangement exists, and delivery has occurred or services
have been rendered. For sales of devices, which are invoiced directly, additional revenue recognition criteria include that the price
is fixed and determinable and collectability is reasonably assured; for device sales contracts with terms of more than one year, the
Company recognizes any significant financing component as revenue over the contractual period using the effective interest method, and
the associated interest income is reflected accordingly on the statement of operations and included in other income; for revenue that
is earned based on customer usage of the proprietary software to render a patient’s cardiac study, the Company recognizes revenue
when the study ends based on a fixed billing rate. Costs associated with providing the services are recorded as the service is provided
regardless of whether or when revenue is recognized.
The
Company may also earn service-related revenue from contracts with other counterparties with which it consults. This contract work is
separate and distinct from services provided to clinical customers, but may be with a reseller or other counterparties that are working
to establish their operations in foreign jurisdictions or ancillary products or market segments in which the Company has expertise and
may eventually conduct business.
The
Company recognized the following forms of revenue for the three and nine months ended December 31, 2022 and 2021:
SCHEDULE
OF REVENUE RECOGNITION
| | |
For
Three
Months
Ended
December
31, 2022
$ | | |
For
Three
Months
Ended
December
31, 2021
$ | | |
For
Nine
Months
Ended
December
31, 2022
$ | | |
For
Nine
Months
Ended
December
31, 2021 $ | |
| Technology fee
sales | |
| 2,253,187 | | |
| 1,413,790 | | |
| 6,240,042 | | |
| 4,365,292 | |
| Device sales | |
| 205,994 | | |
| 266,318 | | |
| 656,580 | | |
| 886,235 | |
| Service-related
and other revenue | |
| - | | |
| 250,000 | | |
| - | | |
| 250,000 | |
| Revenue | |
| 2,459,181 | | |
| 1,930,108 | | |
| 6,896,622 | | |
| 5,501,527 | |
Inventory
Inventory
is stated at the lower of cost and market value, cost being determined on a weighted average cost basis. Market value of our inventory,
which is all purchased finished goods, is determined based on its estimated net realizable value, which is generally the selling price
less normally predictable costs of disposal and transportation. The Company records write-downs of inventory that is obsolete or in excess
of anticipated demand or market value based on consideration of product lifecycle stage, technology trends, product development plans
and assumptions about future demand and market conditions. Actual demand may differ from forecasted demand, and such differences may
have a material effect on recorded inventory values. Inventory write-downs are charged to cost of revenue and establish a new cost basis
for the inventory.
Significant
accounting estimates and assumptions
The
preparation of the condensed consolidated financial statements requires the use of estimates and assumptions to be made in applying the
accounting policies that affect the reported amounts of assets, liabilities, revenue and expenses and the disclosure of contingent assets
and liabilities. The estimates and related assumptions are based on previous experiences and other factors considered reasonable under
the circumstances, the results of which form the basis for making the assumptions about the carrying values of assets and liabilities
that are not readily apparent from other sources.
BIOTRICITY
INC.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2022 (Unaudited)
(Expressed
in US dollars)
The
estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period
in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the
revision affects both current and future periods.
Significant
accounts that require estimates as the basis for determining the stated amounts include share-based compensation, impairment analysis
and fair value of warrants, structured notes, convertible debt and conversion liabilities.
| ● |
Fair
value of stock options |
The
Company measures the cost of equity-settled transactions with employees by reference to the fair value of equity instruments at the date
at which they are granted. Estimating fair value for share-based payments requires determining the most appropriate valuation model for
a grant of such instruments, which is dependent on the terms and conditions of the grant. The estimate also requires determining the
most appropriate inputs to the Black-Scholes option pricing model, including the expected life of the instrument, risk-free rate, volatility,
and dividend yield.
In
determining the fair value of the warrant issued for services and issue pursuant to financing transactions, the Company used the Black-Scholes
option pricing model with the following assumptions: volatility rate, risk-free rate, and the remaining expected life of the warrants
that are classified under equity.
| ● |
Fair
value of derivative liabilities |
In
determining the fair values of the derivative liabilities from the conversion and redemption features, the Company used valuation models
with the following assumptions: dividend yields, volatility, risk-free rate and the remaining expected life. Changes in those assumptions
and inputs could in turn impact the fair value of the derivative liabilities and can have a material impact on the reported loss and
comprehensive loss for the applicable reporting period.
Determining
the appropriate functional currencies for entities in the Company requires analysis of various factors, including the currencies and
country-specific factors that mainly influence labor, materials, and other operating expenses.
| ● |
Useful
life of property and equipment |
The
Company employs significant estimates to determine the estimated useful lives of property and equipment, considering industry trends
such as technological advancements, past experience, expected use and review of asset useful lives. The Company makes estimates when
determining depreciation methods, depreciation rates and asset useful lives, which requires considering industry trends and company-specific
factors. The Company reviews depreciation methods, useful lives and residual values annually or when circumstances change and adjusts
its depreciation methods and assumptions prospectively.
Provisions
are recognized when the Company has a present obligation, legal or constructive, as a result of a previous event, if it is probable that
the Company will be required to settle the obligation and a reliable estimate can be made of the obligation. The amount recognized is
the best estimate of the expenditure required to settle the present obligation at the end of the reporting period, taking into account
the risks and uncertainties surrounding the obligations. Provisions are reviewed at the end of each reporting period and adjusted to
reflect the current best estimate of the expected future cash flows.
BIOTRICITY
INC.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2022 (Unaudited)
(Expressed
in US dollars)
Contingencies
can be either possible assets or possible liabilities arising from past events, which, by their nature, will be resolved only when one
or more uncertain future events occur or fail to occur. The assessment of the existence and potential impact of contingencies inherently
involves the exercise of significant judgment and the use of estimates regarding the outcome of future events.
Inventories
are stated at the lower of cost and market value. Market value of our inventory, which is all purchased finished goods, is determined
based on its estimated net realizable value, which is generally the selling price less normally predictable costs of disposal and transportation.
The Company estimates net realizable value as the amount at which inventories are expected to be sold, taking into consideration fluctuations
in retail prices less estimated costs necessary to make the sale. Inventories are written down to net realizable value when the cost
of inventories is estimated to be unrecoverable due to obsolescence, damage, or declining selling prices.
The
calculation of current and deferred income taxes requires the Company to make estimates and assumptions and to exercise judgment regarding
the carrying values of assets and liabilities which are subject to accounting estimates inherent in those balances, the interpretation
of income tax legislation across various jurisdictions, expectations about future operating results, the timing of reversal of temporary
differences and possible audits of income tax filings by the tax authorities. In addition, when the Company incurs losses for income
tax purposes, it assesses the probability of taxable income being available in the future based on its budgeted forecasts. These forecasts
are adjusted to take into account certain non-taxable income and expenses and specific rules on the use of unused credits and tax losses.
When
the forecasts indicate that sufficient future taxable income will be available to deduct the temporary differences, a deferred tax asset
is recognized for all deductible temporary differences. Changes or differences in underlying estimates or assumptions may result in changes
to the current or deferred income tax balances on the condensed consolidated balance sheets, a charge or credit to income tax expense
included as part of net income (loss) and may result in cash payments or receipts. Judgment includes consideration of the Company’s
future cash requirements in its tax jurisdictions. All income, capital and commodity tax filings are subject to audits and reassessments.
Changes in interpretations or judgments may result in a change in the Company’s income, capital, or commodity tax provisions in
the future. The amount of such a change cannot be reasonably estimated.
| ● |
Incremental
borrowing rate for lease |
The
determination of the Company’s lease obligation and right-of-use asset depends on certain assumptions, which include the selection
of the discount rate. The discount rate is set by reference to the Company’s incremental borrowing rate. Significant assumptions
are required to be made when determining which borrowing rates to apply in this determination. Changes in the assumptions used may have
a significant effect on the Company’s condensed consolidated financial statements.
BIOTRICITY
INC.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2022 (Unaudited)
(Expressed
in US dollars)
Earnings
(Loss) Per Share
The
Company has adopted the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”)
Topic 260-10 which provides for calculation of “basic” and “diluted” earnings per share. Basic loss per share
of common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period.
Diluted earnings or loss per share of common stock is computed similarly to basic earnings or loss per share except the weighted average
shares outstanding are increased to include additional shares from the assumed exercise of any common stock equivalents, if dilutive.
The Company’s warrants, options, convertible promissory notes, convertible preferred stock, shares to be issued and restricted
stock awards while outstanding are considered common stock equivalents for this purpose. Diluted earnings is computed utilizing the treasury
method for the warrants, stock options, shares to be issued and restricted stock awards. Diluted earnings with respect to the convertible
promissory notes and convertible preferred stock utilizing the if-converted method was not applicable during the periods presented as
no conditions required for conversion had occurred. No incremental common stock equivalents were included in calculating diluted loss
per share because such inclusion would be anti-dilutive given the net loss reported for the periods presented.
Cash
Cash
includes cash on hand and balances with banks.
Foreign
Currency Translation
The
functional currency of the Company’s Canadian-based subsidiary is the Canadian dollar and the US-based parent is the U.S. dollar.
