UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For
the quarterly period ended | |
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the period from ______________ to_______________
Commission
file number:
(Exact name of registrant as specified in its charter)
State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(Registrant’s Telephone Number, Including Area Code)
Indicate
by check whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act).
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller
reporting company | |
| Emerging
growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The
|
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: shares of Common Stock, $0.001 par value, at February 14, 2023. As at that same date, the Company also has 1,466,718 Exchangeable Shares outstanding that convert directly into common shares, which when combined with its Common Stock produce an amount equivalent to 52,514,582 outstanding voting securities.
BIOTRICITY INC.
| 2 |
PART 1
FINANCIAL INFORMATION
Item 1 – Condensed Consolidated Financial Statements
| 3 |
BIOTRICITY INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS AT DECEMBER 31, 2022 (unaudited) AND MARCH 31, 2022 (audited)
(Expressed in US Dollars)
| As at December 31, 2022 | As at March 31, 2022 | |||||||
| $ | $ | |||||||
| CURRENT ASSETS | ||||||||
| Cash | ||||||||
| Accounts receivable, net | ||||||||
| Inventory | ||||||||
| Deposits and other receivables | ||||||||
| Total current assets | ||||||||
| Deposits [Note 10] | ||||||||
| Long-term accounts receivable | ||||||||
| Property and equipment [Note 11] | ||||||||
| Operating right-of-use lease asset [Note 10] | ||||||||
| TOTAL ASSETS | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and accrued liabilities [Note 4] | ||||||||
| Convertible promissory notes and short-term loans [Note 5] | ||||||||
| Derivative liabilities [Note 8] | ||||||||
| Operating lease current liability [Note 10] | ||||||||
| Total current liabilities | ||||||||
| Federally guaranteed loans [Note 7] | ||||||||
| Term loan [Note 6] | ||||||||
| Derivative liabilities [Note 8] | ||||||||
| Operating lease liability [Note 10] | ||||||||
| TOTAL LIABILITIES | ||||||||
| STOCKHOLDERS’ DEFICIENCY | ||||||||
| Preferred stock, $par value, authorized as at December 31, 2022 and March 31, 2022, respectively, share issued and outstanding as at December 31, 2022 and March 31, 2022, respectively [Note 9] | ||||||||
| Series A preferred stock, $par value, authorized as at December 31, 2022 and March 31, 2022, respectively, and preferred shares issued and outstanding as at December 31, 2022 and as at March 31, 2022, respectively [Note 9] | ||||||||
| Common stock, $par value, authorized as at December 31, 2022 and March 31, 2022, respectively. Issued and outstanding common shares: and as at December 31, 2022 and March 31, 2022, respectively, and exchangeable shares of and outstanding as at December 31, 2022 and March 31, 2022, respectively [Note 9] | ||||||||
| Shares to be issued and shares of common stock as at December 31, 2022 and March 31, 2022, respectively [Note 9] | ||||||||
| Additional paid-in-capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficiency | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | ||||||||
See accompanying notes to unaudited condensed consolidated interim financial statements
| 4 |
BIOTRICITY INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2022 AND 2021 (unaudited)
(Expressed in US Dollars)
3
Months 2022 | 3
Months 2021 | 9 Months Ended
2022 | 9
Months 2021 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| REVENUE | ||||||||||||||||
| Cost of Revenue | ||||||||||||||||
| NET REVENUE | ||||||||||||||||
| EXPENSES | ||||||||||||||||
| General and administrative expenses [Notes 5, 6, 9 and 10] | ||||||||||||||||
| Research and development expenses | ||||||||||||||||
| TOTAL OPERATING EXPENSES | ||||||||||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other (expense) income [Note 3, 5] | ( | ) | ( | ) | ||||||||||||
| Gain (loss) upon convertible notes conversion and repayment [Note 5 and 9 (d)] | ( | ) | ( | ) | ( | ) | ||||||||||
| Accretion and amortization expenses [Note 6] | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in fair value of derivative liabilities [Note 8] | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| NET LOSS BEFORE INCOME TAXES | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income taxes | ||||||||||||||||
| NET LOSS BEFORE DIVIDENDS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Adjustment: Preferred Stock Dividends | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| NET LOSS ATTRIBUTABLE TO COMMON STOCKLHOLDERS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Translation adjustment | ( | ) | ( | ) | ( | ) | ||||||||||
| COMPREHENSIVE LOSS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| LOSS PER SHARE, BASIC AND DILUTED | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | ||||||||||||||||
See accompanying notes to unaudited condensed consolidated interim financial statements
| 5 |
BIOTRICITY INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIENCY
FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2022 AND 2021 (unaudited)
(Expressed in US Dollars)
| Preferred stock | Common stock and exchangeable common shares | Shares to be Issued | Additional paid in capital | Accumulated other comprehensive (loss) income | Accumulated deficit | Total | ||||||||||||||||||||||||||||||||||