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange
rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using
the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities are translated using the historical rate
on the date of the transaction. All exchange gains or losses arising from translation of these foreign currency transactions are included
in net income (loss) for the year. In translating the financial statements of the Company’s Canadian subsidiaries from their functional
currency into the Company’s reporting currency of United States dollars, condensed consolidated balance sheet accounts are translated
using the closing exchange rate in effect at the balance sheet date and income and expense accounts are translated using an average exchange
rate prevailing during the reporting period. Adjustments resulting from the translation, if any, are included in accumulated other comprehensive
loss in stockholders’ deficiency. The Company has not, to the date of these condensed consolidated financial statements, entered
into derivative instruments to offset the impact of foreign currency fluctuations.
Accounts
Receivable
Accounts
receivable consists of amounts due to the Company from medical facilities, which receive reimbursement from institutions and third-party
government and commercial payors and their related patients, as a result of the Company’s normal business activities. Accounts
receivable is reported on the condensed consolidated balance sheets net of an estimated allowance for doubtful accounts. The Company
establishes an allowance for doubtful accounts for estimated uncollectible receivables based on historical experience, assessment of
specific risk, review of outstanding invoices, and various assumptions and estimates that are believed to be reasonable under the circumstances,
and recognizes the provision as a component of selling, general and administrative expenses. Uncollectible accounts are written off against
the allowance after appropriate collection efforts have been exhausted and when it is deemed that a balance is uncollectible.
BIOTRICITY
INC.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2022 (Unaudited)
(Expressed
in US dollars)
Fair
Value of Financial Instruments
ASC
820 defines fair value, establishes a framework for measuring fair value and expands required disclosure about fair value measurements
of assets and liabilities. ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer
a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between
market participants on the measurement date. ASC 820-10 also establishes a fair value hierarchy, which requires an entity to maximize
the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels
of inputs that may be used to measure fair value:
●
Level 1 – Valuation based on quoted market prices in active markets for identical assets or liabilities.
●
Level 2 – Valuation based on quoted market prices for similar assets and liabilities in active markets.
●
Level 3 – Valuation based on unobservable inputs that are supported by little or no market activity, therefore requiring management’s
best estimate of what market participants would use as fair value.
In
instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy,
the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is
significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to
the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.
Fair
value estimates discussed herein are based upon certain market assumptions and pertinent information available to management. The respective
carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these
instruments or interest rates that are comparable to market rates. These financial instruments include cash, accounts receivable, deposits
and other receivables, convertible promissory notes and short term loans, federally-guaranteed loans, term loans and accounts payable
and accrued liabilities. The Company’s cash and derivative liabilities, which are carried at fair values, are classified as a Level
1 and Level 3, respectively. The Company’s bank accounts are maintained with financial institutions of reputable credit, therefore,
bear minimal credit risk.
Property
and Equipment
Property
and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated
useful lives of the assets. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of
the assets. Maintenance and repairs are charged to expense as incurred, and improvements and betterments are capitalized. Depreciation
of property and equipment is provided using the straight-line method for substantially all assets with estimated lives as follow:
SCHEDULE
OF PROPERTY AND EQUIPMENT ESTIMATED USEFUL LIVES
| |
Office
equipment |
5
years |
| |
Leasehold
improvement |
5
years |
Impairment
for Long-Lived Assets
The
Company applies the provisions of ASC Topic 360, Property, Plant, and Equipment, which addresses financial accounting and reporting for
the impairment or disposal of long-lived assets. ASC 360 requires impairment losses to be recorded on long-lived assets, including right-of-use
assets, used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those
assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying
amount exceeds the fair value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner,
except that fair values are reduced for the cost of disposal. Based on its review at December 31, 2022 and 2021, the Company believes
there was no impairment of its long-lived assets.
BIOTRICITY
INC.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2022 (Unaudited)
(Expressed
in US dollars)
Leases
The
Company is the lessee in a lease contract when the Company obtains the right to use the asset. Operating leases are included in the line
items right-of-use asset, lease obligation, current, and lease obligation, long-term in the condensed consolidated balance sheet.
Right-of-use
(“ROU”) asset represents the Company’s right to use an underlying asset for the lease term and lease obligations represent
the Company’s obligations to make lease payments arising from the lease, both of which are recognized based on the present value
of the future minimum lease payments over the lease term at the commencement date. Leases with a lease term of 12 months or less at inception
are not recorded on the condensed consolidated balance sheet and are expensed on a straight-line basis over the lease term in the condensed
consolidated statement of operations. The Company determines the lease term by agreement with lessor. As the Company’s lease does
not provide implicit interest rate, the Company uses the Company’s incremental borrowing rate based on the information available
at commencement date in determining the present value of future payments. Refer to Note 10 for further discussion.
Income
Taxes
The
Company accounts for income taxes in accordance with ASC 740. The Company provides for Federal, State and Provincial income taxes payable,
as well as for those deferred because of the timing differences between reporting income and expenses for financial statement purposes
versus tax purposes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between
the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred
tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recoverable or settled. The effect of a change in tax rates is recognized as income or expense in the
period of the change. A valuation allowance is established, when necessary, to reduce deferred income tax assets to the amount that is
more likely than not to be realized.
Research
and Development
Research
and development costs, which relate primarily to product and software development, are charged to operations as incurred. Under certain
research and development arrangements with third parties, the Company may be required to make payments that are contingent on the achievement
of specific developmental, regulatory and/or commercial milestones. Before a product receives regulatory approval, milestone payments
made to third parties are expensed when the milestone is achieved. Milestone payments made to third parties after regulatory approval
is received are capitalized and amortized over the estimated useful life of the approved product.
Stock
Based Compensation
The
Company accounts for share-based payments in accordance with the provision of ASC 718, which requires that all share-based payments issued
to acquire goods or services, including grants of employee stock options, be recognized in the condensed consolidated statements of operations
and comprehensive loss based on their fair values, net of estimated forfeitures. ASC 718 requires forfeitures to be estimated at the
time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Compensation expense
related to share-based awards is recognized over the requisite service period, which is generally the vesting period.
The
Company accounts for stock based compensation awards issued to non-employees for services, as prescribed by ASC 718-10, at either the
fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily determinable,
using the guidelines in ASC 505-50. The Company issues compensatory shares for services including, but not limited to, executive, management,
accounting, operations, corporate communication, financial and administrative consulting services.
BIOTRICITY
INC.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2022 (Unaudited)
(Expressed
in US dollars)
Convertible
Notes Payable and Derivative Instruments
The
Company has adopted the provisions of ASU 2017-11 to account for the down round features of warrants issued with private placements effective
as of April 1, 2017. In doing so, warrants with a down round feature previously treated as derivative liabilities in the condensed consolidated
balance sheet and measured at fair value are henceforth treated as equity, with no adjustment for changes in fair value at each reporting
period. Previously, the Company accounted for conversion options embedded in convertible notes in accordance with ASC 815. ASC 815 generally
requires companies to bifurcate conversion options embedded in convertible notes from their host instruments and to account for them
as free-standing derivative financial instruments. ASC 815 provides for an exception to this rule when convertible notes, as host instruments,
are deemed to be conventional, as defined by ASC 815-40. The Company accounts for convertible notes deemed conventional and conversion
options embedded in non-conventional convertible notes which qualify as equity under ASC 815, in accordance with the provisions of ASC
470-20, which provides guidance on accounting for convertible securities with beneficial conversion features. Accordingly, the Company
records, as a discount to convertible notes, the intrinsic value of such conversion options based upon the differences between the fair
value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the
note. Debt discounts under these arrangements are amortized over the term of the related debt.
Preferred
Shares Extinguishments
The
Company accounted for preferred stock redemptions and conversions in accordance to ASU-260-10-S99. For preferred stock redemptions and
conversion, the difference between the fair value of consideration transferred to the holders of the preferred stock and the carrying
amount of the preferred stock is accounted as deemed dividend distribution and subtracted from net loss.
Recently
Issued Accounting Pronouncements
In
June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial
Instruments.” This pronouncement, along with subsequent ASUs issued to clarify provisions of ASU 2016-13, changes the impairment
model for most financial assets and will require the use of an “expected loss” model for instruments measured at amortized
cost. Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance
to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on
the financial asset. In developing the estimate for lifetime expected credit loss, entities must incorporate historical experience, current
conditions, and reasonable and supportable forecasts. This pronouncement is effective for fiscal years, and for interim periods within
those fiscal years, beginning after December 15, 2019. On November 19, 2019, the FASB issued ASU No. 2019-10, Financial Instruments—Credit
Losses (Topic 326), finalized various effective date delays for private companies, not-for-profit organizations, and certain smaller
reporting companies applying the credit losses (CECL), the revised effective for fiscal years beginning after December 15, 2022.
In
December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies
the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current
guidance to promote consistency among reporting entities. ASU 2019-12 is effective for fiscal years beginning after December 15, 2021.
Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a
retrospective or modified retrospective basis. There is no significant impact from adopting ASU 2019-12 on the Company’s financial
condition, results of operations, and cash flows.
In
April 2021, The FASB issued ASU 2021-04 to codify the final consensus reached by the Emerging Issues Task Force (EITF) on how an issuer
should account for modifications made to equity-classified written call options (hereafter referred to as a warrant to purchase the issuer’s
common stock). The guidance in the ASU requires the issuer to treat a modification of an equity-classified warrant that does not cause
the warrant to become liability-classified as an exchange of the original warrant for a new warrant. This guidance applies whether the
modification is structured as an amendment to the terms and conditions of the warrant or as termination of the original warrant and issuance
of a new warrant. The Company adopted this guidance for the fiscal year beginning April 1, 2022. There is no significant impact from
adopting ASU 2021-04 on the Company’s financial condition, results of operations, and cash flows.
BIOTRICITY
INC.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2022 (Unaudited)
(Expressed
in US dollars)
The
Company continue to evaluate the impact of the new accounting pronouncement, including enhanced disclosure requirements, on our business
processes, controls and systems.
4.
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
SCHEDULE
OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
| | |
| | |
| |
| | |
As
at
December
31, 2022
$ | | |
As
at
March
31, 2022
$ | |
| Accounts payable
and deferred revenue | |
| 2,383,657 | | |
| 1,159,477 | |
| Accrued
liabilities | |
| 1,106,769 | | |
| 1,436,270 | |
| Accounts
payable and accrued liabilities | |
| 3,490,426 | | |
| 2,595,747 | |
Accounts
payable as at December 31, 2022 included $203,525
current account with a shareholder and executive
(March 31, 2022: $2,851 due
to shareholder and executive) of the Company, primarily as a result of that individual’s role as an employee. These amounts are
unsecured, non-interest bearing and payable on demand.
5.
CONVERTIBLE NOTES AND SHORT-TERM LOANS
SCHEDULE
OF CONVERTIBLE NOTES
| | |
Total
$ | |
| Balance
at March 31, 2022 | |
| 1,540,000 | |
| | |
| | |
| Conversion to common shares
(Note 9) | |
| (555,600 | ) |
| Redemption of convertible
notes | |
| (53,250 | ) |
| Convertible note extinguishment | |
| (500,000 | ) |
| New issuance of convertible note, net of discounts | |
| 556,864 | |
| New issuance of short-term
loan and promissory notes, net of discounts | |
| 2,156,480 | |
| Repayment of short-term loans | |
| (20,264 | ) |
| Amortization of discounts | |
| 1,407 | |
| | |
| | |
| Balance
at December 31, 2022 | |
| 3,125,637 | |
Interest
expense on the above debt instruments was $69,930
and $126,574 for the three and nine months ended
December 31, 2022, respectively, and $77,791 and
$828,769 for
the three and nine months ended December 31, 2021, respectively.
Series
A Convertible Promissory Notes:
During
the year ended March 31, 2021, the Company issued $11,275,500
(face value) in two series of convertible promissory
notes (the “Series A Notes”) sold under subscription agreements to accredited investors. The Notes mature one year from the
final closing date of the offering and accrue interest at 12%
per annum.
For
first series of Series A Notes, commencing six months following the Issuance Date, and at any time thereafter (provided the Holder has
not received notice of the Company’s intent to prepay the note), at the sole election of the Holder, any amount of the outstanding
principal and accrued interest of this note (the “Outstanding Balance”) could be converted into that number of shares of
Common Stock equal to: (i) the Outstanding Balance divided by (ii) 75% of the volume weighted average price of the Common Stock for the
5 trading days prior to the Conversion Date (the conversion price).
BIOTRICITY
INC.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2022 (Unaudited)
(Expressed
in US dollars)
For
the first series of Series A Notes, the
notes would automatically convert into common stock (in each case, subject to the trading volume of the Company’s common stock
being a minimum of $500,000 for each trading day in the 20 consecutive trading days immediately preceding the conversion date), upon
the earlier to occur of (i) the Company’s common stock being listed on a national securities exchange, in which event the conversion
price would be equal to 75% of the volume weighted average price of the common stock for the 20 trading days prior to the conversion
date, or (ii) upon the closing of the Company’s next equity round of financing for gross proceeds of greater than $5,000,000, in
which event the conversion price would be equal to 75% of the price per share of the common stock (or of the conversion price in the
event of the sale of securities convertible into common stock) sold in such financing. The Company could, at its discretion redeem the
notes for 115% of their face value plus accrued interest.
For
second series of Series A Notes, the notes could be converted into shares of common stock, at the option of the holder, commencing six
months from issuance, at a conversion price equal to the lower of $4.00
per share or 75% of the volume weighted average
price of the common stock for the five trading days prior to the conversion date
For
the second series of Series A Notes, the
notes would automatically convert into common stock (in each case, subject to the trading volume of the Company’s common stock
being a minimum of $500,000 for each trading day in the 20 consecutive trading days immediately preceding the conversion date), upon
the earlier to occur of (i) the Company’s common stock being listed on a national securities exchange, in which event the conversion
price would be equal to the lower of $4.00 per share or 75% of the volume weighted average price of the common stock for the 20 trading
days prior to the conversion date, or (ii) upon the closing of the Company’s next equity round of financing for gross proceeds
of greater than $5,000,000, in which event the conversion price would be equal to the lower of $4.00 per share or 75% of the price per
share of the common stock (or of the conversion price in the event of the sale of securities convertible into common stock) sold in such
financing. The Company could, at its discretion redeem the notes for 115% of their face value plus accrued interest.
The
Company was obligated to issue warrants that accompany the convertible notes and provide 50% warrant coverage. The warrants have a 3-year
term from date of issuance and an exercise price that is 120% of the 20-day volume weighted average price of the Company’s common
shares at the time final closing.
The
Company was obligated to pay the placement agent of the first series of Series A Notes a 12% cash fee for $8,925,550 (face value) of
the notes and 2.5% cash fee and other sundry expenses for the remaining $2,350,000 (face value) of the notes.
Net
proceeds to the Company from Series A Notes issuance up to March 31, 2021 amounted to $10,135,690
after payment of the relevant financing related
fees.
The
Company was also obligated to issue warrants to the placement agent that have a 10-year term and cover 12% of funds raised for $8,925,550
(face value) of the notes (first series) and 2.5% of funds raised for the remaining $2,350,000 (face value) of notes (second series),
with an exercise price that is 120% of the 20-day volume weighted average price of the Company’s common shares at the time final
closing. On final closing, which occurred on January 8, 2021, the warrants’ exercise price was struck at $1.06 per share.
Prior
to January 8, 2021 (final closing date), the Company determined that the conversion and redemption features, investor warrants and placement
agent warrants contained in those Notes represented a single compound derivative liability that meets the requirements for liability
classification under ASC 815. The Company accounted for these obligations by determining the fair value of the related derivative liabilities
associated with the embedded conversion and redemption features, as well as investor warrants and placement agent warrants.
BIOTRICITY
INC.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2022 (Unaudited)
(Expressed
in US dollars)
Subsequently,
the exercise price of all warrants was concluded and locked to $1.06
as of January 8, 2021. Since the exercise price
was no longer a variable, the Company concluded that the noteholder and placement agent warrants should no longer be accounted for as
a derivative liability in accordance with ASC 815 guidelines related to equity indexation and classification. The derivative liabilities
related to those warrants were therefore marked to market as of January 8, 2021 and then transferred to equity (collectively, “End
of warrants derivative treatment”). Therefore, the remaining derivative liabilities only related to the conversion and redemption
features of the convertible notes.
For
the Series A Notes, The Company recognized debt issuance costs in the amount of $2,301,854
and treated these as a deduction from the convertible
note liabilities directly, as a contra-liability, and amortized the debt issuance cost over the term of the Notes. The Company also recognized
initial debt discount in the amount of $8,088,003
and accreted the interest over the remaining
lives of those Notes. The debt issuance costs were fully amortized as of March 31, 2022.
As
at March 31, 2022, $700,000
of Series A Notes remained unconverted and outstanding,
which was equal to the face value of the relevant convertible notes. There was no conversion of Series A Notes during the nine months
ended December 31, 2022.
On December 30, 2022, the Company exchanged $500,000
of Series A Notes along with its outstanding interest accrual of $121,500
into a new convertible note with the same note holder. The new convertible note has principal of $621,500,
stated interest rate of 12%,
as well as option to convert outstanding principal and accrued interest at the conversion price, calculated at 75%
multiplied by the average of the three lowest closing prices during the previous ten trading days prior to the receipt of the
conversion notice. The new convertible note matures on December 30, 2023. The Company had concluded that this exchange transaction is
an extinguishment of the original convertible note. Therefore, the Company recorded the new convertible note at fair value, which was
its face value of $621,500
net of a discount of $64,636.
The difference between the fair value of the original convertible note immediately prior to the extinguishment and the fair value of
the new convertible note is $64,636.
This amount was recorded as a gain upon debt extinguishment and was included in other income on the income statement. In addition, the
Company had assessed fair value of the derivative liability associated with the conversion option on the original note immediately before
the modification, as well as the fair value of the derivative liability associated with the new convertible note. The difference $14,083
was recognized as other expense [Note 8].
As
of December 31, 2022, the Company recorded $50,400
of interest accruals for the Series A Notes.
In connection with the foregoing, the Company relied upon the exemption from registration provided by Section 4(a)(2) under the Securities
Act of 1933, as amended, for transactions not involving a public offering.
Series
B Convertible Notes
In
addition, during the year ended March 31, 2021, the Company also issued $1,312,500
(face value) of convertible promissory notes
(“Series B Notes”) to various accredited investors.
Commencing
six months following the issuance date, and at any time thereafter, subject to the Company’s Conversion Buyout clause, at the sole
election of the holder, any amount of the outstanding principal and accrued interest of the note (the “outstanding balance”)
could be converted into that number of shares of Common Stock equal to: (i) the outstanding balance divided by (ii) the Conversion Price.