| Shares | $ | Shares | $ | Shares | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Balance, September 30, 2022 (unaudited) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Conversion of convertible notes into common shares [Note 9] | - | - | ||||||||||||||||||||||||||||||||||||||
| Preferred stock purchased back via cash [Note 8] | ( | ) | ( | ) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of shares for services [Note 9] | - | - | ||||||||||||||||||||||||||||||||||||||
| Issuance of warrants for services [Note 9] | - | - | - | |||||||||||||||||||||||||||||||||||||
| Exchange of warrants for promissory notes | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Stock based compensation - ESOP [Note 9] | - | - | - | |||||||||||||||||||||||||||||||||||||
| Translation adjustment | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Net loss before dividends for the period | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Preferred stock dividends | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, December 31, 2022 (unaudited) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Preferred stock | Common stock and exchangeable common shares | Shares to be Issued | Additional paid in capital | Accumulated other comprehensive (loss) income | Accumulated deficit | Total | ||||||||||||||||||||||||||||||||||
| Shares | $ | Shares | $ | Shares | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Balance, March 31, 2022 (audited) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Conversion of convertible notes into common shares [Note 9] | - | - | ||||||||||||||||||||||||||||||||||||||
| Preferred stock purchased back via cash [Note 8] | ( | ) | ( | ) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of shares for services [Note 9] | - | - | ||||||||||||||||||||||||||||||||||||||
| Exercise of warrants for cash [Note 9] | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Issuance of warrants for services [Note 9] | - | - | - | |||||||||||||||||||||||||||||||||||||
| Exchange of warrants for promissory notes | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Stock based compensation - ESOP [Note 9] | - | - | - | |||||||||||||||||||||||||||||||||||||
| Translation adjustment | - | - | - | |||||||||||||||||||||||||||||||||||||
| Net loss before dividends for the period | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Preferred stock dividends | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, December 31, 2022 (unaudited) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| 6 |
| Preferred stock | Common stock and exchangeable common shares | Shares to be Issued | Additional paid in capital | Accumulated other comprehensive (loss) income | Accumulated deficit | Total | ||||||||||||||||||||||||||||||||||
| Shares | $ | Shares | $ | Shares | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Balance, September 30, 2021 (unaudited) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Conversion of convertible notes into common shares | - | - | ||||||||||||||||||||||||||||||||||||||
| Issuance of additional shares to convertible note holders | - | - | ||||||||||||||||||||||||||||||||||||||
| Conversion of preferred shares into common shares | ( | ) | ( | ) | - | ( | ) | |||||||||||||||||||||||||||||||||
| Preferred stock purchased back via cash | ( | ) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Issuance of shares for services | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Exercise of warrants for cash | - | |||||||||||||||||||||||||||||||||||||||
| Issuance of warrants for services | - | - | - | |||||||||||||||||||||||||||||||||||||
| Stock based compensation - ESOP | - | - | - | |||||||||||||||||||||||||||||||||||||
| Cashless exercise of warrants | - | - | ||||||||||||||||||||||||||||||||||||||
| Translation adjustment | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Net loss before dividends for the period | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Preferred stock dividends | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, December 31, 2021 (unaudited) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Preferred stock | Common stock and exchangeable common shares | Shares to be Issued | Additional paid in capital | Accumulated other comprehensive (loss) income | Accumulated deficit | Total | ||||||||||||||||||||||||||||||||||
| Shares | $ | Shares | $ | Shares | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Balance, March 31, 2021 (audited) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Issuance of common shares for private placement | - | - | ||||||||||||||||||||||||||||||||||||||
| Issuance of preferred shares for private placement investors | - | - | ||||||||||||||||||||||||||||||||||||||
| Issuance of additional shares to convertible note holders | - | - | ||||||||||||||||||||||||||||||||||||||
| Issuance of shares from uplisting | - | - | ||||||||||||||||||||||||||||||||||||||
| Conversion of convertible notes into common shares | - | |||||||||||||||||||||||||||||||||||||||
| Conversion of preferred shares into common shares | ( | ) | ( | ) | - | ( | ) | |||||||||||||||||||||||||||||||||
| Preferred stock purchased back via cash | ( | ) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Issuance of shares for services | - | - | ||||||||||||||||||||||||||||||||||||||
| Exercise of warrants for cash | - | |||||||||||||||||||||||||||||||||||||||
| Issuance of warrants for services | - | - | - | |||||||||||||||||||||||||||||||||||||
| Derivative liabilities adjustment pursuant to issuance of preferred Shares | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Stock based compensation - ESOP | - | - | - | |||||||||||||||||||||||||||||||||||||