Partial conversions of the note shall have the effect of lowering the outstanding principal amount of the note. The
holder may exercise such conversion right by providing written notice to the Company of such exercise in a form reasonably acceptable
to the Company (a “conversion notice”). Conversion price means (subject in all cases to proportionate adjustment for stock
splits, stock dividends, and similar transactions), seventy-five percent (75%) multiplied by the average of the three (3) lowest closing
prices during the previous ten (10) trading days prior to the receipt of the conversion notice.
The
Series B Notes will automatically convert into common stock upon a merger, consolidation, exchange of shares, recapitalization, reorganization,
as a result of which the Company’s common stock shall be changed into another class or classes of stock of the Company or another
entity, or in the case of the sale of all or substantially all of the assets of the Company other than a complete liquidation of the
Company. Within the first 180 days after the issuance date, the Company may, at its discretion redeem the notes for 115% of their face
value plus accrued interest. The Company is obligated to issue warrants that accompany the convertible notes and provide 50% warrant
coverage. The warrants have a 3-year
term from date of issuance and an exercise price that is $1.06
per share for 100,000
warrant shares and $1.5
per share for 212,500
warrant shares.
BIOTRICITY
INC.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2022 (Unaudited)
(Expressed
in US dollars)
Net
proceeds to the Company from convertible note issuances to March 31, 2021 amounted to $1,240,000
after the original issuance discount as well
as payment of the financing related fees. The Company determined that the conversion and redemption features contained in the Series
B Notes represented a single compound derivative liability that meets the requirements for liability classification under ASC 815. The
Company accounted for these obligations by determining the fair value of the related derivative liability associated with the embedded
conversion and redemption features.
The
Company recognized debt issuance costs in the amount of $10,000
and treated these as a deduction from the convertible
note liabilities directly, as a contra-liability, and amortized the debt issuance cost over the term of the Series B Notes. The Company
recognized initial debt discount in the amount of $1,312,500
and accreted the interest over the remaining
lives of those notes. The debt issuance costs were fully amortized as of March 31, 2022.
As
at March 31, 2022, $840,000
of Series B Notes remained unconverted and outstanding,
which was equal to the face value of the relevant convertible notes.
During
the three and nine months ended December 31, 2022, $153,600
and $555,600
(face value) of Series B Notes were converted
into 238,846
and 746,957 common shares (Note 9 d).
During
the three and nine months ended December 31, 2022, $53,250
(face value) of Series B Notes were redeemed
by cash payment of $61,238.
The redemption price was determined in accordance
to the Series B note agreement, where the Company has an option to redeem the note at 115% of its principal value instead of converting
the note upon receipt of a conversion notice. The difference between the redemption cash payment and the book value of the note redeemed,
including the derivative liability associated to the note, was $9,991,
and was recognized as a gain upon convertible note repayment.
As
of December 31, 2022, the Company recorded accrued interest in the amount of $82,509
related to the Series B Notes. In connection
with the foregoing, the Company relied upon the exemption from registration provided by Section 4(a)(2) under the Securities Act of 1933,
as amended, for transactions not involving a public offering.
In
total, as at December 31, 2022, the Company had issued $200,000
and $231,150
for Series A and Series B notes, respectively,
that remained outstanding beyond their contractual maturity date. These continued to accrue interest, and no repayment demands were received
from noteholders, notwithstanding the fact that these noteholders have continued to convert portions of these notes subsequently, and
it is management’s expectation that all of these notes will eventually convert. In connection with the foregoing, the Company relied
upon the exemption from registration provided by Section 4(a)(2) under the Securities Act of 1933, as amended, for transactions not involving
a public offering.
Other
Short-term loans and Promissory Notes
During
the three months ended December 31, 2022, the Company entered into a short-term bridge loan agreement with a collateralized merchant
finance company that advanced gross proceeds of $400,000,
prior to the deduction of issuance costs in the amount of $9,999.
The issuance costs were recognized as a debt discount and amortized via the effective interest method. The term of the finance agreement
is 40
weeks. The Company is required to make weekly
payments of $13,995
($560,000
in the aggregate). As of December 31, 2022, the
amount of principal outstanding was $380,500.
The remaining unamortized issuance cost discount was $9,392.
The
Company has an option to repay the loan earlier to receive a discount on total repayment. If the Company repays within 30 days, the total
repayment is $512,000.
If the Company repays within 60 days, the total repayment is $520,000.
If the Company repays within 90 days, the total repayment is $528,000.
During the three months ended December 31, 2022, the Company also entered into a short term collateralized bridge loan agreement with
a finance company that advanced gross proceeds of $800,000,
prior to the deduction of issuance costs in the amount of $32,000.
The issuance costs were recognized as a debt discount and amortized via the effective interest method. The term of this second agreement
is 40
weeks. The Company is required to make weekly
payments of $29,556
($14,999
for the first four weeks, and $1,120,000
in the aggregate). As of December 31,
2022, the amount of principal and interest outstanding under this agreement was $799,236
and the remaining unamortized issuance cost discount was $31,200.
The Company has an option to repay the loan earlier and receive a discount on total repayment. The total repayment amount becomes $920,000
if repaid within 30 days, $944,000
if repaid within 60 days, $968,000
if repaid within 90 days, $1,000,000
if repaid within 120 days, and $1,088,000
if repaid within 150 days.
In
December 2022, the Company entered into a promissory note agreement with an individual investor that resulted in gross proceeds of $600,000
(the “Principal Amount”). The note
has a fixed rate of interest at 25%
per annum payable monthly on the first day of
every month. This promissory note matures on December 15, 2023, when the Principal Amount is due. The note has various default provisions
which would, if triggered, result in the acceleration of the Principal Amount plus any accrued and unpaid interest. The note also has
a 3%
early payment penalty provision. As of December
31, 2022, the amount of principal outstanding on the note was $600,000,
and accrued interest outstanding on the note was $6,575.
Also in December 2022, the Company received a short-term loan in the amount of $150,000
from an individual investor. There was no
interest or issuance cost associated with the
latter loan, which was repaid in January 2023.
BIOTRICITY
INC.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2022 (Unaudited)
(Expressed
in US dollars)
On December 30, 2022, the Company extinguished 306,604
warrants (Note 9f) that were originally issued to Series A Convertible Note holders, and replaced these warrants with a new promissory
note issued to the same warrant holder. The new promissory note has principal balance of $270,000,
stated interest of zero, and matures on June 30, 2023. The Company is obligated to repay 50%
of the principal balance on March 31, 2023, and the rest of the promissory notes on the maturity date. The fair value of this new promissory
note was $248,479
as of the issuance date, which was calculated using a discount rate that was comparable to other loan issuance at the same time
as well as the market bond rates at the time of the promissory note issuance. The difference between the fair value of the new note and
its principal balance was $21,521,
and was recognized as a discount, and will be amortized via effective interest rate method. The Company compared the fair value of the
extinguished warrants immediately prior to extinguishment against the fair value of the new promissory note issued. The difference between
these fair values is $176,711, and was
recognized as other expense on the income statement. As of December 31, 2022, the amount of principal outstanding on the new note was
$270,000, and the remaining unamortized discount
was $21,521.
6.
TERM LOAN AND CREDIT AGREEMENT
Term
Loan
On
December 21, 2021, the Company entered into a Credit Agreement (“Credit Agreement”) with SWK Funding LLC (“Lender’),
wherein the Company has borrowed $12,000,000,
with a maturity date of December 21, 2026.
The principal will accrue interest at the LIBOR Rate plus 10.5%
per annum (subject to adjustment as set forth in the Credit Agreement). Interest payments are due on each February, May, August and November
commencing February 15, 2022.
Pursuant to the Credit Agreement, the Company
will be required to make interest only payments for the first 24 months (which may be extended to 36 months under prescribed circumstances),
after which payments will include principal amortization that accommodates a 40% balloon principal payment at maturity. Prepayment of
amounts owing under the Credit Agreement are allowed under prescribed circumstances.
Pursuant to the Credit Agreement the Company is subject to an Origination Fee in the amount of $120,000.
Upon Termination of the Credit Agreement, the Company shall pay an Exit Fee of $600,000.
As
part of the loan transaction, the Company paid legal and professional costs directly in connection to the debt financing in the amount
of $50,000
in cash.
Total
costs directly in connection to the debt financing in the amount of $193,437
(professional fee $48,484;
lender’s origination fee, due diligence fee, and other expenses in the amount of $144,953)
was deduced from the gross proceeds in the amount of $12,000,000.
BIOTRICITY
INC.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2022 (Unaudited)
(Expressed
in US dollars)
The
Company also repaid $1,574,068
of existing short-term loan and promissory notes and relevant
accrued interests by using the proceeds from the loan.
Total
costs directly in connection to the loan and fair value of warrants was in the amount of $1,042,149.
And such costs were accounted as debt discount, and amortized using the effective interest method. The amortization of such debt discount
was included in the accretion and amortization expenses. For the three and nine months ended December 31, 2022, the amortization of debt
discount expense was $51,061
and $151,970
respectively.
Total
interest expense on the term loan for the three and nine months ended December 31, 2022 was $335,242
and $1,054,166,
respectively (three and nine months ended December 31, 2022: $38,333
and $38,333).
On
December 31, 2022, the Company was not in compliance with certain covenants of the term loan, for which it sought and received relief
from the term loan lender.
The
Company and Lender also entered into a Guarantee and Collateral Agreement (“Collateral Agreement”) wherein the Company agreed
to secure the Credit Agreement with all of the Company’s assets. The Company and Lender also entered into an Intellectual Property
Security Agreement dated December 21, 2021 (the “IP Security Agreement”) wherein the Credit Agreement is also secured by
the Company’s right title and interest in the Company’s Intellectual Property.
In
connection with the Credit Agreement, the Company issued 57,536
warrants to the Lender, which were fair-valued
at $198,713 (Note
9). The warrants are accounted as a deduction from liability as well as a credit into additional paid-in capital, and amortized using
the effective interest method.
7.
FEDERALLY GUARANTEED LOANS
Economic
Injury Disaster Loan (“EIDL”)
In
April 2020, the Company received $370,900
from the U.S. Small Business Administration (SBA)
under the captioned program. The
loan has a term of 30
years and
an interest rate of 3.75%
per annum, without the requirement for payment in its first 12 months.
The Company may prepay the loan without penalty at will.
In
May 2021, the Company received an additional $499,900
from the SBA under the same terms.
As
at December 31, 2022, the Company recorded accrued interest of $60,520
for the EIDL loan (December 31, 2021: $36,181).
Interest
expense on the above loan was $8,231
and $24,602
for the three and nine months ended December
31, 2022, respectively, and $8,231
and $36,181
for the three and nine months ended December
31, 2021, respectively.
Payment
Protection Program (“PPP”) Loan
In
May 2020, Biotricity received loan proceeds of $1,200,000
(the “PPP Loan”) under the Paycheck
Protection Program established by the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) administered by
the U.S. Small Business Administration (“SBA”). The Company met the criteria for the loan forgiveness and applied for the
loan forgiveness in March 2021. For the year ended March 31, 2021, the Company recognized the loan forgiveness as a reduction to payroll
expense in the amount of $1,156,453
and a reduction to the rent expense of $43,547.
The loan forgiveness was granted by the SBA in May 2021. As at December 31, 2022, the balance of outstanding PPP loan is NIL
(March 31, 2022: NIL).
8.
DERIVATIVE LIABILITIES
On
December 19, 2019 and January 9, 2020, the Company issued 7,830
Series A preferred shares; 6,000
of these were issued for cash proceeds of $6,000,000
and 1,830
of these were issued on conversion of $1,830,000
of promissory notes that had previously been
issued for cash proceeds in October 2019.
BIOTRICITY
INC.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2022 (Unaudited)
(Expressed
in US dollars)
On
May 22, 2020, another 215
Series A preferred shares were issued as a result
of a combined transaction that included the conversion of $100,000
in promissory notes and $15,000
in accrued interest for 115
preferred shares, as well as a purchase of 100
preferred shares for cash proceeds of $100,000.
During
the three months ended September 30, 2021, an additional 100
Series A preferred shares were issued for cash
proceeds of $100,000
(Note 9 d).
During
the three months ended December 31, 2021, the Company redeemed $230,000
preferred shares through cash. The total amount
of the preferred shares redeemed and derivative liabilities derecognized was $225,919.
The difference of redemption value of $230,000
and the carrying value of preferred shares on
the day of redemption was $4,081
was recognized as a deemed dividend distribution.
In
addition, during the three months ended December 31, 2021, the Company converted $715,000
preferred shares into 288,756
common shares. The difference between the total
amount of the preferred shares converted, derivative liabilities derecognized and unpaid interests at the time of conversion ($1,076,513),
and the fair value of the common shares converted ($1,226,406)
was $149,893
and was recognized as deemed dividend distribution.
During
the three months ended June 30, 2022, the Company redeemed $328,904
preferred shares through cash. The total amount
of the preferred shares redeemed and derivative liabilities derecognized was $296,032.
The difference of redemption value of $328,904
and the carrying value of preferred shares on
the day of redemption was $32,872
and was recognized as a deemed dividend distribution
During
the three months ended September 30, 2022, the Company redeemed $69,852
preferred shares through cash. The total amount
of the preferred shares redeemed and derivative liabilities derecognized was $65,062.
The difference of redemption value of $69,852
and the carrying value of preferred shares on
the day of redemption was $4,790
and was recognized as a deemed dividend distribution.
During the three months ended December
31, 2022, the Company redeemed $496,800
preferred shares through cash. The total amount of the preferred shares redeemed and derivative liabilities derecognized was $469,116.
The difference of redemption value of $496,800
and the carrying value of preferred shares on the day of redemption was $27,684
and was recognized as a deemed dividend distribution.
The
Company analyzed the compound features of variable conversion and redemption embedded in the preferred shares instrument, for potential
derivative accounting treatment on the basis of ASC 820 (Fair Value in Financial Instruments), ASC 815 (Accounting for Derivative Instruments
and Hedging Activities), Emerging Issues Task Force (“EITF”) Issue No. 00–19 and EITF 07–05, and determined that
the embedded derivatives should be bundled and valued as a single, compound embedded derivative, bifurcated from the underlying equity
instrument, treated as a derivative liability, and measured at fair value.
SCHEDULE
OF DERIVATIVE LIABILITIES
| | |
Fiscal
Year 2023
$
| |
|
Fiscal
Year 2022
$
|
|
| Derivative
liabilities as at March 31, 2022 and 2021 | |
| 352,402 | |
|
|
410,042 |
|
| Change
in fair value of derivatives during the period | |
| 195,521 | |
|
|
(203,525 |
) |
| Reduction
due to preferred shares redeemed | |
| (10,605 | ) |
|
|
- |
|
| Derivative
liabilities as at June 30, 2022 and 2021 | |
| 537,318 | |
|
|
206,517 |
|
| New issuance | |
| - | |
|
|
17,084 |
|
| Change
in fair value of derivatives during the period | |
| 168,762 | |
|
|
(101,173 |
) |
| Reduction
due to preferred shares redeemed | |
| (4,444 | ) |
|
|
- |
|
| Derivative
liabilities as at September 30, 2022 and 2021 | |
| 701,636 | |
|
|
121,828 |
|
| Change
in fair value of derivatives during the period | |
| 78,026 | |
|
|
644,774 |
|
| Reduction
due to preferred shares redeemed | |
| (37,987 | ) |
|
|
(479,791 |
) |
| Derivative
liabilities as at December 31, 2022 and 2021 | |
| 741,675 | |
|
|
286,811 |
|
BIOTRICITY
INC.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2022 (Unaudited)
(Expressed
in US dollars)
The
lattice methodology was used to value the derivative components, using the following assumptions:
SCHEDULE
OF DERIVATIVE COMPONENTS VALUATION ASSUMPTIONS
| | |
December
2022 | |
| Dividend yield
(%) | |
| 12 | |
| Risk-free rate for term (%) | |
| 4.18
–
4.36 | |
| Volatility (%) | |
| 92.7
–
93.6 | |
| Remaining terms (Years) | |
| 1.00
to 2.50 | |
| Stock price ($ per share) | |
| 0.45
to 0.72 | |
In
addition, the Company recorded derivative liabilities related to the conversion and redemption features of the convertible notes, as
well as warrants that were issued in connection with the convertible notes, during the year ended March 31, 2021 (Note 5). As the warrant
exercise price became final and locked, the derivative liabilities related to those warrants were marked to market and transferred to
equity (Note 5). Any noteholder and placement agent warrants that were issued after the finalization of exercise price was accounted
for as equity.
SCHEDULE
OF DERIVATIVE LIABILITIES
| | |
Fiscal
Year 2023
$ | |
|
Fiscal
Year 2022
$
|
|
| | |
| |
|
|
|
|
| Balance
at March 31, 2022 and 2021 | |
| 520,747 | |
|
|
3,633,856 |
|
| Conversion
to common shares | |
| (104,118 | ) |
|
|
(403,108 |
) |
| Change
in fair value of derivative liabilities | |
| 2,703 | |
|
|
502,508 |
|
| Balance
at June 30, 2022 and 2021 | |
| 419,332 | |
|
|
3,733,256 |
|
| Conversion
to common shares | |
| (35,274 | ) |
|
|
(2,744,711 |
) |
| Change
in fair value of derivative | |
| 3,280 | |
|
|
(295,801 |
) |
| Balance
at September 30, 2022 and 2021 | |
| 387,338 | |
|
|
692,744 |
|
| Convertible
note modification | |
| 14,083 | |
|
|
- |
|
| Convertible
note redemption | |
| (17,979 | ) |
|
|
- |
|
| Conversion
to common shares | |
| (53,402 | ) |
|
|
(250,738 |
) |
| Change
in fair value of derivative | |
| 21,679 | |
|
|
129,999 |
|
| Balance
at December 31, 2022 and 2021 | |
| 351,719 | |
|
|
572,005 |
|
The
monte-carlo methodology was used to value the convertible note derivative components, using the following assumptions:
SCHEDULE
OF WARRANT DERIVATIVE COMPONENTS VALUATION ASSUMPTIONS
| | |
| December
2022 | |
| Risk-free rate
for term (%) | |
| 3.74
- 4.37 | |
| Volatility (%) | |
| 90.4
- 99.6 | |
| Remaining terms (Years) | |
| 0.50
- 0.75 | |
| Stock price ($ per share) | |
| 0.50
- 1.00 | |
9.