| Cashless exercise of warrants | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| Translation adjustment | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Net loss before dividends for the period | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Preferred stock dividends | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, December 31, 2021 (unaudited) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
See accompanying notes to unaudited condensed consolidated interim financial statements
| 7 |
BIOTRICITY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED DECEMBER 31, 2022 AND 2021 (UNAUDITED)
(Expressed in US Dollars)
| Nine Months Ended December 31, 2022 | Nine Months Ended December 31, 2021 | |||||||
| $ | $ | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss before dividends | ( | ) | ( | ) | ||||
| Adjustments to reconcile net loss to net cash used in operations: | ||||||||
| Stock based compensation | ||||||||
| Issuance of shares for services | ||||||||
| Issuance of warrants for services | ||||||||
| Accretion and amortization expenses | ||||||||
| Change in fair value of derivative liabilities | ||||||||
| Loss upon convertible promissory notes and preferred stock conversions, net | ||||||||
| Loss on debt and warrant modification | ||||||||
| Property and equipment depreciation | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | ( | ) | ( | ) | ||||
| Inventory | ( | ) | ( | ) | ||||
| Deposits and other receivables | ( | ) | ( | ) | ||||
| Accounts payable and accrued liabilities | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Property and equipment | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Issuance of common shares | ||||||||
| Issuance of preferred shares | ||||||||
| Redemption of preferred shares | ( | ) | ( | ) | ||||
| Exercise of warrants for cash | ||||||||
| Federally guaranteed loans | ||||||||
| Repayment of convertible debentures and notes | ( | ) | ( | ) | ||||
| Proceeds from short term loan and promissory notes, net | ||||||||
| Issuance of shares from uplisting | ||||||||
| Preferred Stock Dividend | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Effect of foreign currency translation | ||||||||
| Net (decrease) increase in cash during the period | ( | ) | ||||||
| Cash, beginning of period | ||||||||
| Cash, end of period | ||||||||
See accompanying notes to unaudited condensed consolidated interim financial statements
| 8 |
BIOTRICITY INC.
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 $
| 9 |
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.
| 10 |
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:
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 | ||||||||||||||||
| Device sales | ||||||||||||||||
| Service-related and other revenue | ||||||||||||||||
| Revenue | ||||||||||||||||
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.
| 11 |
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.
| ● | Fair value of warrants |
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.
| ● | Functional currency |
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 |
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.
| 12 |
BIOTRICITY INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 (Unaudited)
(Expressed in US dollars)
| ● | Contingencies |
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.
| ● | Inventory obsolescence |
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.
| ● | Income and other taxes |
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.
| 13 |
BIOTRICITY INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 (Unaudited)
(Expressed in US dollars)
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.
| 14 |
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:
| Office equipment | ||
| Leasehold improvement |
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.
| 15 |
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.
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.
| 16 |
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.
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.
| 17 |
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
As at December 31, 2022 $ | As at March 31, 2022 $ | |||||||
| Accounts payable and deferred revenue | ||||||||
| Accrued liabilities | ||||||||
| Accounts payable and accrued liabilities | ||||||||
Accounts
payable as at December 31, 2022 included $
5. CONVERTIBLE NOTES AND SHORT-TERM LOANS
Total $ | ||||
| Balance at March 31, 2022 | ||||
| Conversion to common shares (Note 9) | ( | ) | ||
| Redemption of convertible notes | ( | ) | ||
| Convertible note extinguishment | ( | ) | ||
| New issuance of convertible note, net of discounts | ||||
| New issuance of short-term loan and promissory notes, net of discounts | ||||
| Repayment of short-term loans | ( | ) | ||
| Amortization of discounts | ||||
| Balance at December 31, 2022 | ||||
Interest
expense on the above debt instruments was $
Series A Convertible Promissory Notes:
During
the year ended March 31, 2021, the Company issued $
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).
| 18 |
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,
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 $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,
Net
proceeds to the Company from Series A Notes issuance up to March 31, 2021 amounted to $
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.
| 19 |
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 $
For
the Series A Notes, The Company recognized debt issuance costs in the amount of $
As
at March 31, 2022, $
On December 30, 2022, the Company exchanged $