STOCKHOLDERS’ EQUITY (DEFICIENCY)
a)
Authorized stock
As
at December 31, 2022, the Company is authorized to issue 125,000,000
(March 31, 2022 – 125,000,000)
shares of common stock ($0.001
par value) and 10,000,000
(March 31, 2022 – 10,000,000)
shares of preferred stock ($0.001
par value), 20,000
of which are designated shares of Series A preferred
stock ($0.001
par value) as of December 31, 2022 and March
31, 2022.
BIOTRICITY
INC.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2022 (Unaudited)
(Expressed
in US dollars)
At
December 31, 2022, common shares and shares directly exchangeable into equivalent common shares that were issued and outstanding totaled
52,242,072
(March 31, 2022 – 51,277,040);
these were comprised of 50,775,354 (March
31, 2022 – 49,810,322)
shares of common stock and 1,466,718
(March 31, 2022 – 1,466,718)
exchangeable shares. There is currently one share of the Special Voting Preferred Stock issued and outstanding, held by one holder of
record, which is the Trustee in accordance with the terms of the Trust Agreement. The Company has also issued a Series A preferred stock,
$0.001
par value; 20,000
shares have been designated as authorized (as
at December 31, 2022 and March 31, 2022); 6,305
Series A preferred shares were issued and outstanding
as at December 31, 2022 (March 31, 2022: 7,201).
b)
Exchange Agreement
On
February 2, 2016, the Company was formed through reverse-take-over:
| |
● |
The
Company issued approximately 1.197 shares of its common stock in exchange for each common share of iMedical held by the iMedical
shareholders who in general terms, are not residents of Canada (for the purposes of the Income Tax Act (Canada).
Accordingly, the Company issued 13,376,947
shares; |
| |
● |
Shareholders
of iMedical who in general terms, are Canadian residents (for the purposes of the Income Tax Act (Canada)) received approximately
1.197 Exchangeable Shares in the capital of Exchangeco in exchange for each common share of iMedical held. Accordingly, the Company
issued 9,123,031
Exchangeable
Shares; |
| |
● |
Each
outstanding option to purchase common shares in iMedical (whether vested or unvested) was exchanged, without any further action or
consideration on the part of the holder of such option, for approximately 1.197 economically equivalent replacement options with
an inverse adjustment to the exercise price of the replacement option to reflect the exchange ratio of approximately 1.197:1; |
| |
● |
Each
outstanding warrant to purchase common shares in iMedical was adjusted, in accordance with the terms thereof, such that it entitles
the holder to receive approximately 1.197 shares of the common stock of the Company for each warrant, with an inverse adjustment
to the exercise price of the warrants to reflect the exchange ratio of approximately 1.197:1 |
| |
● |
Each
outstanding advisor warrant to purchase common shares in iMedical was adjusted, in accordance with the terms thereof, such that it
entitles the holder to receive approximately 1.197 shares of the common stock of the Company for each advisor warrant, with an inverse
adjustment to the exercise price of the Advisor Warrants to reflect the exchange ratio of approximately 1.197:1; and |
| |
● |
The
outstanding 11% secured convertible promissory notes of iMedical were adjusted, in accordance with the adjustment provisions thereof,
as and from closing, so as to permit the holders to convert (and in some circumstances permit the Company to force the conversion
of) the convertible promissory notes into shares of the common stock of the Company at a 25%
discount to purchase price per share in Biotricity’s next offering. |
Issuance
of common stock, exchangeable shares and cancellation of shares in connection with the reverse takeover transaction as explained above
represents recapitalization of capital retroactively adjusting the accounting acquirer’s legal capital to reflect the legal capital
of the accounting acquiree.
c)
Series (A) Preferred Stock
The
number of Series A Preferred Stock issued and outstanding as of December 31, 2022 and March 31, 2022 was 6,305
and 7,201,
respectively.
The
Series A Preferred Stock is junior to the Company’s existing undesignated preferred stock, and unless otherwise set forth in the
applicable certificate of designations, shall be junior to any future issuance of preferred stock. The purchase price (the “Purchase
Price”) for the Series A Preferred Stock to date has been $1,000
per share. Except as otherwise expressly required
by law, the Series A Preferred Stock does not have voting rights and does not have any liquidation rights.
Preferred
Stock Dividends
Dividends
shall be paid at the rate of 12%
per annum of the amount of the Series A Preferred Stockholder’s (the “Holder”) Purchase Price. Dividends shall be paid
quarterly unless the Holder and the Company mutually agree to accrue and defer any such dividend.
Conversion
The
Series A Preferred Stock is convertible into shares of common stock commencing 24 months after the issuance date of the Series A Preferred
Stock. Upon which, on a monthly basis, up to 5%
of the aggregate amount of the Purchase Price can be converted (subject to adjustment for changes in the Holder’s ownership of
the underlying Series A Preferred Stock). The conversion price is equal to the greater of $.001
or a 15%
discount to the volume-weighted average price (“VWAP”) of the Company’s common stock five Trading Days immediately
prior to the conversion date (the “Conversion Rate). Additionally, subject to certain provisions, the Holder may exchange its Series
A Preferred Stock into any common stock financing being conducted by the Company at a 15% discount to the pricing of that financing.
Other
Adjustments and Rights
●
The Conversion Rate (and shares issuable upon conversion of the Series A Preferred Stock) will be appropriately adjusted to reflect stock
splits, stock dividends business combinations and similar recapitalization.
●
The Holders shall be entitled to a proportionate share of certain qualifying distributions on the same basis as if they were holders
of the Company’s common stock on an as converted basis.
BIOTRICITY
INC.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2022 (Unaudited)
(Expressed
in US dollars)
Company
Redemption
The
Company may redeem all or part of the outstanding Series A Preferred Stock after one year from the date of issuance by paying an amount
equal to the aggregate Purchase Price paid, adjusted for any reduction in Series A Preferred Stock holdings, multiplied by 110%
plus accrued dividends
d)
Share issuances
Share
issuances during the year ended March 31, 2022
During
the year ended March 31, 2022, the Company issued 4,696,083
common shares (not including 19,263
shares that were part of to be issued shares
from prior year conversions) in connection with conversion of convertible notes. The total amounts of debts settled is in amount of $14,522,812
that composed of face value of convertible promissory
notes in amount of $10,309,000,
carrying amount of conversion and redemption feature derived from notes in amount of $3,398,557
and unpaid interest in amount of $815,255.
The fair value of the shares issued was determined based on the market price upon conversion and was in the amount of $15,678,454.
The difference between amounts of debts settled and fair value of common shares issued was in the amount of $1,155,642
and was recorded as loss on conversion of convertible
promissory notes in statement of operations.
During
the year ended March 31, 2022, the Company issued 658,355
common shares in connection with warrant exercises
for cash, and 446,370
common shares in connection with cashless warrant
exercises (Note 9f). In addition, the Company issued 451,688
common shares for services provided (not including
250,000
that were part of to be issued shares from prior year commitment).
The fair value of common shares issued for services provided was $1,414,449.
The fair value of common shares was determined based on the fair value on the date of approval of common share issuance.
During
the year ended March 31, 2022, the Company issued 69,252
common shares for cash proceeds of $250,000,
which were initially received as a promissory note, and paid through the issuance common shares within the same quarter.
During
the year ended March 31, 2022, the Company issued 5,382,331
common shares in connection with the equity financing
that was concurrent with its listing on the Nasdaq Capital Market, for total net cash proceeds of $14,545,805.
During
the year ended March 31, 2022, an additional Series A preferred shares were issued for cash
proceeds of $100,000.
The Company issued 288,756
common shares as a result of preferred share
conversions (Note 8).
During
the year ended March 31, 2022, the Company also issued an aggregate of 1,423,260
shares of its common stock to investors as part
of the one-for-one exchange of previously issued exchangeable shares into the Company’s Common Stock, which is a non-cash transaction.
Share
issuances during the three months ended June 30, 2022
During
the three months ended June 30, 2022, the Company issued 404,545
common shares in connection with conversion of
convertible notes (Note 5). The total amounts of debts settled is in amount of $406,118
that composed of face value of convertible promissory
notes in amount of $302,000
(Note 5), carrying amount of conversion and redemption
feature derived from notes in amount of $104,118.
The fair value of the shares issued and to be issued was determined based on the market price upon conversion and was in the amount of
$457,025.
The difference, that represented a loss on conversion between amounts of debt settled and fair value of common shares issued, was in
the amount of $50,908
and was recorded as loss on conversion of convertible
promissory notes in statement of operations.
During
the three months ended June 30, 2022, the Company removed 40,094
of previously to be issued shares, in connection
with cancellation of warrant exercises from certain warrant holders. In addition, the Company recognized additional 11,792
shares to be issued for warrant exercise request
received but not processed as of quarter end. As a result of the cancellation of to be issued shares, $42,500
was reduced from balance of shares to be issued,
and the Company increased the balance of the shares to be issued by $12,500
upon the warrants exercise.
During
the three months ended June 30, 2022, the Company issued 4,167
common shares for services received, with a fair
value of $7,500.
Share
issuances during the three months ended September 30, 2022
During
the three months ended September 30, 2022, the Company issued 117,647
common shares in connection with conversion of
convertible notes (Note 5). The total amounts of debts settled is in amount of $135,274
that composed of face value of convertible promissory
notes in amount of $100,000
(Note 5), carrying amount of conversion and redemption
feature derived from notes in amount of $35,274.
The fair value of the shares issued and to be issued was determined based on the market price upon conversion and was in the amount of
$175,294.
The difference, that represented a loss on conversion, between amounts of debts settled and fair value of common shares issued was in
the amount of $40,020
and was recorded as loss on conversion of convertible
promissory notes in statement of operations.
During
the three months ended September 30, 2022, the Company issued 22,772
common shares for services received, with a fair
value of $30,287.
BIOTRICITY
INC.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2022 (Unaudited)
(Expressed
in US dollars)
Share
issuances during the three months ended December 31, 2022
During
the three months ended December 31, 2022, the Company issued 238,846
common shares in connection with the conversion
of convertible notes (Note 5). The total amounts of debts settled is in amount of $207,002
that composed of face value of convertible promissory
notes in amount of $153,600
(Note 5), carrying amount of conversion and redemption
feature derived from notes in amount of $53,402.
The fair value of the shares issued and to be issued was determined based on the market price upon conversion and was in the amount of
$211,602.
The difference, that represented a loss on conversion, between amounts of debts settled and fair value of common shares issued was in
the amount of $4,600
and was recorded as loss on conversion of convertible
promissory notes in condensed consolidated statements of operations and comprehensive loss.
In
addition, the Company issued 105,263
common shares for services received with a fair
value of $112,631
which was recognized as a general and administrative expense
with a corresponding credit to additional paid-in capital.
e)
Shares to be issued
During
the nine months ended December 31, 2022, the Company issued 100,094
shares in satisfaction of its obligation of shares
to be issued, and moved $77,300
out of the shares to be issued account into the
additional paid in capital account.
f)
Warrant issuances, exercises and other activity
Warrant
exercises and issuances during the year ended March 31, 2022
During
the year ended March 31, 2022, 658,355
warrants were exercised pursuant to receipt of
exercise proceeds of $872,292.
446,370
warrants were exercised pursuant to cashless
warrant exercise. In addition, $103,950
warrant exercise proceeds receivable was recorded
as part of deposit and other receivables as of March 31, 2022.
During
the year ended March 31, 2022, the Company issued 212,594
warrants, including 25,000
as compensation for advisor and consultant services,
and 187,594
as compensation to an executive of the Company
who was not part of the Company stock options plan. The warrant expenses were fair valued at $541,443,
and recognized as general and administrative expenses, with a corresponding credit to additional paid-in capital.
During
the year ended March 31, 2022, the Company issued 57,536
share purchase warrants to lenders in connection
with the term loan (Note 6). The fair value of these warrants, in the amount of $198,713,
was recorded as part of the discount of the loan, with a corresponding credit to additional paid-in capital. The warrants were not considered
as derivative instruments. The fair value of these warrants was determined by using the Black Scholes model, based on the following key
inputs and assumptions: expiry date December
21, 2028, exercise price $6.26,
rate of return 1.40%,
and volatility 121.71%.
During
the year ended March 31, 2022, the Company issued 373,404
share purchase warrants to underwriter. The warrants
were not considered as a derivative instrument and were accounted as additional paid-in capital along with the uplisting transaction.
The warrants were fair valued at $900,371.
The fair value of these warrants was determined by using Black Scholes model, based on the following key inputs and assumptions: expiry
date August
26, 2026, exercise price $3.75,
rate of returns 0.77%,
and volatility 111.9%.
Warrant
exercises and issuances during the three months ended June 30, 2022
During
the three months ended June 30, 2022, the Company issued 53,827
warrants as compensation to an executive of the
Company who was not part of the Company stock options plan. The warrant expenses were fair valued at $77,414,
and recognized as general and administrative expenses, with a corresponding credit to additional paid-in capital.
Warrant
exercises and issuances during the three months ended September 30, 2022
During
the three months ended September 30, 2022, the Company issued 118,282
warrants as compensation to an executive of the
Company who was not part of the Company stock options plan. The warrant expenses were fair valued at $77,332,
and recognized as general and administrative expenses, with a corresponding credit to additional paid-in capital.
BIOTRICITY
INC.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2022 (Unaudited)
(Expressed
in US dollars)
Warrant
issuances and exchanges into other securities during the three months ended December 31, 2022
During the three months ended December
31, 2022, the Company issued 218,785
warrants as compensation to an executive of the Company who was not part of the Company stock options plan. The fair value of
the warrants at issuance was $77,780
and was recognized as a general and administrative expense, with a corresponding credit to additional paid-in capital. In addition,
the Company added 312,500
warrants to its outstanding warrant schedule in connection with warrants issued to Series B convertible note holders. This has
no impact on paid-in capital as the fair value of warrants were already accounted for as part of the original Series B convertible note
issuance accounting entries. Lastly, the Company extinguished and exchanged 306,604
warrants for promissory notes [Note 5] that resulted in an adjustment to additional paid-in capital in the amount of $71,768.
Warrant
issuances, exercises and expirations or cancellations during the three months ended December 31, 2022 and preceding periods resulted
in warrants outstanding at the end of those respective periods as follows:
SCHEDULE
OF WARRANTS OUTSTANDING
| | |
Broker
and Other Warrants | | |
Consultant
Warrants | | |
Warrants
Issued on Conversion of Convertible Notes | | |
Total | |
| As at March 31, 2022 | |
| 876,205 | | |
| 1,802,316 | | |
| 7,211,623 | | |
| 9,890,144 | |
| | |
| | | |
| | | |
| | | |
| | |
| Less: Expired/cancelled | |
| - | | |
| - | | |
| (1,563,980 | ) | |
| (1,563,980 | ) |
| Less: Exercised | |
| - | | |
| - | | |
| (11,792 | ) | |
| (11,792 | ) |
| Add: Issued | |
| - | | |
| 53,827 | | |
| - | | |
| 53,827 | |
| As at June 30, 2022 | |
| 876,205 | | |
| 1,856,143 | | |
| 5,635,851 | | |
| 8,368,199 | |
| | |
| | | |
| | | |
| | | |
| | |
| Less: Expired/cancelled | |
| (37,134 | ) | |
| (114,583 | ) | |
| - | | |
| (151,717 | ) |
| Less: Exercised | |
| - | | |
| - | | |
| - | | |
| - | |
| Add: Issued | |
| - | | |
| 118,282 | | |
| - | | |
| 118,282 | |
| As at September 30,
2022 | |
| 839,071 | | |
| 1,859,842 | | |
| 5,635,851 | | |
| 8,334,764 | |
| Warrant outstanding,
beginning balance | |
| 839,071 | | |
| 1,859,842 | | |
| 5,635,851 | | |
| 8,334,764 | |
| | |
| | | |
| | | |
| | | |
| | |
| Less: Expired/cancelled | |
| - | | |
| (278,000 | ) | |
| - | | |
| (278,000 | ) |
| Less: Exercised | |
| - | | |
| - | | |
| (306,604 | ) | |
| (306,604 | ) |
| Add: Issued | |
| - | | |
| 218,785 | | |
| - | | |
| 531,285 | |
| As at December 31,
2022 | |
| 839,071 | | |
| 1,800,627 | | |
| 5,329,247 | | |
| 7,968,945 | |
| Warrant
outstanding, ending balance | |
| 839,071 | | |
| 1,800,627 | | |
| 5,329,247 | | |
| 7,968,945 | |
| | |
| | | |
| | | |
| | | |
| | |
| Exercise Price | |
| $1.06
to
$6.26 | | |
| $0.45
to
$3.15 | | |
| $1.06
to
$1.50 | | |
| | |
| Expiration Date | |
| August
2026 to January 2031 | | |
| January
2023 to December 2032 | | |
| January
2024 to February 2024 | | |
| |
|
BIOTRICITY
INC.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2022 (Unaudited)
(Expressed
in US dollars)
g)
Stock-based compensation
On
February 2, 2016, the Board of Directors of the Company approved the Company’s 2016 Equity Incentive Plan (the “Plan”).
The purpose of the Plan is to advance the interests of the Company and its stockholders by providing an incentive to attract, retain
and reward persons performing services for the Company and by motivating such persons to contribute to the growth and profitability of
the Company. The Plan seeks to achieve this purpose by providing for awards in the form of options, stock appreciation rights, restricted
stock purchase rights, restricted stock bonuses, restricted stock units, performance shares, performance units and other stock-based
awards.
The
Plan shall continue in effect until its termination by the board of directors or committee formed by the board; provided, however, that
all awards shall be granted, if at all, on or before the day immediately preceding the tenth (10th) anniversary of the effective
date. The maximum number of shares of stock that may be issued under the Plan shall be equal to 3,750,000
shares; provided that the maximum number of shares
of stock that may be issued under the Plan pursuant to awards shall automatically and without any further Company or shareholder approval,
increase on January 1 of each year for not more than 10 years from the effective date, so the number of shares that may be issued is
an amount no greater than 20% of the Company’s outstanding shares of stock and shares of stock underlying any outstanding exchangeable
shares as of such January 1; provided further that no such increase shall be effective if it would violate any applicable law or stock
exchange rule or regulation, or result in adverse tax consequences to the Company or any participant that would not otherwise result
but for the increase.
Based
on the 2016 Option Plan, the Company is authorized to issue employee options with a 10-year
term. On March 31, 2020, the Company’s Board of Directors approved the amendment of certain prior options grants, issued to current
employees, previously issued with a 3-year
term, such that the respective options issued under these agreements would have their term extended to 10
years. The Company revalued these options using
a lattice model with an expected life of 10
years, risk free rates of 0.46%
to 0.75%,
stock price of $0.974
and expected volatility of 132.2%,
in order to recognize the additional expense associated with the longer term and recognized a one-time charge of $1,600,515
in share-based compensation, with a corresponding
adjustment to adjusted paid in capital.
During
the three months ended June 30, 2022, the Company granted 10,180
of options with a weighted average remaining
contractual life of 10
years. The Company recorded stock-based compensation
of $149,190
in connection with ESOP 2016 Plan (June 30, 2021
- $155,851),
under general and administrative expenses with corresponding credit to additional paid in capital.
During
the three months ended September 30, 2022, the Company granted 3,757
of options with a weighted average remaining
contractual life of 10
years. The Company recorded stock-based compensation
of $153,338
in connection with ESOP 2016 Plan (September
30, 2021 - $169,778),
under general and administrative expenses with corresponding credit to additional paid in capital.
During
the three months ended December 31, 2022, the Company granted no new options. The Company recorded stock-based compensation of
$63,125
in connection with ESOP 2016 Plan (December 31,
2021 - $100,650),
under general and administrative expenses with corresponding credit to additional paid in capital.
BIOTRICITY
INC.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2022 (Unaudited)
(Expressed
in US dollars)
The
following table summarizes the stock option activities of the Company to December 31, 2022:
SCHEDULE
OF STOCK OPTION ACTIVITIES
| | |
Number
of options | | |
Weighted Average
exercise price
($) | |
| Outstanding as of March 31, 2022 | |
| 7,409,714 | | |
| 2.3466 | |
| Granted | |
| 10,180 | | |
| 1.7700 | |
| Exercised | |
| - | | |
| - | |
| Outstanding as of June 30, 2022 | |
| 7,419,894 | | |
| 2.3458 | |
| Granted | |
| 3,757 | | |
| 2.2700 | |
| Outstanding as of September 30, 2022 | |
| 7,423,651 | | |
| 2.3457 | |
| Granted | |
| - | | |
| - | |
| Expired | |
| (16,733 | ) | |
| 1.3671 | |
| Forfeited | |
| (88,084 | ) | |
| 1,9710 | |
| Exercised | |
| - | | |
| - | |
| Outstanding as of December
31, 2022 | |
| 7,318,834 | | |
| 2.3509 | |
BIOTRICITY
INC.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2022 (Unaudited)
(Expressed
in US dollars)
The
fair value of each option granted is estimated at the time of grant using the Black Scholes model using the following assumptions, for
each of the respective fiscal year:
SCHEDULE
OF FAIR VALUE OF OPTION GRANTED USING VALUATION ASSUMPTIONS
| | |
Fiscal
Year 2023 | | |
Fiscal
Year 2022 | |
| Exercise
price ($) | |
| 1.77
–
2.27 | | |
| 2.40
–
3.98 | |
| Risk
free interest rate (%) | |
| 3.00
–
4.06 | | |
| 0.34
–
2.32 | |
| Expected
term (Years) | |
| 5
–
6.5 | | |
| 2.0
–
10.0 | |
| Expected
volatility (%) | |
| 107.7
– 119.5 | | |
| 106.6
–
129.9 | |
| Expected
dividend yield (%) | |
| 0.00 | | |
| 0.00 | |
| Fair
value of option ($) | |
| 0.36
–
1.57 | | |
| 1.19
–
3.52 | |
| Expected
forfeiture (attrition) rate (%) | |
| 0.00 | | |
| 0.00 | |
10.
OPERATING LEASE RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
The
Company has one operating lease primarily for office and administration.
During
December 2021, the Company entered into a new lease agreement. The Company paid $85,000
deposit that would be returned at the end of
the lease. In December 2022, the Company started a new lease with an additional suite in the same premise as the existing lease.
When
measuring the lease obligations, the Company discounted lease payments using its incremental borrowing rate. The weighted-average-rate
applied is 11.4%.
SCHEDULE
OF OPERATING LEASES OBLIGATIONS
| Right of Use Asset | |
$ | |
| Balance at March 31, 2022 | |
| 1,242,700 | |
| New leases | |
| 685,099 | |
| Amortization | |
| (255,146 | ) |
| Balance at December 31, 2022 | |
| 1,672,653 | |
| Lease
Liability | |
$ | |
| Balance at March 31, 2022 | |
| 1,330,338 | |
| New leases | |
| 685,099 | |
| Repayment and interest
accretion | |
| (231,533 | ) |
| Balance at December 31, 2022 | |
| 1,783,904 | |
| | |
| | |
| Current portion of operating lease liability | |
| 322,882 | |
| Noncurrent portion of operating lease liability | |
| 1,461,022 | |
The
operating lease expense was $53,286
and $264,738
for the three and nine months ended December
31, 2022, respectively. (December 31, 2021: $119,465
and $255,020)
was included in the general and administrative expenses.
The
following table represents the contractual undiscounted cash flows for lease obligations as at December 31, 2022:
SCHEDULE
OF CONTRACTUAL UNDISCOUNTED CASH FLOWS FOR LEASE OBLIGATION
| | |
| |
| Calendar year | |
$ | |
| 2023 | |
| 505,696 | |
| 2024 | |
| 552,293 | |
| 2025 | |
| 600,288 | |
| 2026 | |
| 565,359 | |
| 2027 and beyond | |
| - | |
| Total undiscounted lease liability | |
| 2,223,636 | |
| Less imputed interest | |
| (439,732 | ) |
| Total | |
| 1,783,904 | |
11.
PROPERTY AND EQUIPMENT
During
the year-ended March 31, 2022, the Company purchased leasehold improvements of $12,928
(useful life: 5
years) as well as furniture & fixtures of
$16,839 (useful
life: 5
years). The Company recognized depreciation expense
for these assets in the amount of $1,487 and
$4,465 during
the three and nine months ended December 31, 2022 (December 31, 2021: $819,
$819):
SCHEDULE
OF PROPERTY AND EQUIPMENT
| Cost | |
Office equipment | | |
Leasehold improvement | | |
Total | |
| | |
| $ | | |
| $ | | |
| $ | |
| Balance at March 31, 2022 | |
| 16,839 | | |
| 12,928 | | |
| 29,767 | |
| Additions | |
| - | | |
| - | | |
| - | |
| Balance at December
31, 2022 | |
| 16,839 | | |
| 12,928 | | |
| 29,767 | |
BIOTRICITY
INC.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2022 (Unaudited)
(Expressed
in US dollars)
| Accumulated
depreciation | |
Office equipment | | |
Leasehold improvement | | |
Total | |
| | |
| $ | | |
| $ | | |
| $ | |
| Balance at March 31, 2022 | |
| 1,308 | | |
| 1,000 | | |
| 2,308 | |
| Depreciation for Q1 | |
| 842 | | |
| 647 | | |
| 1,489 | |
| Depreciation for Q2 | |
| 842 | | |
| 647 | | |
| 1,489 | |
| Depreciation for Q3 | |
| 841 | | |
| 646 | | |
| 1,487 | |
| Balance at December
31, 2022 | |
| 3,833
| | |
| 2,940 | | |
| 6,773 | |
| | |
| | | |
| | | |
| | |
| Net book value | |
| | | |
| | | |
| | |
| Balance at March 31, 2022 | |
| 15,531 | | |
| 11,928 | | |
| 27,459 | |
| Balance at December
31, 2022 | |
| 13,006 | | |
| 9,988 | | |
| 22,994 | |
12.
CONTINGENCIES
There
are no unrecognized claims against the Company that were assessed as significant, which were outstanding as at December 31, 2022 and,
consequently, no additional provision for such has been recognized in the condensed consolidated financial statements during the three
and nine months then ended.
13.
SUBSEQUENT EVENTS
The
Company’s management has evaluated subsequent events up to February 14, 2023, the date the condensed consolidated financial statements
were issued, pursuant to the requirements of ASC 855, and has determined the following material subsequent events:
On January 23, 2023,
the Company issued a new convertible note to an individual in the amount of $2,000,000
(“principal amount”). This note bears interest with a fixed rate of 10%
for its entire 18-month term, paid in advance through the issuance of common stock. On January 23, the company issued 270,270
shares to this individual in payment of this interest, using a share price of $0.74
per share, which is a strike price equal to the lowest Company stock price on the note issuance
date. The note maybe repaid in cash, or via conversion of note principal, subject to mutual consent of the Company and the note holder,
at 15%
discount to the stock’s VWAP on the conversion date. In addition, the note holder has the option to convert, after a qualified
financing through the earlier of the prepayment date or maturity date, all of the outstanding principal and accrued interest thereon,
based upon a conversion price equal to a 20%
discount to the lessor of (i) the actual price per new round of stock based on qualified financing, (ii) if there be no qualified financing
as of the maturity date, by mutual consent and election of the Company and the note holder, at 15%
discount to average VWAP for ten consecutive trading days immediately prior to the maturity date.
BIOTRICITY
INC.
FORM
10-Q
DECEMBER
31, 2022